PE’s Exit Problem: The Untouched Opportunity in Sales

Quick answer: Private equity is sitting on a backlog of companies bought with cheap debt that no longer exists, and the industry’s response has been financial: continuation funds, secondaries, and a wave of retail-facing products that bring individual investors into the asset class. Bain & Company counted roughly 28,000 unsold buyout portfolio companies worth about $3.2 trillion in its Global Private Equity Report (Bain & Company, 2024). Those structures solve for liquidity. None of them adds a dollar of EBITDA. With cheap debt gone and multiple expansion no longer doing the work, the return has to come out of operations, and the largest untouched opportunity in most portfolio companies is how the company sells. Procurement, pricing, systems and headcount have all been worked over twice. The sales org is still running on the same heroics it ran on at close, which means the growth is there and nobody has gone and gotten it.

Key takeaways

• The exit market is congested and the debt is expensive. Bain reported distributions to limited partners as a share of fund net asset value falling to their lowest level in more than a decade (Bain & Company, Global Private Equity Report 2024).
• Continuation vehicles, interval funds, non-traded BDCs, private-credit ETFs and 401(k) access are all liquidity answers. They do not change what the company earns.
• The operating playbook has been run on cost, price, systems and headcount. It has not been run on the actual work of selling.
• A sales org where the number depends on four people is not a growth story. In diligence it is key-person risk, and it gets priced.
• Sales improvement lands on the lines that make cash: win rate, discount integrity, cycle time and net retention.
• The gain shows up twice at exit. Once in EBITDA, and again in the multiple a buyer will pay for revenue that is repeatable rather than personality-dependent.
• When the window opens, every sponsor sells at once. What’s missing in most books is a credible operating story that the buyer can verify.

Why is private equity inventing new retail products right now?

Because the traditional exit is blocked and the sponsors need liquidity from somewhere. Bain’s Global Private Equity Report (2024) put the unsold inventory at roughly 28,000 companies and about $3.2 trillion, with a large share held four years or longer. Distributions back to LPs fell to their lowest level in over a decade (Bain & Company, 2024). LPs want cash. IPO and strategic sale windows have not cooperated.

So the industry built other doors.

• Secondaries and GP-led continuation vehicles set a record, with 2024 volume around $160 billion (Jefferies Global Secondary Market Review, January 2025). The sponsor sells the asset to itself and gives LPs an option to cash out.
• Dividend recapitalizations, where the company borrows to pay its owner, ran at record volume in the loan market in 2024 (PitchBook LCD, 2025).
• New retail-facing wrappers arrived fast. Blackstone opened BXPE to wealthy individuals in January 2024. State Street and Apollo launched a public-and-private credit ETF in February 2025. Europe’s ELTIF 2.0 rules took effect in January 2024. A US executive order in August 2025 directed regulators to open a path for alternative assets inside 401(k) plans.

Read the list again as an operator. Every item on it is a way to move ownership or move cash. Not one of them changes what the business earns next year.

What does an expensive balance sheet actually do to your operating plan?

It moves the burden off the capital structure and onto your P&L. Cash interest takes a bigger bite of free cash flow. Covenant headroom is thinner, so a soft quarter costs more than a soft quarter used to cost. Add-ons are harder to finance, which takes the easy inorganic growth story off the table. And the entry multiple is not going to be rescued by a higher exit multiple.

Bain has been making the same argument for a while now: with cheap debt and multiple expansion out of the picture, value creation has to come from operating improvement (Bain & Company, Global Private Equity Report 2024).

Fine. Everybody agrees. The question nobody answers in the board deck is which operating improvement, and where the room actually is.

What’s missing from the PE operating playbook?

What’s missing is how the company sells. Look at what has already been done in your portfolio company since close. Procurement renegotiated. Pricing studied. ERP consolidated. Headcount rationalized twice. Marketing spend reallocated. A new CRM, a revenue intelligence tool, a comp plan reset, a RevOps hire.

Now look at the actual work of selling. The conversation a rep has with a buyer. What was touched there?

• Ask ten reps how they run discovery and you’ll get ten answers. – That shows up as discounting, because a rep who can’t find the problem has nothing to sell but price.
• There’s no shared definition of a qualified deal. – That shows up in the forecast, every quarter, and the board notices.
• Managers inspect pipeline but nobody develops anybody. – The cost is ramp time and attrition, paid in carried quota you never collect.
• New reps learn by sitting next to whoever’s good. – The cost is months, and the method leaves when that person leaves.
• Most of the number comes from a handful of people. – The cost is a diligence discount, priced as key-person risk.

That’s the untouched opportunity. Not a tool. Not a training event. The definition of the work itself, written down, used the same way by everybody, and measured.

We keep calling this a talent problem. It’s a system problem, and unlike talent, a system can be built on purpose.

How does a compounding sales org turn into cash, not just revenue?

Because the improvements land directly on the lines that make cash, and most of them require no new headcount. A sales org that runs on a defined system moves four things:

Win rate. More revenue out of the same cost of sales. The incremental gross margin flows almost straight to EBITDA because you didn’t add reps to get it.

Discount integrity. Price given away is EBITDA given away at close to a hundred cents on the dollar. Reps discount when they can’t defend value, and they can’t defend value when they never established the problem.

Cycle time. Shorter cycles mean the same bookings convert to collected cash earlier in the year. That’s working capital, not just a bigger number on a slide.

Net retention. Holding the base costs less than replacing it. Expansion inside accounts is the cheapest revenue in the building.

Take your own numbers and do the arithmetic. Your current win rate, your average discount, your cost of sales. Move win rate two points, hold two points of discount, and see what it does to EBITDA at your gross margin. Then multiply that by your exit multiple. Most operators run that math once and stop calling sales a soft area.

The reason this compounds is that a defined system keeps the gain. In a heroic org, a good quarter is a good quarter. Next quarter starts at zero. In a compounding org, the thing that produced the gain is written down and still operating, so the next quarter starts from the gain and adds to it.

What does this do to valuation when the market loosens up?

Sales improvement raises valuation twice: once in EBITDA, and again in the multiple.

The first one is arithmetic. Added EBITDA gets multiplied at exit.

The second one is the part sponsors underestimate. A buyer is not just buying earnings, they’re buying the durability of those earnings. Two companies with identical EBITDA are not worth the same money if one of them produces it through a documented, transferable system and the other produces it through four reps who have not resigned yet. One is a business. The other is a run of good outcomes with names attached to it, and diligence finds out which is which.

Ask what a buyer’s operating partner does in the data room. They ask how deals get qualified. They ask what happens to the forecast when the top two reps leave. They ask why win rate moved. If the answer to every question is “our people are great,” the quality of earnings work will say so in writing.

And when the window does open, it opens for everyone. Thousands of companies come to market at once out of the same backlog. What’s missing from most of those books is a credible, verifiable operating story. The ones that have it will not be competing on the same terms.

Where does a CRO or a sponsor start in the next two quarters?

Start narrow, with the two decisions everything downstream depends on: what qualifies a deal to advance, and what a manager must see before approving it. Those two are writable this quarter, and they change what the forecast counts, what coaching addresses, what new reps get taught, and what gets discounted.

For the sponsor, the diagnostic question at the next board meeting is not “how’s pipeline.” It’s this: how much of the number is the system and how much is force? Ask how many reps produce most of the revenue. Ask three managers to describe the qualification standard and see whether the answers match. Ask what ramp time is, as a number, and watch whether anyone actually knows it.

If nobody knows, that’s not a gap in reporting. That’s the untouched opportunity, sitting there unpriced.

How do you tell what’s system and what’s force in your portfolio?

Get an honest read before the next board cycle. The Four Orgs Assessment and the PCOS Capability Assessment at salesgrowth.com take about twenty minutes and tell you how much of your current performance would survive the departure of your top two reps.

Frequently asked questions

How long before this shows up in EBITDA?

The first narrow changes, qualification standards and manager coaching standards, can be in place inside a quarter and start moving win rate and discount within one to two sales cycles after that. Longer sales cycles push it out. The compounding part takes a year or more, which is exactly why sponsors who wait until the exit is in sight get none of it.

Isn’t this just sales training?

No. Training is an event that decays. What’s being described is a defined way of working: a written standard for a qualified deal, a defined discovery approach, managers coaching against that standard, and measurement that ties behavior to outcome. Training without those is a peacock program, and it’s why so many portfolio companies have a certification and a flat win rate.

Our growth thesis is add-on acquisitions. Does this still matter?

More, not less. Integration failures show up in the commercial org first, when two sales teams sell two different ways to the same buyer and neither can explain the combined value. A defined selling system is what makes an acquired team productive in months rather than never.

Who owns this, the CRO or the operating partner?

The CRO owns building and running it. The operating partner owns asking for evidence that it exists and protecting the time it takes to build, because the CRO is paid on this quarter and building does not pay off in the quarter you build it. Without that cover, the push always wins the argument in week eleven.

We’re eighteen months from exit. Is it too late?

No, but the sequencing changes. Eighteen months is enough to move win rate and discount and to have the documented standards in place that a buyer’s diligence team can actually inspect. What you will not have is eight quarters of compounding, so the value shows up more in the quality of the earnings story than in the absolute EBITDA number.

How does this affect quality of earnings work?

Buyers test whether revenue is repeatable and transferable. Concentration of production in a few reps, undocumented process, and a forecast built on rep belief rather than buyer-verified evidence all read as risk, and risk gets priced into the multiple or into the earnout structure.

About the source

This article is from A Sales Growth Company (ASG), creator of Problem-Centric® Selling and architect of the Problem-Centric Operating System (PCOS™), written by Keenan. It applies the Four Orgs framework, Heroic, Random, Peacock and Compounding, to private equity portfolio companies. To see where your commercial org stands, visit salesgrowth.com.

Sources

• Bain & Company, Global Private Equity Report 2024: unsold buyout inventory of roughly 28,000 companies worth about $3.2 trillion, aging holding periods, and distributions to LPs as a share of NAV at their lowest level in over a decade.
• Jefferies, Global Secondary Market Review, January 2025: 2024 secondary market volume of roughly $160 billion, a record.
• PitchBook LCD, 2025: record dividend recapitalization volume in the loan market in 2024.
• Public product and policy events cited: Blackstone’s BXPE launch (January 2024), the State Street and Apollo public-and-private credit ETF (February 2025), EU ELTIF 2.0 rules taking effect (January 2024), and the US executive order on alternative assets in defined contribution plans (August 2025).
• The Heroic, Random, Peacock and Compounding org types are ASG’s Four Orgs model. The win rate, discount, cycle time and retention arithmetic in this article is a framework for running your own numbers, not a research finding.