A Guide to Alternative Private Equity Exit Methods in 2024

October 15, 2024 | BY

clee

Geopolitical tensions, tightening foreign investment restrictions, and a poorly performing Chinese economy are some of the challenges facing private equity investors trying to exit their investments. Whilst the preferred exit method depends on the transaction itself, there are ways to minimize the general risks of exit methods

Summary

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  • Geopolitical tensions and undesirable market conditions mean that firms cannot exit their private equity investments using traditional methods, and/or may struggle to find buyers
  • Alternative exit methods include M&A and secondary solutions, but each has its own challenges
  • More comprehensive due diligence is necessary to minimize the risks involved with transactions
  • Firms should consider tailor-made exit strategies involving exits, in stages, using different methods

"IPOs are not really functioning," said Edward Tung, head of legal and compliance at biotech venture capital firm ORI Capital.

But companies are still seeking to exit private equity investments in China. The problem is they also face challenges when relying on alternative exit methods, given the current market situation and geopolitical tensions. Heightened geopolitical tensions between China and the U.S. "necessitate more extensive due diligence," Tung said. In particular, more care must be taken with regard to the regulatory and legal risks.

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