Financial conditions are milder than in 2023, with key rates falling and credit more readily available. However, exit windows are still rare in Europe, with few IPO; a renewed appetite among industrials but on a selective basis; and more frequent recourse to liquidity solutions such as sales to another fund or continuation vehicles. Conclusion: liquidity is not something you have to endure--it has to be prepared for.

Many assets have been “80% ready” since 2023-2024. Every quarter without a window adds to the pressure. We need to make a choice: sell now, extend the term using a continuation vehicle, or strengthen the position through a targeted acquisition and appropriate financing. On the investor side, the key indicator remains the level of distributions: they are rising, but too slowly to satisfy all the funds. Hence the need for more selective recommitments.

Global averages mask the essential point: dispersion. Around 9-10x EV/Ebitda for the European mid cap, with variations depending on the quality of the file. Premiums go to companies that offer clarity: contractual indexation applied, discount policy controlled, retention and move upmarket measured, synergies already visible in the accounts and Ebitda improvement clearly presented. The unfulfilled promise (future capex or acquisition) is hardly monetisable today.

Five realistic exit routes

Five exit routes can be identified, which can be ranked from the most pragmatic to the least pragmatic.

The first is the sale to an industrialist, which is particularly relevant when synergies are tangible and the company is operating autonomously--particularly after a carve-out. Controlled working capital and clear governance are then real levers for increasing value.

The second option is the sale to another fund. It is justified if the “next chapter” is credible, whether in terms of sector consolidation, commercial productivity gains or pooled purchasing. Direct financing (private credit) can, in this case, guarantee certainty of execution.

Thirdly, the introduction to the stock market in Europe remains an intermittent window, rarely suitable for medium-sized companies, except in the case of certain solid software or medtech profiles.

Fourth route: the continuation vehicle, led by the manager. This solution gives time to a conviction asset, provided that the process is competitive, the price justified by independent expert opinion, and investors have a choice between a distribution or a continuation of the investment.

Finally, the partial sale or recapitalisation allows a minority stake to be disposed of or a reasonable dividend recapitalisation to be carried out, in order to breathe new life into the distribution schedule.

The right financing unlocks the exit

Cost isn’t everything: certainty of execution matters more. Three tools dominate in mid cap:

—The unitranche loan offers speed and clarity with simple documents for the borrower and managed risk sharing between lenders in-house.

—The adapted covenants define a clear leverage ratio, which tightens when operational milestones are reached, with tests that do not activate in the event of a simple cash drawdown.

—The holding company level debt with capitalised interest (PIK), limited in time and amount, makes it possible to finance a capex or a small acquisition without disrupting operations.

At fund level, a line backed by the value of the portfolio can finance external growth with rapid synergies or smooth a distribution. It must remain limited, over a short period, with full transparency for investors.

Timeframes: think 18 to 36 months

The average holding period has increased. The right strategy is to open two exit routes early (industrial and funds, or sale and continuation), and to provide partial liquidity options if the window is delayed. A clean continuation is better than a fire sale to meet the fund’s maturity.

Creating value through operations

Financial engineering is no longer enough. We need to generate tangible results.

On prices and revenues, this requires properly applied indexation, a clarified offering (references/SKUs), a rigorous discount policy, a controlled move upmarket and measured commercial efficiency.

On the treasury side, controlling and optimising WCR is essential: lower DSO and DIO, advance payments, automated collection and monthly monitoring of the transformation of Ebitda into cash.

For external growth, four to six small, well-integrated operations are better than an overpriced trophy. Unified systems, harmonised pricing, purchasing/logistics synergies, a 90-day integration plan and tracking of Ebitda per acquisition are essential.

The asset disposals (carve-out) must be prepared with short-term transitional service agreements, autonomy in IT, finance and quality, and a credible debt reduction plan.

An Ebitda-oriented operational analysis enables short-term returns on investment via pricing policy, demand forecasts, automation of support functions and analysis of the risk of customer attrition. The results must be visible in the P&L and cash flow.

Finally, you need to be ready at all times for a sale. This means keeping an up-to-date data room, carrying out an analysis of the quality of results, formalising turnover rules, mapping out acquirers, making retention plans and preparing a mini-prospectus.

Where premiums still remain

Some sectors retain particular appeal. The software and recurring services remain valued, provided they have a solid subscription base (ARR), organic growth (NRR) and low attrition.

In health (services and diagnostics), demand remains resilient, subject to increased vigilance on compliance and quality.

Speciality industries are benefiting from intra-EU relocation, with shorter lead times, greater reliability and fewer logistical risks.

Finally, staff-intensive B2B services see their value driven by contractual visibility and standardised processes.

Investors: four priorities for 2025

What investors expect in 2025:

—A credible 12-24 month distribution schedule is essential.

—The governance of continuation vehicles and structured finance must be exemplary: prior information, independent expert opinion, partial deferral of the manager’s share of performance and transparent fees.

—Tangible evidence of operational value creation is expected, with a visible shift from Ebitda to cash flow.

—Finally, investors want reasonable access to co-investments and differentiating deals.

Exit: ten decisive gestures

Ten gestures make the difference on exit:

—Classify the portfolio according to the degree of readiness for disposal.

—Open two leads per priority asset.

—Secure upstream financing.

—Deliver visible improvements in 90 to 180 days (price, WCR, attrition).

—Pre-solicit a core group of buyers and build a qualified mapping.

—Use partial liquidity (minority disposal or dividend) without over-leveraging.

—Limit structured instruments to what is strictly necessary and explain them clearly.

—Document value creation (evolution of Ebitda, synergies, productive capex).

—Address risks (cyber, ESG, quality) ahead of opening the data room.

—Maintain a distribution calendar and update it quarterly.

Create--don’t wait for--your window

Successfully exiting mid cap in 2025 means methodically assembling the elements that make value legible: visible operating results in P&L and cash flow, financing that secures execution, and unambiguous governance. Teams that do this will distribute earlier and raise under better conditions.

*Samuelle Thevenet is the chief operating officer of Ambrosia. She will be speaking at the LPEA Insights conference on 23 October.

This article was originally published in French.