Introduction
An exit pitch is presented to the one audience that knows the company better than the bank does. The sponsor has owned it for years, so a sell-side presentation that recites the business teaches the client nothing. What a bank's financial sponsors group (FSG) can add lies outside the company: who would pay and with what money, what each route turns into for the fund, and how a process should run. Paycor's board recorded its choice of sell-side adviser in a public filing, and its reasons concerned the bank's earlier work and knowledge of buyers, not a valuation. A pitch for a sale or initial public offering (IPO) mandate on a mature asset is organized around the sponsor's decisions, and each page is judged by whether it moves one.
The Sections of an Exit Pitch and the Decision Each Serves
A pitch turns the standing exit view a coverage team keeps on each mature company into a recommendation and a request to be hired. Page order varies by bank, but each block serves a decision:
| Section | Decision it serves |
|---|---|
| Asset view and equity story | What buyers will pay for |
| Valuation by route | Which route, in the fund's terms |
| Buyer universe and ranking | Whom to approach first |
| Financing evidence | What sponsor buyers can borrow |
| IPO readiness and window | Whether listing is a real option |
| Process, credentials and team | How to run the sale, and with whom |
Sponsors read in order of consequence: the route first, then buyers and process, the bank last.
The View of the Asset and Its Equity Story
The deal team measures progress against its value creation plan; a buyer pays for what it can still do. The opening pages turn a delivered plan into an equity story, usually more than one.
- Equity Story
The short argument for why a company is worth owning from here: its market position, its growth path and what the next owner or public investor can add. In an exit pitch it is written for each buyer type, because corporates, sponsors and public investors pay for different futures.
A strategic buyer pays for fit and synergies, a sponsor buyer for cash flow that carries debt and a second plan, public investors for predictable growth. One story for all three usually serves the bank's preferred route. The stronger version names the weak points diligence will find, such as aggressive add-backs, while the sponsor can still fix them.
Buyer Lists, Ranking and Financing Evidence
The buyer pages carry most of a bank's distinctive value, because they rest on relationships the sponsor cannot reproduce.
- Buyer Universe
The full set of parties that could plausibly acquire a company, usually grouped into strategic acquirers, financial sponsors and international or sovereign buyers, before any is contacted. A sell-side bank narrows it into a ranked list for the process.
Ranking is where judgment shows: by ability to pay (size, balance sheet, the leverage a sponsor can raise), by appetite (strategy, recent deals) and by the likelihood of engaging now, flagging anyone conflicted or prone to leak. Reading their later bids is a separate skill, covered in how sellers weigh sponsor bids in an auction.
For sponsor buyers the pitch adds financing evidence: the debt a buyer could raise, in turns of earnings before interest, taxes, depreciation and amortization (EBITDA). A lending bank may offer a staple available to every bidder; a boutique shows lender soundings. That number caps every sponsor bid, so a leverage view no lender would underwrite inflates the valuation pages too.
IPO Readiness and the Market Window
Where a listing is plausible, the pitch tests readiness, from audited accounts to a public-company board, against the equity capital markets (ECM) guide's checklist, and reads the market window. Only shares sold at listing become cash at once, so the IPO is shown with the sell-down that produces distributions.
Valuation Across Routes on One Basis
Routes priced side by side mislead, because they pay differently. A sale pays at one closing, an IPO in installments, a continuation vehicle (CV) only the limited partners (LPs) who sell, a dividend recap a dividend while the fund keeps the company. The common basis is the fund's own: cash realized, its timing and exposure kept, expressed as distributions to paid-in capital (DPI) and internal rate of return (IRR).
Illustratively, a fund invested $400 million for all of a company six years ago. It earns $150 million of EBITDA with $600 million of net debt, and the fund has returned $1.5 billion on $2.5 billion paid in, a DPI of 0.60x. Headlines are enterprise value (EV); IRR is measured at each route's price on everything the fund still holds, ignoring costs except recap fees:
| Route | Headline value | Cash to the fund, year one | Fund DPI after | IRR at that price | Exposure kept |
|---|---|---|---|---|---|
| Strategic sale | $2.10bn (14x) | $1,500m | 1.20x | About 24.6% | None |
| Secondary buyout | $1.95bn (13x) | $1,350m | 1.14x | About 22.5% | None |
| IPO, 25% sold | $2.25bn (15x) | $413m | 0.77x | About 26.6%, mostly paper | 75% of shares |
| CV, 70% of LPs sell | $2.03bn (13.5x) | $998m | 1.00x | About 23.6% | 30% rolled |
| Recap to 5.5x | No new price | $219m after fees | 0.69x | Not priced | All of it |
The figures are invented, but the shape is typical: the highest headline is rarely the route that puts the most cash in the fund first.
Treating the Recap and the CV Honestly
A sell-side bank is paid when a sale closes, which tempts it to treat non-sale routes as foils. An honest pitch prices a recap at the leverage lenders would really provide, using the cushion and coverage tests for a dividend recap, and a CV at a price a lead secondary investor might set, estimated by the bank's private capital advisory (PCA) team. If either wins, the pitch says so; the PCA guide's five-route comparison covers the fund-level side.
The Recommendation, the Process and the Team
The closing pages turn analysis into advice: a recommended route, a process and a team. A broad auction tests the most buyers but invites leaks; a targeted process keeps control; bilateral talks suit a buyer that refuses an auction, the balance explored in the trade-off between auctions and negotiated sales. Credentials persuade when specific:
- Comparable sales the team ran, with outcomes against first indications.
- Buyers it knows from recent advice or financing.
- The working team, named, since sponsors have seen seniors pitch and juniors execute.
The familiar failure is a headline valuation no buyer will pay: it wins the meeting and loses the client when bids land below a number the sponsor has repeated to its LPs. Mergermarket's 2023 investigation of phantom mandates reported assets being pitched at "ludicrously rich valuations" to stir interest.
Incumbent and Challenger Pitches
The bank that financed the buyout or led the IPO pitches as the incumbent: its pitch confirms work the client has seen, at the risk of complacency and conflicts if it lends to likely buyers. A challenger must change the conversation with an unnamed buyer, an unpriced route or a sharper financing view; a higher number alone reads as the failure above.
Paycor: How a Controlled Company Chose Its Sell-Side Bank
Paycor, a Cincinnati payroll software company, shows these choices from the client's side. Funds advised by Apax Partners bought a majority in November 2018 for $1.3 billion and listed it in July 2021, per Apax's sale announcement. In January 2025 Paychex agreed to pay $22.50 a share, about $4.1 billion of EV, approved by the Apax affiliate's written consent with about 53% of the votes.
The merger information statement records the choice. In 2023 the owners had worked informally with J.P. Morgan on introductions to acquirers. After Paychex approached, the board weighed Goldman Sachs and three other banks, ruled out a bake-off to limit leak risk, and chose Goldman for its IPO role, execution and experience with acquirers. J.P. Morgan advised Paychex, and JPMorgan Chase Bank committed its financing.
Goldman's targeted market check from late November 2024 drew no rival bid, while Paychex's proposal moved from a range of $17.25 to $18.92 a share in November to $22.50 in December. The bilateral buyer set the price; the check showed no one would beat it.
After the Pitch: Bake-Off, Mandate Letter and Fees
A sponsor wanting competition runs a bake-off, comparing banks' routes, prices and teams, much as issuers do in an equity bake-off for bookrunner roles. The winner signs a mandate letter, the sell-side form of the engagement letter described in buy-side advisory mandates and fees, which typically sets:
- Exclusivity and term, including any co-advisers.
- A success fee on closing, sometimes with a credited retainer.
- A tail keeping the fee owed if a contacted buyer signs soon after the mandate ends.
- Expenses and an indemnity.
Paperwork can trail the work. Paycor signed its letter on January 5, 2025, weeks into the market check and two days before the merger agreement: about $45 million, all contingent on completion, roughly 1.1% of EV. The sale completed on April 14, 2025.
Set against the sponsor's own analysis, most of any exit pitch confirms what the deal team believes. The pages that win are where the bank's numbers differ and it can show why: a buyer the sponsor had not ranked, a leverage view below the deal team's hopes, a recap returning less than assumed. An exit pitch earns its fee on the lines where it disagrees with the client and has the evidence to be right.
