Ryan Ollerenshaw
Founding Partner, Alder Search
This is one of the most important conversations a sponsor needs to have with their portfolio CEO — and one of the most frequently avoided.
The CEO who has led a business brilliantly through a five-year hold isn't automatically the best person to lead the exit process. The skills are different. The pressures are different. And the cost of getting this wrong shows up directly in exit valuation.
Exit readiness, from a leadership perspective, is about having a management team that can perform in the specific, intense context of a sale process: compressed timelines, multiple audiences, intense scrutiny, and the need to present the business's story with precision and confidence under real pressure.
That's not the same as running the business day-to-day. A CEO who is genuinely excellent at operational execution may be far less comfortable in the management presentations that are central to a competitive sale process. A CFO who has built a strong finance function may struggle to translate that into the financial narrative that buyers and their advisors need to see.
The most effective sponsors I work with start thinking about exit readiness 18 to 24 months before the anticipated exit date. That window gives them time to assess the current team against the demands of the process, address any gaps through development or targeted hiring, and make sure the management team is as well-prepared for the exit as the business itself.
In some cases — more common than sponsors acknowledge publicly — this means bringing in a CEO or CFO specifically for the exit phase. Someone with a track record of leading sale processes who can complement the operational strengths of the existing team. When executed well, it can have a material impact on exit valuation.
The conversation about exit readiness isn't easy. Nobody wants to tell a CEO who has worked incredibly hard for five years that they might not be the best person to lead the next chapter. But the sponsors who have that conversation early — with honesty and respect — consistently achieve better outcomes than those who avoid it until the process is already in motion.
Have the conversation early. Before it becomes urgent.
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