A Look at the Exit Environment –

Q&A with Lincolnshire Management Inc.

Buyouts: Very generally, are there opportunities for buyout firms to exit their portfolio companies in the current market?

T.J. Maloney, president of Lincolnshire: The environment for buyout exits is more difficult now than in recent memory. Companies that can perform in low growth to recessionary economies are more en vogue, whereas technology and telecommunication deals are very difficult to exit at this time. Nevertheless, billions of private equity dollars have been raised in the past few years and the managers of those dollars are still looking for investment opportunities.

Buyouts: Do you think GPs feel a little bit of pressure to sell companies in their portfolio right now in order to make some money, reassure their LPs, get something done?

Jeff Muti of Lincolnshire: General partners that are out fund raising or anticipate fund raising in the next 12 months are particularly under pressure to sell portfolio companies and generate realizations for their limited partners. Selling right now is more difficult, as buyers are more skeptical due to general economic conditions, and financing for deals is tougher given the more selective attitude of lenders.

Buyouts: What is the most likely way to exit a good company right now?

Claire Quaderer of Lincolnshire: The best way to exit a company right now is to rely on the advice of trusted investment banking firms and to be realistic, as a seller, about price.

Buyouts: When do you see the opportunity for exits improving?

Maloney: The opportunity for exits should improve as the stock markets demonstrate sustained stability and growth. As pressure builds on lenders to generate profits, they will come into the market more aggressively and provide greater opportunity for financing purchases and, thus, facilitate exits.