Recruiter's Glossary

Examples: Working Capital Target • Management Incentive Plan • Sponsor-backed

Exit Multiple

Term from Private Equity industry explained for recruiters

An Exit Multiple is a way to measure how successful a private equity investment was when selling or 'exiting' a company. Think of it like measuring your profit when selling a house - if you bought it for $100,000 and sold it for $300,000, that's a 3x multiple. In private equity, professionals use this term to show how many times they multiplied the original investment. For example, an '[[Exit Multiple]] of 3.5x' means they made three and a half times their initial investment. This is one of the most common ways to measure success in private equity deals.

Examples in Resumes

Achieved an Exit Multiple of 4.2x on healthcare company investment

Led deal team to successful Exit Multiple of 3x within 3 years

Generated top-quartile Exit Multiple performance across portfolio companies

Typical job title: "Private Equity Professionals"

Also try searching for:

Investment Professional Private Equity Associate Deal Professional Portfolio Manager Investment Principal Private Equity Vice President

Where to Find Private Equity Professionals

Professional Networks

Job Boards

Industry Resources

• Preqin
• PitchBook
• PE Hub

Example Interview Questions

Senior Level Questions

Q: How do you evaluate what's a good exit multiple for different industries?

Expected Answer: Should explain how different industries have different expectations - tech companies might achieve higher multiples (5x+) while stable industries like manufacturing might see lower multiples (2-3x). Should mention factors like market conditions, hold period, and growth potential.

Q: Describe a deal where you achieved a strong exit multiple and how you got there.

Expected Answer: Should be able to walk through a specific example, explaining initial investment thesis, value creation strategies implemented, and how they maximized the sale price to achieve the multiple.

Mid Level Questions

Q: What factors can impact an exit multiple?

Expected Answer: Should discuss market conditions, company performance, industry trends, competitive landscape, and timing of exit. Should also mention how operational improvements can enhance multiples.

Q: How do you balance focus on exit multiple versus IRR?

Expected Answer: Should explain the relationship between time and returns - a lower multiple over a shorter period might be better than a higher multiple that takes much longer to achieve.

Junior Level Questions

Q: What is an exit multiple and why is it important?

Expected Answer: Should explain that it's the return on investment measured as a multiple of the original investment, and why it's a key metric for evaluating private equity success.

Q: How do you calculate an exit multiple?

Expected Answer: Should explain that it's the total value returned to investors divided by total investment made, mentioning that it doesn't account for time value of money like IRR does.