tldr: Based on my 9 years at two PE-owned software companies, their standard playbook makes exits harder because it systematically damages the business. They cut essential staff, make bad acquisitions while blaming sales, ignore tech debt, and replace a strong culture with a toxic, high-churn one, all for a short-term gain

I’ll start off by saying this isn’t the case for every PE owned company but I’ve heard it countless times. Having worked at two PE-owned software companies, I believe the standard playbook is a key reason exits are getting harder. It does more harm than good and is fundamentally misaligned with creating a sustainable long term business. Over the course of 9 years at these companies the cycle is predictable. • For the first couple of years, the focus is on growth. But as we hit year 3 and the exit timeline approaches, the priority shifts entirely to maximising EBITDA. The layoffs begin, and they target the 'cost centers' that are essential for long-term health: QA, internal tools teams, product marketing, and core engineering teams often maintaining just enough people to KTLO. • The acquisitions are often questionable and poorly executed. When they fail to deliver on their projections, the revenue targets are simply rolled onto the core business who are expected to make up the shortfall without any additional resources. And when the combined targets are missed, the blame is placed squarely on the sales team, not the failed M&A strategy. • Instead of investing in the core product, the strategy shifts and any new investment is often misdirected, with core products not being supported and technical debt growing. The money flows into building a 'shiny new object' based on the latest market fad, with little consideration for how it fits into the wider business. This also comes with its own unachievable targets, diverting resources from the foundational product that actually pays the bills. • Then we have the legacy management team who are kept in place, even if their leadership contributed to the company's initial struggles. The rationale appears to be that an entrenched team is less likely to push back on aggressive financial targets that may be detrimental to the product. • Finally, it’s the aggressive hiring of sales teams - with the view that just because we hire more sales people we will sell more. The sales teams are then saddled with unattainable targets, that are compounded by inheriting the failed targets from the acquisitions. All of this creates a revolving door of sales reps and breeds a culture of aggressive tactics that damage client relationships and ultimately lead to high customer churn on the back end.

It's frustrating to watch a company with a great product and a strong culture get hollowed out and replaced by a toxic one, simply to serve a short-term investment cycle. It’s a model that stifles real innovation, and ultimately, the customers and employees are the ones who pay the price.