Deal Structures & Exits
Deal structure covers the mechanics that bankers and sponsors negotiate beyond the multiple. Valuation (12) indicates what an asset is worth; structure determines how a transaction is assembled, how it can fail to close, and the routes by which value is realized. (Book: Part III, Ch. 14–15.)
Deal structures
| Structure | What it is | When used in cyber |
|---|---|---|
| Take-private | PE acquires a public company and delists | Scaled vendors at a discount to private/strategic multiples (Thoma Bravo's signature) |
| Carve-out | Buy a division/product line from a larger owner | Big-Tech or distressed-vendor divestitures (e.g., McAfee/FireEye splits → STG) |
| Strategic acquisition | A platform buys a capability | Fills a suite gap; commands the strategic premium (Palo Alto–CyberArk) |
| Tuck-in / bolt-on | Small target integrated into a platform | The engine of buy-and-build roll-ups (services, GRC, identity) |
| Earnout | Part of price contingent on post-close performance | Bridges valuation gaps, esp. for high-growth/early targets |
| Structured / minority equity | Preferred, convertible, or minority stake | Growth capital or partial liquidity without full sale |
| Secondary buyout | Sponsor-to-sponsor sale | Mid-life liquidity when public/strategic exit isn't ideal |
| Merger of equals / roll-up combination | Combine comparable assets | Sub-scale players combining to reach platform scale |
Deal-completion risk
- Antitrust / competition review: large deals draw scrutiny (e.g., Google–Wiz attention); cyber's strategic importance heightens it.
- CFIUS / foreign-ownership review: anything touching national security or critical infrastructure can be blocked or conditioned when a foreign buyer is involved — acute in cyber and gov-adjacent assets.
- Financing conditionality: in leveraged deals, available debt (see Lenders) gates what can close and at what price.
- Diligence surprises: retention/churn, security incidents, customer concentration, or a failed key-person/founder commitment can break a deal late.
Exits: M&A and public markets
Exits are not only M&A. The route chosen reflects which market prices the asset highest (see the public/private/M&A multiple stack in 12).
| Route | Notes |
|---|---|
| Strategic sale | Most common; control + synergy premium; the platforms are the buyers (03, 08) |
| Secondary buyout | Sponsor-to-sponsor; common when public window is shut |
| Continuation vehicle (CV) | GP sells the asset into a new fund it also manages; LPs roll or cash out. Now a structural fourth route — ~16% of sponsor exit volume by 2025 — for trophy assets held past fund life (06h) |
| IPO | Episodic; needs an open window; public comps anchor pricing |
| Re-IPO | Take-private → improve → return to public markets (e.g., SailPoint) |
| Dual-track | Run an IPO and a sale simultaneously to discover which pays more |
| SPAC | Largely a post-mortem; the 2020–21 wave mostly closed |
Window timing matters: the IPO market opens and shuts; a frozen exit market (as in parts of the 2026 reset — see Bear Case) leaves sponsors holding assets past their horizon, under pressure to return capital they can't yet realize.
How a process runs
Updated 2026-08-16 18:13 UTC · © El Dorado Capital · el-doradocapital.com · Market intelligence for informational purposes only; not investment advice.