EXIT STRATEGIES FOR PRIVATE EQUITY PORTFOLIO COMPANIES IN THE MARKETS OF CENTRAL AND EASTERN EUROPE. THE CASE OF POLAND

The purpose of this paper is to focus on the investigation of private equity exit strategies in the markets of Central and Eastern Europe (CEE), between the years 2008 and 2012. Exits are central to the venture capital (VC) and private equity (PE) process because financial returns are primarily derived from capital gains upon sale, and not dividends on equity. Even though exit strategies are placed as the last part of the PE process, they are so crucial that they are already planned prior to the initial investment. This article reviews the pre-existing literature and examines the potential factors that might affect PE exit outcomes in terms of initial public offerings (IPOs), trade sales, secondary sales, buybacks and write-offs. Findings indicate that Poland is similar to the other CEE countries with respect to exit route strategies for private equity managers. Divestments have been performed mainly through trade sales of companies to strategic investors and not through IPOs despite the fact that Poland hosts one of the most active European stock exchanges. In the years 2008 through 2012, exit activity was concentrated in a few countries, with the Czech Republic, Hungary and Poland accounting for 81% of the total exit value at investment cost in the CEE region.