Why PE-Backed CEOs Should Revisit the Exit Plan After Year Five

In a recent LinkedIn post, Greg Head discusses why chief executives at private equity-backed companies should ask their sponsors about the exit case once a hold extends beyond five years. This article reports on Head’s post and examines the questions he raises; it is journalistic coverage, not an article written by Head.

“If you’re a PE-backed CEO past year five, don’t wait for the board to define your exit case.”

Head argues that a delayed exit can bring a leadership transition into consideration, with new equity serving as a possible tool. He points to the president, finance leader and other executives who understand the business as people who may receive renewed equity before any change is announced. In his view, that preparation may indicate that the sponsor is testing whether the company can continue operating if the chief executive changes.

Ask the sponsor to explain the current exit case

According to Head, executives in this position may discuss the company’s prospects privately or with a prospective sponsor instead of raising the issue with the current investor. He recommends taking the question directly to the board: What is the exit case now, and what does the board need from the existing team to reach it?

“Ask what the exit case is now and what the board needs from this team to get there.”

Head’s argument centers on timing and agency. Raising the subject before the board does, he says, allows the CEO to shape how the discussion begins. Waiting for directors to introduce it means entering a conversation whose framing has already been set.

Founders face a changed equity timeline

Head says the issue can be more acute for founders who sold their businesses but stayed on. Their rolled equity may have been valued around an expected three-to-five-year hold. If the company reaches year seven without an exit, he argues, the original assumptions deserve another look.

“Year seven is a different deal.”

His post closes with a direct recommendation to founders: ask the sponsor to discuss the new arrangement. The point is not that every extended hold signals an imminent leadership change or a specific outcome; rather, Head urges executives to seek clarity about the sponsor’s expectations and how their equity fits the current timeline.

A conversation about expectations

Head frames the board discussion as a way for CEOs and founder-operators to understand what the sponsor is evaluating and what the team must deliver. His advice is to bring the question forward, while the leadership team can still help define the terms of the conversation.