AJF Growth Consultants

TL;DR: Value Creation Is Engineered, Not Discovered

Service business exits don't succeed by chance—they succeed by early design. Many platforms stumble because risks (over-concentration, inefficiency, founder reliance) aren't addressed until it's too late.

Private equity's value creation playbook starts Day One: growth levers, operational discipline, and margin expansion.

The three multipliers investors pay for: recurring revenue, CX + retention, scalable operations.

Exit readiness is not an event—it's a system operators and investors build together from the start.

Frequently Asked Questions

Why do many service businesses struggle to exit cleanly?

Over-concentration in one channel, product line, or geography increases fragility. Buyers discount these because they expect to professionalize during their hold. If a seller fixes these early, there's less to discount, and PE can focus on scaling. EY Exit Readiness Study reports 93% of PE firms see valuation improvement from early readiness.

What makes an exit-ready services platform?

Discipline across growth, operations, and CX. Operators must prove recurring revenue, margin resilience, and customer retention.

When should exit planning start?

Day One. PwC: Value Creation — From Strategy to Execution notes that value creation planning should run from diligence to exit.

How can CX affect exit multiples?

Retention, referrals, and reviews signal durable value. Alvarez & Marsal shows readiness alignment matters, but in services, CX loyalty can weigh as heavily as EBITDA.

How do PE sponsors mitigate discounting risk?

By running a tight process with a top IB and completing a Quality of Earnings (QofE) review up front. At Pelican Water, this preparation created a bidding frenzy: 100+ bidders, 11 finalists, and no discounting. Sponsor discipline plus operator readiness unlocked value. See the full Pelican Water Case Study for additional details.

Why Many Platforms Struggle to Exit Cleanly

Over-Concentration Risks

Platforms dependent on one market or customer base invite discounts. Fix fragility early to earn stronger multiples.

Margin Drag & Inefficiencies

Cost creep in installs, supply chain, or G&A compresses EBITDA. Topline growth isn't rewarded without discipline.

Founder Dependency

Without playbooks and leadership layers, buyers see risk.

At Pelican Water, a top IB, a completed QofE with EY, and a sponsor-led value creation playbook eliminated discount factors. The outcome: 100+ bidders, 11 finalists, and operational discipline that held up under diligence.

The Private Equity Value Creation Playbook

Growth Levers

Revenue must be engineered across channels. Diversified GTM engines (digital, in-home, wholesale, for example) signal resilience.

Operational Tightening

Standardized installs, efficient supply chains, and disciplined scheduling create dependable EBITDA.

Margin Expansion

Investors reward platforms that squeeze waste while preserving growth.

Sponsor + Operator Alignment

A sponsor's value creation playbook plus operator execution of the Five Pillars framework (customer acquisition, sales execution, operational excellence, tech enablement, white-glove CX) creates a dual track for scale.

For a deeper dive into this framework, see Scaling a Services Platform: Five Pillars to $100M.

Avoiding the "Growth at All Costs" Trap

Chasing topline growth without discipline destroys value. Revenue without margins or retention is fragile. Operational discipline separates premium exits from average ones:

Invest only when CAC vs. LTV is positive

Train sales and service teams with documented playbooks

Track churn relentlessly—retention signals durability

The 3 Exit Multipliers That Matter

Recurring Revenue

Predictable service plans and repeat business show durability.

CX + Retention

Loyal customers who return, refer, and review create compounding value. Our White Glove CX Position Paper details how CX builds the moat.

Scalable Ops

Systems that replicate across branches reduce dependency risk.

"When we prepared Pelican Water for exit, the multiple wasn't won on growth alone. Investors valued our digital engine, scalable GTM platforms, and efficient supply chain—but equally important was how we treated our customers." —Anthony Friesl

Exit Strategy Checklist for Operators and Investors

Revenue Resilience

Do we have recurring streams beyond one-time installs?

Operational Discipline

Are installs, service, and supply chain standardized?

Leadership Depth

Can the business thrive without the founder?

CX Loyalty

Do retention, referrals, and reviews signal durability?

Market Position

Do GTM engines and brand authority signal defensibility?

Process Readiness

Have we mitigated discount factors through a QofE and top advisor or IB?

If you can answer "yes" across these, exit readiness isn't a scramble—it's already built in.

Exit Strategy Day One: How PE Creates Value