According to the Boston Consulting Group’s Deals to Dollars: Navigating Successful Private Equity Exits in Africa Report 2025 (BCG Report), 71% of LPs regard a weak exit climate and unpredictable exit windows as the biggest challenges to investing in Africa. Delayed exits are therefore a sign of heightened market volatility owing to factors such as recession or political instability, high interest rates, the diminished performance of certain African stock exchanges, and a broader global deceleration in capital deployment. These challenges make it increasingly difficult for investors to secure predictable exit timelines, which in turn affects overall confidence in the African markets. Given these dynamics, it is essential to examine exit options and key considerations in navigating successful PE exits in the African market.

Why exits matter

Exits are the ultimate test of a PE firm’s ability to create and realise a substantial capital gain upon exit of the investment. An exit strategy denotes a predetermined plan to sell an investment at a certain time in order to maximise a return. Investors usually aim to sell at a higher value than the original investment. Successful exits not only generate returns for investors but also validate the underlying investment thesis.

Exit strategies in Africa

Some of the exit strategies we have encountered are outlined below.

Trade sales

This entails the sale and purchase of shares of the selling portfolio company to strategic buyers. According to the BCG Report, trade sales account for 40–60% of exits, in line with global trends, remaining the preferred and most successful exit strategy, as they often provide immediate liquidity and can command premium valuations from strategic buyers. For instance, in March 2024, Universal Music Group (UMG) acquired a majority stake in Mavin Group, a leading Nigerian music label. TPG, a private equity investor, fully exited its investment, while Kupanda Capital retained a partial interest. This was achieved through a trade sale to a strategic buyer (UMG). The deal provided liquidity to TPG and aligned with UMG’s strategic expansion in Africa. Despite broader market challenges, trade sales remain the cornerstone of PE exit strategies in Africa.

Secondary sales/buyouts

Secondary sales have become a significant and growing exit strategy for private equity firms in Africa, with AVCA reporting that they made up 30% of exits in the last decade, reflecting a steady increase in this exit route. This type of exit involves the sale of a portfolio company between PE firms. Secondary sales are preferred as they offer speed, liquidity for early investors, higher valuations, and flexible deal structures. Such is the case with British International Investment, which sold its 10.1% stake in I&M Bank, a leading East African banking group, to AfricInvest, a leading Pan-African Asset Management platform, in June 2024.

Initial public offerings

An investor may choose to dispose off their equity stake through an initial public offering (IPO). This involves offering shares of a private company to the public, necessitating compliance with the relevant capital markets listing requirements. The Africa Private Equity News reports that IPOs, on average, account for 10% of total reported PE exits but have declined in recent years due to concerns over low liquidity and complex listing processed on East African stock exchanges. Case in point, after a five-year period with no new equity listings, the Nairobi Securities Exchange in Kenya came alive in July 2025, with the listing of Shri Krishana Overseas Limited, a family-owned packaging company, to raise capital for expansion of its operations. Meanwhile, in January 2025, Ethiopia marked a significant milestone with the launch of the Ethiopian Security Exchange for trading. These developments signal a renewed dynamism in East Africa’s capital markets and may encourage private equity funds to view IPOs as a more practical and attractive exit route.

Navigating successful PE exits in Africa

Outlining the exit strategy at the very onset

PE firms should integrate exit planning into their investment process from day one. Early exit planning requires evaluation and appreciation of all alternative exit strategies to adopt the most preferred option: identifying potential buyers, clearly setting out the exit timeframe (usually between five to seven years), and building businesses with clear value propositions. Drawing from our experience, deals with a clear exit plan and identify potential buyers from the start are more likely to achieve timely and profitable exits.

Effective due diligence

Due diligence on the target company exposes any potential issues and the risk exposure or liability to the investor during the pre-transaction stages. The findings are then negotiated as conditions precedent, conditions subsequent, warranties, or indemnities in the transaction documents to mitigate the identified risks, allowing for a smooth exit by the investor in due time.

Clearly setting out the exit strategy

We advise clients in the drafting and negotiating of shareholders agreement to ensure that terms such as the exit strategy and associated rights, drag along, tag along, prohibition on sale of shares by management without the PE firm’s consent, and pre-emptive rights do not unduly restrict an investor’s exit.

Understanding the target company’s local laws

Adherence with the jurisdiction of the target company’s relevant local laws on exit strategies is crucial in crafting a robust exit strategy. For instance, where sector-specific approvals are required during the transaction – such as in banking, telecommunications, and insurance – we recommend sourcing competent local counsel to advise on the transaction.

Tax considerations

To facilitate a swift exit and with the assistance of a tax practitioner, funders must take cognisance of any tax obligations such as capital gains tax, withholding tax, and any available exemptions or incentives accruing from the transaction.

Environmental, Social and Governance (ESG) considerations

ESG considerations are increasingly important and attractive to investors. Firms that embed sustainability into their value creation strategies are better positioned for successful exits. Investors are not looking to only generate financial returns but also embrace investments with a social or environmental impact.

Conclusion

The true measure of a PE deal’s success is not the acquisition, but the successful exit that validates the investment. Whether through trade sales, secondary sales, or IPOs, each exit strategy offers unique opportunities and challenges. The key to unlocking value lies in meticulous preparation: integrating exit planning from the start, conducting rigorous due diligence, crafting flexible shareholder agreements, ensuring compliance with local laws, optimising tax structures, and embracing ESG principles at the heart of value creation. The most successful investors are those who approach exits not as an afterthought, but as a strategic imperative; navigating complexity with discipline, foresight, and local expertise.