Almost every valuation model in private markets ends the same way: a terminal value, derived from an exit multiple, in a year chosen because it fits a fund’s life. That single assumption usually drives more of the answer than everything above it.
Boxwood has no fund life. We are not obliged to sell anything by a particular date. It is worth being precise about what that changes, because the answer is less romantic and more interesting than “we can be patient.”
What gets easier
Three things, immediately.
The multiple-arbitrage question disappears. We do not need to believe that someone will pay more per unit of earnings in year six than we are paying today. That belief is doing enormous work in most private equity models, and it is a belief about a future market rather than about a business.
Capital allocation inside the company gets simpler. If the plan is to sell in year four, spending in year three that pays off in year six is difficult to justify — a network build, a platform migration, a market entry that takes eighteen months to produce revenue. Without an exit date, that argument does not arise. We evaluate the investment on its return, not on whether it will be visible in a sale process.
And the leverage question changes shape. Debt structured to be refinanced at exit needs an exit. Debt sized to be serviced from operating cash flow does not. The second is a more conservative structure and it is the one that suits long-term ownership.
What gets harder
Now the uncomfortable part.
If there is no exit, the return has to come from somewhere else, and there are only two places: cash the business distributes, and value it compounds by reinvesting. Both are slower and both are far less forgiving of a mediocre business. An exit can rescue a mediocre asset if the market is generous at the right moment. Ownership cannot. Over fifteen years, you get the business’s actual economics and nothing else.
That imposes a discipline that I think is underrated. When you cannot sell your way out of a mistake, you become considerably more careful about the quality of what you buy — the durability of the revenue, the honesty of the margin, the capital intensity of the growth. In my experience that filter removes more candidates than any valuation screen.
The second difficulty is governance. A fund’s exit is also its natural moment of accountability: the return is realised, the decision is judged. Without it, there is a real risk of holding something for a decade simply because nobody forced the question. The remedy, as I see it, is to re-underwrite every position as if we were buying it that day at its current carrying value. If we would not buy it, we should not be holding it. That is a harder test than it sounds, and it should be.
What this means for a founder
The practical difference is not that we are nicer. It is that our incentives are aligned with a longer version of your plan than most buyers can accept.
If you need a shareholder who will support a build that pays back in year six, that is a conversation we can have. If your existing shareholders need liquidity by a fixed date, we are the wrong buyer — and I would rather say that on the first call than in week ten of diligence.
Arthur Akopyan is an Investor at Boxwood Group and a Partner at UFG Private Equity. He has completed several dozen transactions in the TMT sector.