The exit matrix: a position, not a bet

Most deals are underwritten on a single exit — usually a sale at the finished value — and that exit is the one most likely to be unavailable exactly when it is needed. A market that softens, a lender that tightens, a buyer who pulls out: each one closes the planned door, and a deal with no second door becomes a forced sale. The exit matrix exists so that the second door is costed before it is needed, not improvised after.

What are the four exits?

Each route is run through the same engine, so the figure for a sale and the figure for a refinance are comparable rather than computed two different ways. And each is computed after tax, because a sale, a refinance and a hold are taxed differently, and comparing them before tax can put them in the wrong order — the exit that looks best gross is routinely not the one that leaves the most in hand.

Why does the number of exits feed the score?

Exit optionality is a component of the Deal Score, and it is there for a simple reason: a deal with three working exits is worth more than an identical deal with one, even when the central-case profit is the same. The second and third exits are what turn a loss into a delay when the first one closes. Capital recycling interacts with this directly — a refinance exit that returns most of the deployed cash lets the same money do the next deal, where a rent-only hold leaves it trapped.

The refinance window makes the point concrete. A short-term facility has to be refinanced or repaid on a date, and a deal with no refinance exit arranged is relying entirely on a sale completing before the term ends. The exit matrix shows whether that reliance is a choice or a corner.

Does more exits always mean a better deal?

No — it means a more robust one. A deal with a single exit and an enormous margin can still be the right deal, if the margin is large enough to absorb the risk of that one door closing. What the matrix does is make the trade explicit rather than invisible: it shows you that you are making a concentrated bet, and what the fallback would cost if you had to take it. A bet made knowingly is a strategy; a bet made because nobody costed the alternative is an accident.

What it changes about how a deal is run

• The walk-away price is set with the exits in view, so a deal is not priced for a sale that may not happen.
• A deal that only works on one exit is flagged as such, not quietly scored as though it had three.
• Refinance and hold is costed at the improved value, after the works, which is the only version of that exit that is real.
• Assignment is only offered where the contract and the law actually permit it, never as a default escape.

The whole argument for the matrix is that exits fail without notice and in the order you least expect. Costing all four before committing is the difference between a position you can hold and a bet you have to hope wins.