How Camwood Capital Group Is Helping Founder-Led Companies Navigate Smarter, Phased Exits

As deal flow accelerates across the lower-middle market, one trend is gaining momentum: founders aren't always ready for a clean break. Whether due to operational legacy, team continuity, or strategic vision, more sellers are seeking transitional deal structures that allow them to step back over time rather than all at once.

This has given rise to a growing preference for phased exits—succession models in which founders remain involved post-close, often as board members, minority shareholders, or strategic advisors, or a combination thereof. In contrast to abrupt transitions, phased exits allow for alignment between founder and investor priorities while preserving institutional knowledge and internal stability.

For private equity sponsors focused on value creation, the implications are clear: deal structures must evolve to support more than just liquidity—they must enable continuity.

Understanding the Phased Exit

At its core, a phased exit is a flexible, founder-aligned approach to succession planning. Rather than selling 100% of the company and walking away, the seller retains an ongoing role or equity stake, with a predefined plan to reduce involvement over time.

While the concept is not new, its strategic use has become more pronounced as generational transitions, succession gaps, and market uncertainty reshape the middle-market deal landscape.

Key drivers behind the rise of phased exits include:

• Founder Legacy: Many sellers want to ensure that their company's culture, employees, and brand identity are preserved through the transition.
• Valuation Optimization: Retained equity or performance-based earn-outs can create alignment and enhance long-term value realization for both parties.
• Management Continuity: In cases where there is no clear second-in-command, retaining the founder temporarily ensures a smoother operational handover.
• Market Positioning: For sponsors, phased exits reduce integration risk and accelerate post-close execution.

How Camwood Capital Group Structures Transitions with Founders

Camwood Capital Group, a Texas-based private investment firm, has made phased exits a core part of its collaborative investment strategy. The firm focuses on control investments in lower-middle market companies across business services, industrials, and tech-enabled verticals.

Rather than forcing binary outcomes, Camwood works with founders to tailor transition plans based on business needs and seller priorities. In many transactions, founders maintain meaningful ownership, provide strategic oversight, or lead execution during key post-close periods.

"We take pride in being a trusted partner to entrepreneurs and management teams," notes a Camwood spokesperson—a philosophy that shows up in how deals are structured. The firm's approach reflects an operational mindset: investing not only in financial assets but in the people and processes that drive long-term success.

One example is Texas Contract Manufacturing Group (TCMG), a Camwood portfolio company that brings together precision manufacturing firms serving critical industries such as aerospace, defense, and medical devices. TCMG's evolution through targeted acquisitions—like Apex Machining, Lor-Van Manufacturing, and Unitech Tool & Machine—demonstrates Camwood's ability to support operational transformation and scale across complex industrial platforms.

Camwood's investment frameworks often include:

• Equity Rollovers to preserve founder incentives and participation in future upside
• Earn-Outs tied to performance benchmarks that align strategic focus
• Defined Transition Roles with clarity on founder involvement post-close
• Supportive Operating Partnerships that provide resources without disruption

This operationally focused model makes Camwood an appealing partner for founders who are open to transitioning but not yet ready to exit completely.

Why Sponsors Are Embracing This Model

Phased exits aren't just founder-friendly—they're also strategic tools for private equity firms. With rising competition for quality assets, sponsors who offer flexible capital and customized structures are often better positioned to win deals.

From a risk management perspective, phased transitions offer several advantages:

• Knowledge Retention: Founders continue to support key decisions during the most sensitive period—immediately after closing.
• Relationship Stability: Customer, vendor, and employee confidence tends to remain higher when leadership continuity is visible.
• Alignment of Interests: Shared equity and earn-out mechanisms promote a longer-term mindset between sponsor and seller.
• Operational Flexibility: Sponsors gain time to build out new leadership infrastructure without rushing change.

For Camwood, this model also aligns with their preference for active engagement in building sustainable growth platforms. Rather than treating acquisitions as passive investments, they serve as value creation partners—working alongside management to scale.

Is the Phased Exit Always the Right Fit?

Not every transaction benefits from a phased exit. In some cases—such as corporate carve-outs, distressed assets, or founder disengagement—a clean transition may still be the better option. But for companies with strong founder identities and stable performance, a phased approach often enhances long-term outcomes.

The key is clarity. Sponsors and founders must agree on the scope, timeline, and expectations of the ongoing relationship. When well-defined, these transitions become not only practical but also transformative.

The New Standard for Middle-Market Succession?

As more founder-led companies enter the M&A pipeline, the phased exit is proving to be more than a transitional tactic—it's becoming a competitive advantage. For sponsors seeking to differentiate, and for sellers seeking both liquidity and legacy, it offers a middle path grounded in flexibility, alignment, and mutual trust.

Camwood Capital Group's continued success with this model reflects a broader shift in private equity: from transactional thinking to partnership-building.

Succession doesn't have to mean surrender. In today's middle market, it can mean evolution—executed with discipline, shared vision, and the right capital partner.