Liquidity & Exits

IPOs, acquisitions, tender offers, and other ways shares become liquid.

12 terms

Beginner

Acquisition
When another company purchases your company, providing a potential payout for shareholders.
Initial Public Offering (IPO)
When a private company first sells shares to the public on a stock exchange.
Liquidity Event
Any event that allows shareholders to convert their equity into cash (IPO, acquisition, etc.).

Intermediate

Acquihire
An acquisition primarily to hire the team, not to acquire the product or customers.
Direct Listing
Going public by listing existing shares directly on an exchange without raising new capital.
Escrow
A portion of acquisition proceeds held by a third party to cover potential post-closing claims.
Lock-Up Period
A period (usually 180 days) after an IPO during which insiders cannot sell their shares.
Merger
Two companies combining into one entity, with shareholders of both companies receiving new shares.
Secondary Sale
Selling your private company shares to another investor, providing liquidity before an exit.
Tender Offer
A company-organized opportunity for employees to sell some of their vested shares to a buyer.

Advanced

Earn-Out
Additional acquisition payments contingent on hitting post-acquisition performance targets.
SPAC (Special Purpose Acquisition Company)
A public shell company that raises money via IPO specifically to acquire a private company.

Other categories

Definitions are intended as plain-English educational summaries. Not legal, tax, or investment advice.