Exit Strategy

Disinvesting and liquidating an equity position is the last phase in the process of investing in a company by a venture capitalist. In fact, typically venture capitalists make temporary investments that are linked to the performance of the companies in which they invest.

The study of the exit phase is important because it represents the critical transition that enables the venture capitalist to realize a profit, or give monetary value to the commitment and activity undertaken to the benefit of the counterparty.

Beyond the principles that regulate the divestment process, or relational problems that one may encounter in defining the objectives of each party who participates in the transaction in various ways, in practical terms the main exit strategies available to a private equity player are the following:
  • To sell shares on a regulated market, either in the context of a placement through an initial public offering (IPO) or a placement after the listing (Post-IPO Sale)
  • To sell shares to a partner in the industry (trade sale)
  • To sell shares to another private equity player (replacement and secondary buy out)
  • To repurchase shares, which can be done by the company and/or group of majority or minority shareholders (buy back)
  • To reduce, totally or partially, the value of the shares without selling to third parties (write-off)
Exit Strategy
Exit Strategy