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How do private equity firms exit investments?

Curious about private equity

How do private equity firms exit investments?

Private equity firms exit investments by selling their stake in the company to another investor or by taking the company public through an initial public offering (IPO). Some common exit strategies used by private equity firms include:

1. Trade sale: This involves selling the company to another business or private equity firm in the same industry.

2. IPO: The private equity firm takes the company public through an initial public offering. This allows the firm to sell its shares in the company on a public exchange.

3. Recapitalization: The private equity firm sells a portion of its stake in the company to another investor while retaining the remaining stake.

4. Management buyout: The private equity firm sells the company to the existing management team.

5. Liquidation: This involves selling off the company's assets and distributing the proceeds to investors.

The choice of exit strategy depends on a number of factors, including the current market conditions, the performance of the company, and the goals of the private equity firm and its investors. It's worth noting that the success of a private equity investment is typically measured by the rate of return achieved when the investment is exited.

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