How investors and founders realize returns — IPOs, M&A, secondaries, and distribution waterfalls.
40 terms
The residual value of a startup's assets if the business were shut down, including IP, customer lists, equipment, and remaining cash.
The additional amount paid in an acqui-hire beyond the company's asset value, reflecting the cost of recruiting the team through traditional channels.
An acquisition made primarily to hire the target company's team rather than to acquire its product or technology.
A transaction in which one company purchases another, either for its technology, team, customers, revenue, or strategic position — the most common exit path for venture-backed startups.
A minimum damage amount that must be exceeded before indemnification claims can be made against sellers in an M&A transaction.
A large, privately negotiated sale of shares, typically executed off the public exchange to minimize market impact.
The separation of a business unit or product line from a larger company to operate as an independent entity, often backed by VC or PE investment.
A price range that limits the upside and downside of a transaction, commonly used in M&A deals involving stock consideration.
SEC correspondence identifying issues in a company's regulatory filing that must be addressed before approval.
A path to going public in which a company lists existing shares directly on a stock exchange without issuing new shares or using investment bank underwriters — no IPO lockup, no underwriting fee.
A transaction where company shares are sold directly between parties rather than through a company-sponsored event.
A post-acquisition payment structure where the seller receives additional consideration if the acquired company hits agreed performance milestones after closing.
A contingent payment in an acquisition where the seller receives additional compensation if the acquired company meets specified performance targets after closing.
A specific performance target that must be achieved post-acquisition for sellers to receive additional contingent consideration.
The planned path for investors and founders to realize returns on their investment — typically through IPO, acquisition, or secondary sale.
An acquirer — typically private equity — focused purely on investment returns rather than operational or strategic synergies with the acquired company.
Cash received by founders through selling a portion of their shares before an exit.
A secondary transaction initiated and structured by the GP rather than an LP, typically involving a continuation vehicle or tender offer for existing fund positions.
The duration after an exit event during which a portion of proceeds is withheld from distribution, typically for indemnification or working capital adjustments.
An acquisition attempt made directly to shareholders or through a proxy fight, bypassing the target company's board of directors.
Initial Public Offering — the process by which a private company sells shares to the public on a stock exchange for the first time, enabling liquidity for founders, employees, and investors.
Periods when public market conditions are favorable for technology IPOs — characterized by investor appetite, high valuations, and strong aftermarket performance.
An acquisition financed primarily with debt, where the target company's assets and cash flows secure the borrowed funds.
Any transaction that allows shareholders — founders, employees, and investors — to convert equity in a private company into cash.
Mergers and Acquisitions — the consolidation of companies through purchase, merger, or other corporate transactions. A primary exit path for VC-backed companies.
An IPO where late-stage investors have contractual protections guaranteeing minimum returns, shifting downside risk to earlier investors and founders.
A private company going public by merging with an existing public shell company, bypassing the traditional IPO process.
The registration statement a company files with the SEC to go public, containing comprehensive financial and business disclosures.
Special Purpose Acquisition Company — a shell company that raises public market capital via IPO with the sole purpose of merging with a private company to take it public.
The sale of existing shares in a private company by current shareholders (founders, employees, early investors) to new investors, without the company raising new capital.
A company that acquires another business for strategic value like technology, talent, or market access rather than purely financial returns.
An acquisition by a company seeking operational synergy, market access, technology, or talent — as opposed to a financial buyer seeking pure investment returns.
The additional price a strategic acquirer pays above financial value, reflecting synergies, competitive defense, or strategic benefits unique to that buyer.
The additional worth a company has to a specific acquirer beyond its standalone financial value.
A secondary transaction where a GP sells a portfolio of multiple fund assets together as a package to a secondary buyer, rather than selling individual company positions.
An exit transaction that includes complex terms beyond a simple cash purchase, such as earnouts, escrows, or contingent payments.
A structured offer to purchase shares from existing shareholders at a specified price, used in private companies to provide liquidity to employees and early investors.
The initial creation and distribution of a cryptocurrency token to the public, analogous to an IPO in traditional markets, often triggering investor token vesting schedules.
A liquidity event generating significant financial gains for founders and investors.
A post-closing mechanism in M&A that adjusts the purchase price based on the difference between estimated and actual working capital at closing.