What is a liquidity event?

A liquidity event is a significant event or transaction that allows shareholders, particularly institutional investors or founders, to convert their shares into cash or other liquid assets. These events can occur in a variety of ways, including initial public offerings (IPOs), mergers and acquisitions (M&A), and private placements.

During a liquidity event, investors can sell their shares or ownership stake in a company to other investors or to the general public. The proceeds from the sale can be used to fund other investments or to meet other financial goals.

For founders and early investors, a liquidity event can provide a significant return on investment and help them to realize the value of their shares. It can also help to attract new investors and potentially increase the overall value of the company.

Overall, a liquidity event can be a positive development for both investors and companies, as it allows for greater access to capital and the potential for growth and expansion.