The investor’s field guide · E
Exit
A transaction or process through which an owner realises or ends some or all of their investment.
Explained by the editorial team
An exit is a way of realising or ending ownership. It may involve a trade sale, a sale to another investor, a management buyout or, less commonly for a small company, a public listing. A winding-up can also end an investment with little or no recovery.
Why it matters
Private shares do not usually have an active public market. An investor may need to wait a long time for a permitted buyer or a wider company transaction. A projected exit date in a presentation is an assumption, not a contractual promise.
What to examine
Consider transfer restrictions, shareholder approval rights, debt and the order in which proceeds are distributed. A headline company sale price is not the same as the amount available to each shareholder. Costs, tax and liquidation preferences can affect the result. Build the investment case around uncertainty about timing and proceeds rather than assuming a convenient resale will fund future commitments.
General information, not investment, legal or tax advice. Examples are illustrative. Read the disclaimer.