A liquidity event refers to a situation in which a company provides a cash payout to its shareholders, typically through an initial public offering (IPO), merger or acquisition (M&A), or secondary sale of shares. This event allows investors, particularly venture capitalists and private equity firms, to realize gains on their investments and convert their equity into cash. Understanding liquidity events is essential for planning exit strategies and timing, as they significantly impact the financial outcomes for investors and the future of the company.
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