private-equity-exit

Vocabulary Word

Definition

A 'private equity exit' is when a private equity firm ends its investment in a portfolio company. This is done to realize the profit from their investment, similar to how an artist might sell a painting after many years to reap the benefits of its increased value.

Examples in Different Contexts

In financial planning, a 'private equity exit' refers to the strategy by which a private equity firm sells its stake in a company, realizing a return on investment. A financial planner might detail, 'The exit strategies can include a trade sale, IPO, or secondary buyout, each with different implications for returns and timing.'

Practice Scenarios

Marketing

Scenario:

The marketing agency has tripled its profits under our hand. Let's explore exit channels that could guarantee a favorable return.

Response:

Sounds like a sensible move. A strategic private equity exit will allow us to reinvest in other rising marketing startups.

Accounting

Scenario:

Given recent developments, we need to discuss the exit strategy for our ownership in this accounting software firm. It’s good timing considering the boom in the fintech sector.

Response:

Agreed. With the fintech industry thriving, it is an apt moment for a private equity exit.