Venture

Capital:
Exit
Strategies
ANNEDREI MAURIZZE BARCARSE, MBA
Why do
businesses
exit the
market?
Exit The process that allows
venture capitalists to
realize their returns is
called an “exit.”
Also called “liquidity
event”
Venture capitalists can exit
at different stages and with
different exit strategies.
IS IT TRUE?
Exit
Strategies
• IPO

• Mergers & Acquisition

• Special Purpose Acquisition Companies

& Liquidation
 When & How can you tell that a
company is ready to sell its shares?
 One of the most This exit sells
common exit ownership of the
strategies is the Initial company through
Public Offering or publicly-traded
IPO. shares.

A pre-IPO company
is considered private
However, after an
IPO, a company can
IPO
and only raises
gain access to more
capital from a limited
capital and better
number of
publicity by listing its
shareholders,
shares publicly on a
including venture
stock exchange.
capitalists.
Mergers & Acquisition
An acquisition is when one company purchases
another company, ultimately granting the acquirer a
majority stake in the business.
Acquisitions typically occur through a mutual
agreement between two firms.
However, there are circumstances where a company
will forcefully take over another by buying more
than 50% of its shares.
• Mergers involve combining two companies to form
one.
• There are two different financing methods for
mergers: purchase and consolidation.
• A purchase merger is similar to an acquisition, in that
one company purchases another outright and merges
the acquired company’s assets into its business.
• A consolidation merger occurs when firms of the
same size decide to join together as one entity through
mutual agreement.
Special Purpose Acquisition

Unlike traditional methods where

investors deploy capital in an established
business, a SPAC first raises cash through
Special-Purpose Acquisition Companies,
an IPO (which is held in a trust) and then
or SPACs, are one of the most unique
looks for a private company to merge with
strategies to take a startup public.
or acquire with that cash, thereby turning
the private company into one whose
shares are publicly traded.
Liquidation
Not all exits are positive or within the
entrepreneur’s plans. As noted in the
beginning, only a small percentage of
startups survive. The remaining ones often
liquidate (ending company operations)
due to the inability to pay obligations.
When a company liquidates, any
remaining assets are typically sold —
often at a discount — to help pay off
outstanding debts; the residual value, if
any, after all, debts are paid is typically
divided among shareholders, according to
a predetermined “waterfall,” or hierarchy
of payments
 Joshua 1:9

Thank you! "Have I not commanded you? Be strong and

courageous. Do not be afraid; do not be
discouraged, for the LORD your God will
be with you wherever you go."