Fund Structure
What is Exit?
An exit is the event at which a private fund sells its stake in a portfolio company and realizes cash returns — through an IPO, strategic acquisition, secondary sale, or management buyout.
Exits are how GPs convert unrealized portfolio value into cash distributions to LPs. Common exit routes include: initial public offerings (IPOs), where the company lists on a stock exchange; strategic sales to a corporation; secondary buyouts (selling to another PE fund); and management buyouts (selling back to management).
The timing and pricing of exits are the most consequential decisions a GP makes — they determine realized DPI and IRR. Forced exits near fund-term deadlines can depress returns.
Also known as: realization, liquidity event
Related Terms