Exit
Private Equity glossary · Paper LBOs & Returns Math
Definition
The realization of a portfolio investment via sale, IPO, or other transaction.
Exit in plain English
An exit is the moment an investor finally SELLS what they bought and turns their investment back into cash — that's the whole point of the game. Private equity firms buy a company, spend a few years making it more valuable, then get out, usually by selling it to another company, selling it to another investment firm, or taking it public on the stock market (an IPO). Until the exit, their gains are just paper numbers; the exit is when profit becomes real. Think of flipping a house: all the renovation only pays off on the day you actually sell it.
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