Exit routes/ strategies in Private Equity

In any investment, the investor should have an easy exit option. Incase of investment in listed companies, the investor can easily exit, irrespective of whether the investment made a profit or loss. However, since private equity is usually in unlisted companies, there are no easy exit avenues.

The generally available exit options are:

o Exit by sale of shares at the time of initial public offering (IPO);

o Sale of the PE Fund’s stake to another, strategic investor;

o Sale of the entire company to an interested party;

o Buy back by the promoter.

Funds have a limited timeframes of say five to seven years. So careful consideration should be given at the time of accepting the investment, that a clear, realistic and viable exit strategy is in place, in order to avoid unwarranted litigation.

We have covered the key concepts and considerations raising private equity investment in our main private equity pages.

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