An exit occurs when a private company is either acquired or goes public. Types of exit strategies include IPOs, SPAC deals, direct listings, buyouts, mergers or acquisitions.
In the event of a startup’s exit, the amount invested in the company by angel investors, venture capital investors and private equity firms becomes liquid. If successful, those investors recoup not only their initial investment, but also a significant return, which depends on the stage in which they invested and the amount of equity they owned.