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Chapter 8. Building to Flip > Exiting an Investment

Exiting an Investment

A key issue for any investor is how he or she will get his or her money out of a company if it is successful. Shares in a privately held company can be very difficult to sell, often requiring the permission of other investors—and establishing a value for the shares can be difficult. Finally, finding a buyer can be difficult, since there is not much information available to potential buyers that would connect them to potential sellers.

There are a limited number of ways by which a company can provide liquidity to its investors. It can sell its shares to the public—going public via an IPO—or it can be sold itself to another firm or to another group of investors. None of these are easy or can be done on the spur of the moment. Investors can be unable to dispose of shares in privately held companies for long periods. So investors often insist that entrepreneurs be interested and willing to provide an exit for investors in a reasonable amount of time.


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