What is a “liquidity event”?
A liquidity event is the transaction that converts illiquid private-company equity into cash or publicly-tradable securities: the exit point at which founders, employees and investors can realise the value of their shares. Common liquidity events include acquisition (cash, stock, or hybrid), initial public offering (IPO), secondary sale, and direct listing. Without a liquidity event, equity in a private company is theoretically valuable but practically unspendable.
Types of liquidity events
- Acquisition / M&A: the company is purchased by a strategic or financial buyer. Most common exit.
- Initial Public Offering (IPO): shares are listed on a public exchange; existing investors gradually sell after lock-up.
- Direct listing: existing shares list on exchange without new capital raise.
- Secondary sale: existing shareholders sell to new investors privately; no new capital to company.
- Tender offer: the company or an investor offers to buy back shares from employees and early investors.
- SPAC merger: the company merges with a publicly-listed Special Purpose Acquisition Company.
- Recapitalisation: existing shareholders cash out via leveraged restructuring.
Liquidity event timing
- Median venture-backed exit: 7-10 years from founding to exit in healthy markets; longer in down cycles.
- Lock-up periods: post-IPO lock-ups typically 90-180 days; secondary lock-ups vary.
- VC fund timing pressure: 10-year fund life creates exit pressure as the fund matures.
Founder considerations
- Tax planning: QSBS (in U.S.), capital gains treatment, jurisdiction-specific exit taxes.
- Earnouts and lock-ups: headline price may be misleading if significant portion is tied to post-close performance.
- Stock vs. cash: stock from acquirer carries continuing risk; cash is final.
- Estate and family planning: liquidity events are the right time to revisit personal financial planning.
Liquidity events in Turkish startups
For Turkish startups, most liquidity events are foreign strategic acquisitions (Trendyol:Alibaba, Peak Games:Zynga) or public-company mergers; startup IPOs on the Turkish BIST are relatively rare. The SPK and KAP public offering process is complex; most Türkiye-based startups plan an exit on foreign exchanges through a Cyprus/Delaware HoldCo structure. From a tax perspective, exit proceeds can be optimized for the founder depending on the design of the Cyprus/Delaware structure.
Do: plan for liquidity events from the first cap-table decision: every term you accept compounds into your exit math.
Don’t: treat liquidity events as one-time wins: most founders go through multiple cycles and the rules learned in the first apply for life.