There are three main ways PE firms “exit” their investment, which means to turn it into cash to generate a return for themselves and their investors 💸

1️⃣ Sell the company to another PE firm.

The idea here is that another PE firm might see untapped potential in the company and turn it into their own investment 🔄

However, this is often seen as inefficient and sub-optimal because it’s hard for PE firms to agree on a price 💰

After all, the buyer wants to “buy low”, and the seller wants to “sell high”.

2️⃣ Sell the company to a larger company.

Often, this is the preferred option because of its simplicity and potentially higher return.

Large companies typically have strategic motives when they make acquisitions, for example if the company they buy helps them expand their market, or product offering 🎯

This can lead them to pay more than PE buyers, whose motives are purely financial, rather than strategic 🤝

3️⃣ Initial Public Offering (IPO). Taking the company public allows the PE firm to sell their stake in the company to public investors 🚀

Oftentimes, this occurs when the company is too big to be acquired by another company or PE firm 💪

If a PE firm takes a company public, then you’d be able to invest in it on Bloom!