Browse Definitions :
Definition

liquidity event

Contributor(s): Ivy Wigmore

A liquidity event is a corporate activity in which illiquid assets such as shares are made liquid and distributed to business owners and investors.

The liquid assets of a business include not only cash on hand but also any assets that can readily be converted to cash, such as accounts receivable amounts. Liquidity events are considered exit strategies in which owners and investors terminate some endeavor to cash in shares and other illiquid investments. Common examples of liquidity events include IPOs (initial public offerings) and acquisition of a business by another corporation or a private equity firm.

There is always risk involved with holding illiquid equity in a company. Venture capital (VC) firms and other investors often establish timelines for achieving liquidity, which is typically their end goal for funding a startup. Funds invested in such speculative ventures are sometimes referred to as risk capital.

Liquidity event is not synonymous with liquidation, which is the discontinuation of business for a company and involves redistribution of corporate assets.

This was last updated in April 2016

Continue Reading About liquidity event

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.

-ADS BY GOOGLE

File Extensions and File Formats

SearchCompliance

  • risk management

    Risk management is the process of identifying, assessing and controlling threats to an organization's capital and earnings.

  • compliance as a service (CaaS)

    Compliance as a Service (CaaS) is a cloud service service level agreement (SLA) that specified how a managed service provider (...

  • data protection impact assessment (DPIA)

    A data protection impact assessment (DPIA) is a process designed to help organizations determine how data processing systems, ...

SearchSecurity

  • Web application firewall (WAF)

    A web application firewall (WAF) is a firewall that monitors, filters and blocks data packets as they travel to and from a ...

  • spyware

    Spyware is a type of malicious software -- or malware -- that is installed on a computing device without the end user's knowledge.

  • application whitelisting

    Application whitelisting is the practice of specifying an index of approved software applications or executable files that are ...

SearchHealthIT

SearchDisasterRecovery

  • business continuity plan (BCP)

    A business continuity plan (BCP) is a document that consists of the critical information an organization needs to continue ...

  • disaster recovery team

    A disaster recovery team is a group of individuals focused on planning, implementing, maintaining, auditing and testing an ...

  • cloud insurance

    Cloud insurance is any type of financial or data protection obtained by a cloud service provider. 

SearchStorage

  • DRAM (dynamic random access memory)

    Dynamic random access memory (DRAM) is a type of semiconductor memory that is typically used for the data or program code needed ...

  • RAID 10 (RAID 1+0)

    RAID 10, also known as RAID 1+0, is a RAID configuration that combines disk mirroring and disk striping to protect data.

  • PCIe SSD (PCIe solid-state drive)

    A PCIe SSD (PCIe solid-state drive) is a high-speed expansion card that attaches a computer to its peripherals.

Close