What is liquidity event?

and liquidity is a term used in business financing to describe many different events. Two primary events that fall under the liquidity umbrella are the purchase of corporations and the initial public offer.

The initial public offer is the first sale of ordinary shares to public investors. Any subsequent public issue of shares is called a secondary market offering . The purpose of the initial public offer is to help increase the capital necessary to finance the corporation. It is an effective means of increasing capital, but requires compliance with strict legal regulations and compliance with a large number of reporting requirements.

In general, the event of liquidity of the departure strategy used by the starting company. This is because the event of liquidity often leads to the transformation of the ownership of their own capital, previously held by the founders of the company. Through the liquidity event, initial investors and company owners are able to change their business capitalfor cash. It may also be a means of transferring the property of the ownership of the corporation or business that could have been unfavorable.

The liquidation event is the most common in the starting company, because according to the strictest definition, the beginning company is one that requires little money to start, but is of high risk and can lead to a higher return on investment. On the other hand, a typical company has a return on investment, which is more reasonable for the initial investment and is not of such a high risk. Therefore, it is much more likely that startup owners want to get out of the company through liquidity. Similarly, the owners of the starting company can perform a liquidity event to raise the money that their business has received.

The event of liquidity is not the same as the liquidation of the company. When the company is liquidated, the company is interrupted and does not change ownership. With theLiquidity continues to do business, but under new property.