What constitutes a 'liquidity event' in private equity?

A 'liquidity event' in private equity refers to a situation where investors are given the opportunity to convert their investments into cash or cash equivalents. This typically means that there is a realization of gains where the investors can access the capital they have been invested in.

The essence of a liquidity event is the ability for investors to exit their investments permanently, which is achieved through several means, including selling their stakes in the company or through other forms of disbursements from the company.

In the context of private equity, common liquidity events include public offerings, sales of the company to another entity, or major recapitalizations. All these scenarios enable investors to cash out their investments, which is crucial for realizing the value of their investment in a tangible form.

While other options may be related to financing or corporate strategy, they do not directly provide the opportunity for investors to access liquidity from their investments, making the focus on cashing out the most relevant aspect of defining a liquidity event.