What is a common consequence of a liquidity event?

The common consequence of a liquidity event is that investors receive cash from their investments. A liquidity event typically refers to situations such as the sale of a company, initial public offering (IPO), or any transaction that allows investors to convert their equity stakes into cash. This results in a distribution of cash to the investors based on their ownership percentages, thereby rewarding them for their investment.

In this context, liquidity events are often significant milestones for both the company and its investors, as they realize the financial benefits of their investment and can move on to new opportunities. This is a primary purpose of such events — to provide a return to investors and allow them to allocate their capital elsewhere.

Other options mention aspects like operational costs or workforce engagement, which are not direct or typical consequences of a liquidity event. They may result from various strategic changes post-liquidation but are not the primary outcome of such events. Enhanced product development opportunities, while beneficial, is not a direct consequence of a liquidity event either, as that would depend on how the company or investors chooses to reinvest any newfound cash.