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Liquidity Transaction

A liquidity transaction is a transaction sponsored by a privately-held company in which employees or other stockholders of the company have an opportunity to sell their shares of company stock (including shares issuable upon exercise of options). Sometimes the transaction is structured as a buyback of shares by the company, funded either with balance sheet cash or cash provided from a recent equity financing. Alternatively, the transaction may be structured as a direct purchase of shares by one or more third parties, either paired with a primary equity financing of the company or as a standalone transaction.