Secondary Buyout

A transaction in which a company's existing management team acquires the business, often with financial backing from private equity or debt providers. MBOs are a common succession and exit route, particularly for founder-led or family-owned businesses.

An acquisition in which a significant proportion of the purchase price is funded by debt, using the target company's assets and cash flows as collateral. LBOs are a common private equity strategy for acquiring mature, cash-generative businesses.

A marketplace where existing shareholders in private companies — typically employees, early investors, or founders — can sell their ownership stakes to new buyers before an IPO or trade sale. Secondary markets for private shares have grown significantly, with platforms such as Forge Global and Nasdaq Private Market facilitating transactions that provide liquidity and price discovery for otherwise illiquid private company equity.

A transaction in which existing shareholders sell their equity to new investors rather than the company issuing new shares. Secondary sales provide liquidity to founders and early investors without diluting other shareholders or changing the company's capitalisation.

The sale of a company to a strategic buyer, typically another company in the same or adjacent industry. Trade sales are the most common exit route for venture-backed and private equity-backed businesses and often command premium valuations due to strategic synergies.

A relatively small acquisition made by a private equity portfolio company to complement and enhance its existing operations, typically adding new products, customers, geographies, or capabilities. Bolt-on acquisitions are a core component of buy-and-build strategies and are usually integrated into the platform company rather than operated independently.

The process of offering shares of a private company to the public for the first time through a stock exchange listing. An IPO is a major exit route for venture capital and private equity investors, and requires extensive preparation including financial audits, regulatory compliance, and valuation.

A specialist insurance product used in M&A transactions that covers the buyer against financial losses arising from breaches of the seller's warranties and representations in the sale and purchase agreement. W&I insurance has become standard in European PE transactions, enabling cleaner exits (as the seller's liability is capped or eliminated), facilitating auction processes, and allowing PE funds to distribute sale proceeds to LPs without retaining escrow reserves.

What is a private equity fund and how do they use valuations?

PE funds buy companies at entry multiples, operate them to improve cash flows and competitive position, then exit at higher multiples — valuations are critical for entry/exit decisions.

What is a secondary transaction in venture and who benefits?

A secondary transaction is the sale of existing shares (founder, early investor, employee) to a new investor, providing partial liquidity without a full company exit.

What is a secondary sale and how does it work?

A secondary sale is when existing shareholders (investors, founders, employees) sell their shares in a company to new investors without the company itself raising new capital.

What is a recap (recapitalisation) and why do founders propose them?

A recap allows founders and early investors to sell a portion of their shares to new investors without an exit, providing partial liquidity before the full company exits.