High-profile liquidity events in private markets: key lessons

Liquidity events can hold great significance in the private markets. They come in various forms: when shareholders turn their equity into cash, when a company goes public, or when one firm acquires another, for example. Liquidity events can even be part of a startup’s compensation strategy. 

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Several recent high-profile liquidity events showcase how cash infusions can impact investors in the private markets. Here are a few lessons to take from them.

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What exactly is a liquidity event?

A liquidity event is a milestone that allows shareholders in a private company—like founders, employees, or early investors—to convert their equity into cash. In other words, it’s when previously illiquid shares become tradable or realize their value through a transaction. These events often mark a turning point in a company’s lifecycle and can take many forms, from public listings to private buyouts.

For investors, liquidity events represent an opportunity to exit a position and potentially realize a return. For employees and founders, they can serve as long-awaited financial outcomes tied to years of equity compensation.

Common types of liquidity events

While every company’s path to liquidity is different, here are some of the most common ways liquidity events take place:

• Initial Public Offering (IPO):
  The company lists on a public exchange, allowing insiders and early investors to sell their shares over time.
  
  
• Acquisition or M&A:
  The company is purchased by another firm, and shareholders receive cash, stock, or a mix of both.
  
  
• Secondary Sale (Tender Offer):
  Existing shareholders—often employees or early investors—sell shares directly to new investors, typically in a private secondary market.
  
  
• SPAC Merger:
  A private company goes public by merging with a special purpose acquisition company (SPAC), enabling liquidity without a traditional IPO.
  
  
• Buyback or Internal Sale:
  The company itself repurchases shares from employees or founders, usually as part of a structured liquidity program.

Each of these has different timing, tax, and strategic implications for stakeholders—so understanding the type of event is key when planning around it. Now let’s take a look at how these liquidity events have recently played out in the private markets—and what investors can learn from them.

Several recent high-profile liquidity events showcase how cash infusions can impact investors in the private markets. Here are a few lessons to take from them.

Innovative technology 

Innovative technology is starting to integrate with everyday life, spurring investment from the private sector. Sequoia Capital, for instance, recently led a funding round that infused law enforcement startup Peregrine Technologies with $190 million. The additional funds brought the firm’s valuation to $2.5 billion. 

The adjacent aerospace and defense industry seems set to flourish in 2025 too. Recent fundraising efforts by defense technology startup Epirus demonstrate an appetite for investment in privately held companies with emerging technologies, high security, and national defense implications. The company, which specializes in anti-drone systems, just finished raising $250 million, bringing its total raised to $550 million. 

These liquidity infusions showcase the potential for profitable exits from innovative companies in similar sectors, even amid broader market turbulence.

Why more companies are staying private—and what it means for you

Initial public offerings (IPOs) help shareholders access cash in the public market. Both lucrative and unsuccessful company offerings can send ripple effects throughout the market. 

BlackRock recently acquired Preqin — an independent provider of private market data — underscoring the increasingly important role private markets play in financing global growth. 

In addition, the private market has become a source of rejuvenation for struggling public companies. Consider Walgreens Boots Alliance, which private equity firm Sycamore Partners plans to purchase. The proposed $10 billion deal would take the struggling pharmacy chain out of the public eye, potentially enabling more radical — and profit-saving — restructuring efforts. 

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For similar reasons, companies are increasingly choosing to stay private longer. New deal structures enable them to reward their employees and early investors without the scrutiny of going public. Stripe is one example. The fintech firm announced a deal in February enabling former and current employees to cash out on their holdings and sell to investors via private secondary marketplaces like Augment*.

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Stripe and Elon Musk’s SpaceX have become repeat users of these structures, which allow companies to stall if market conditions aren’t friendly toward public offerings. Those two firms are among the record number of privately held companies with market capitalizations of $1 billion or more that will need additional financing in the years to come. 

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With these so-called “unicorns” increasingly incentivized to allow their shareholders access to the secondary markets, accredited investors now have unprecedented access to potential high-growth opportunities via Augment’s marketplace. 

What to know about taxes and liquidity timing

Liquidity events often come with financial consequences—especially when it comes to taxation. For example, the sale of shares typically triggers capital gains tax, and the timing of the transaction can impact whether gains are considered short-term or long-term. In some cases, an event may also reset 409A valuations, affecting the strike price of future equity grants for employees.

For founders and early employees, it’s important to plan ahead—understanding the potential tax bill, any lock-up periods, and the financial planning considerations that come with sudden liquidity.

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*Securities transactions are executed on Augment Capital, LLC's ATS and offered through Augment Capital, LLC (member FINRA/SIPC). 

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Important Disclosures: Investing in private securities involves substantial risk, including the potential loss of principal. Private securities are typically illiquid, have limited pricing transparency, and often require longer holding periods. These investments are available exclusively to qualified accredited investors and offer no guarantee of returns. Additionally, past performance of private securities does not indicate or predict future results.

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