Exits & M&A

How startups end (and what determines who gets what). This cluster covers the major exit paths (IPO, acquisition, SPAC, direct listing), deal structures and terms (LOI, definitive agreement, earnout, holdback, reps and warranties), the rights that affect exit outcomes (drag-along, tag-along, ROFR, lockup), and the mechanics specific to exits (liquidation waterfall, exit multiples, QSBS). 26 entries.

Exits are the moment when years of equity decisions become real money. Founders should know this vocabulary years before they need it.

Exit paths

• Exit Strategy, the framing question.
• IPO, going public on a major exchange.
• Direct Listing, public without raising new capital.
• SPAC, Special Purpose Acquisition Company.
• Acquisition, being bought by another company.
• Acqui-hire, acquisition primarily for talent.
• Reverse Merger, public-shell merger path.

Buyer types

• Strategic vs Financial Buyer, the two acquirer archetypes.
• Private Equity Buyout, PE-led acquisitions.
• Management Buyout, MBO led by existing management.

Deal mechanics

• Letter of Intent, LOI as the framework.
• Definitive Agreement, the binding contract.
• Representations and Warranties, reps and warranties.
• Earnout, milestone-based deferred payment.
• Escrow Holdback, funds held for post-close adjustments.
• Tender Offer, offer directly to shareholders.

Rights that affect exit outcomes

• Drag-Along Rights, majority can force minority to sell.
• Tag-Along Rights, minority joins majority sale.
• Right of First Refusal, ROFR on share sales.
• Lockup Period, post-IPO trading restrictions.

Exit math

• Liquidation Waterfall, order of payout at exit.
• Exit Multiple, multiples on revenue or EBITDA.
• Enterprise Value vs Equity Value, EV vs equity math.
• Recapitalization, restructuring the cap table.

Liquidity events

• Secondary Sale, selling shares pre-exit.
• QSBS, Qualified Small Business Stock §1202 exclusion.