CFA Practice Question

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CFA Practice Question

A common exit strategy of private equity firms is to sell the company to another private equity firm. This is referred to as:

A. trade sale.
B. recapitalization.
C. secondary sales.
Correct Answer: C

The exit stage is the realization of all hard work. A is the sale of a company to a competitor, and C is to add leverage to the company and to pay itself a dividend accordingly.

User Contributed Comments 1

User Comment
Murtadha A trade sale is the sale of a company to a strategic buyer, usually a competitor while a secondary sale is a sale to another private equity firm or group of investors. The key term that differentiates between the two definitions is 'competitor'.
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