Exit (harvest)
The process of realizing an investment through a sale, public offering or other liquidity route. An initial public offering (IPO) may enable a phased realization rather than an immediate cash exit for every holder.
Exit (harvest) in round numbers
Hypothetical, in US$ millions: entry enterprise value of 400 divided by annual earnings before interest, taxes, depreciation and amortization (EBITDA) of 50 is 8x. Three years later, enterprise value of 700 divided by annual EBITDA of 87.5 is also 8x. The 300 increase in enterprise value is not itself the investor’s equity return; net debt, distributions, capital flows and costs also matter.
Scroll horizontally to read all columns.
| Measure | Entry: year 0 | Exit: year 3 |
|---|---|---|
| Enterprise value, US$m | 400 | 700 |
| Annual EBITDA, US$m | 50 | 87.5 |
| EV / EBITDA | 400 ÷ 50 = 8x | 700 ÷ 87.5 = 8x |
Terms Related to Exit (harvest)
IPO · Strategic buyer · MOIC · IRR · Drag-along and tag-along · MBO / MBI · Pre-exit normalization · Buy It, Make It Better, Sell It · All of the glossary