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While an IPO may be the most visible and glamorous form of exit, it's not the most common. Most companies are sold through a merger or acquisition event before an IPO can occur. If the portfolio company is bought out or merges with another company, the VC receives stock or cash from the event.Another alternative may be the reorganization of a portfolio company's debt and equity mixture, called a recapitalization . The VC exchanges its equity for cash, the management team gains equity incentives, and the company is positioned for future growth.
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