Liquidity Event
Definition
An event that creates the opportunity for shareholders to realise the value of their equity in cash or liquid securities. Liquidity events include acquisition by a third party, an initial public offering, a secondary share sale, and certain structured buyback transactions. Not all share transfers constitute a liquidity event for all shareholders; the specific mechanics of each event determine which shareholders receive liquidity and on what terms.
Common Misapplication
The most common misapplication is treating any acquisition as a full liquidity event for all shareholders without modeling the proceeds available after satisfying the liquidation preference stack. Where the acquisition price does not exceed the total preference stack, common shareholders receive nothing from the liquidity event.
FFI Standard Reference
This term is defined and applied in Book 3, Section 3.5: The Liquidation and Exit Mechanics Standard.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Liquidity Event. https://ffistandard.org/glossary/liquidity-event/. 2026.