Anonymous ID: 380fae Nov. 2, 2018, 8:13 a.m. No.3699385   🗄️.is đź”—kun

>>3699327

He's right you know. Liquidity 'event' a looming

 

https://www.divestopedia.com/definition/880/liquidity-event

 

Definition - What does Liquidity Event mean?

 

A liquidity event refers to the process by which an investor monetizes its investment in a private company. Liquidity events are most often triggered by financial buyers such as private equity firms in order to exit their investments. There are various ways to undertake a liquidity event including the sale to or merger with another company, or taking the public company through an initial public offering (IPO).

 

 

While a sale is considered to be the main way to provide liquidity for investors, some liquidity can also be achieved by having the company pay out some or all of its cash flow in dividends. Financial buyers measure the internal rate of return (IRR) in their investment by not only estimating the net cash realized when the liquidity event is triggered, but also via dividends throughout the life of the investment.

Divestopedia explains Liquidity Event

 

Investments in private companies are said to be "illiquid" because the stock isn't traded in a public stock exchange which allows for the stock to be sold. Therefore, in order to turn this stock into cash, a liquidity event needs to be triggered. For private company owners, a liquidity event results from the sale of their business, as it is the moment when the value created and retained in the business is monetized. This is usually when other owners in the business, such as employees who have bought in, finally receive cash from their investment. If the company reinvests its free cash flow rather than pays out dividends, it is very difficult for employees owners to see any real cash return from their investment until a liquidity event happens.

 

In other words…everyone tries to claim the same set of assets at the same time.

Hypothecation.

 

https://www.divestopedia.com/definition/5974/hypothecation

 

Hypothecation is the process by which a borrower pledges an asset as a collateral in order to obtain a loan, without forgoing the ownership rights to that asset. As a result, the borrower gets to enjoy the benefits or income that is generated by that asset. However, the lender has the right to seize the asset if the borrower cannot repay the loan according to the stipulated terms and conditions entered into by both the parties at the time of signing the loan agreement. For the purpose of hypothecation, assets can also includes the securities of a company. These securities can be used as a collateral to borrow funds for the acquisition.