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    Liquidity Event

    Any transaction that converts illiquid private-company equity into cash or freely tradable securities — typically IPO, M&A, or secondary tender.

    Reviewed by Christian Espinosa, Founder, Blue Goat CyberLast reviewed May 9, 2026

    Definition

    A liquidity event is any transaction that converts illiquid private-company equity into cash or freely tradable public securities. The three primary forms in MedTech are: an IPO, an acquisition (M&A), or a secondary tender offer in which existing investors (or specialized secondary funds) buy shares from earlier holders. The term often appears in vesting acceleration provisions, board approval covenants, and 409A valuation refresh triggers.

    What this means in practice

    MedTech median time to liquidity is significantly longer than software (commonly 8-12 years from founding) due to clinical-trial and regulatory timelines. Secondary transactions have become more common as a partial-liquidity option for long-tenured founders and employees.
    Common pitfalls
    • •Assuming a secondary tender qualifies as the 'liquidity event' under double-trigger acceleration clauses — usually it does not.

    Primary references

    3 sources
    Link health: 3 verified· last checked 2026-05-09
    NVCA·1IRS·1SVB·1
    1. 1
      NVCA Model Legal Documents
      Verified
      NVCAnvca.org
    2. 2
      IRS — Topic 427 Stock Options
      Verified
      IRSirs.gov
    3. 3
      Silicon Valley Bank - Healthcare Reports
      Verified
      SVBsvb.com

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