The success of an AIF is defined by its ability to execute a profitable **exit strategy**. There are two primary ways a fund manager realizes value:
- Strategic Sale (Trade Sale): Selling the portfolio company to a larger corporation (e.g., a competitor or a major industry player). This is the most common exit and often yields a high premium.
- IPO (Initial Public Offering): Listing the company on a public stock exchange. This is seen as a prestigious exit but can be subject to volatile public market conditions.
The manager’s skill in timing the exit is crucial for maximizing investor returns.
