The EIS exit point
When do investors make a potential return?
The Exit – Point 8
Any gains in EIS-qualifying shares are only “attributed gains” until the investor can exit. As there is no secondary market in unquoted shares, an exit is most likely to come in one of three ways:
1) Initial public offering:
The company lists on an exchange and shares can then be sold on the open market.
2) A trade sale or management buyout:
A majority of shareholders agree to sell their shares to another company or possibly the incumbent management team.
3) Voluntary liquidation by shareholders:
The company is wound up, and the assets are sold, with the proceeds distributed to shareholders. This doesn’t necessarily mean the company has failed. Depending on the remaining assets of the company, the distributions to the shareholders may be worth more than the initial price they paid for the shares.
Your chosen fund manager will be able to indicate the target exit strategy for each company you invest in through the scheme at the outset of your investment. The luxury of investing through a leading fund manager means that they will:
- Actively manage companies to the point of an exit, including taking a board position.
- They have a great wealth of knowledge and experience, which allows them to identify companies with excellent growth potential at the outset and advise them on decisions leading to the point of exit.
- Regularly communicate progress so investors can follow the company’s journey and understand exit timescales.
The complete cycle of EIS investment and repeat is explained in the graphic below, for any questions on this, our expert Regional Directors are on hand to support you every step of the way:
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