A startup exit turns illiquid private shares into cash or tradable stock, through an initial public offering or an acquisition. Klarna's 2025 New York listing offered 34,311,274 shares at an expected $35 to $37 (announced); IBM's completed HashiCorp buyout was struck at $35 per share in cash (announced). Same destination — owner liquidity — almost entirely different machinery.
What does an exit actually do?
Before an exit, a private company's shares are worth what the last funding round says on paper, and selling them is constrained, slow and discounted. An exit converts that paper into something tradeable. An IPO lists new and existing shares on a public exchange, where prices are set daily by trading; an acquisition transfers ownership to a strategic or financial buyer at a negotiated price. Founders, employees with vested options, and investors all use exits to realize returns they have often waited a decade to touch.
The two paths are not equally available. Initial public offerings require scale, audited financials, predictable revenue and a receptive market window — which is why they number in the dozens per year in the United States even in good markets, while acquisitions number in the thousands. Every startup that exits does so through the door that is open.
How does an IPO actually unfold?
Klarna's 2025 offering is a clean public walkthrough of the sequence, documented in CNBC's launch coverage:
- Registration. The company files a prospectus — an F-1 for foreign issuers, an S-1 for domestic ones — disclosing financials, risks, ownership and share structure.
- Launch and range. Klarna announced plans to offer 34,311,274 ordinary shares priced between $35 and $37 each, expected to raise up to $1.27 billion on the NYSE under ticker KLAR, at an implied valuation of up to $14 billion (announced).
- Roadshow and pricing. Management pitches institutions; the final price is set based on demand, above or below the filed range.
- Listing and first trade. Shares begin trading; the opening print often moves sharply from the IPO price as public demand finds its level.
- Lockup. Insiders typically cannot sell for roughly 180 days after listing, staggering the supply of shares.
What does an acquisition look like in practice?
IBM's purchase of HashiCorp shows the acquisition path at the same scale. IBM announced completion on February 27, 2025, disclosing that the closing included all of the issued and outstanding common shares of HashiCorp for $35 per share in cash (announced). The deal had been signed the previous spring and spent months in regulatory review before closing — a reminder that large acquisitions are marathon processes, not signing ceremonies.
The mechanics favor certainty. Every share gets the same cash price, negotiated between boards and approved by shareholders; there is no first-day pop or flop, no trading float, and no lockup because there is nothing left to trade. HashiCorp's products — Terraform for infrastructure provisioning, Vault for secrets — simply folded into IBM's automation software portfolio, available from IBM's catalog the day the deal closed, per the company's announcement.
How do the economics compare?
The trade-offs compress into a handful of dimensions:
| Dimension | IPO (Klarna example) | Acquisition (HashiCorp example) |
|---|---|---|
| Proceeds | Up to $1.27B raised; valuation up to $14B at launch (announced) | 100% of equity bought at $35/share cash (announced) |
| Who sells | Company offered ~5.56M shares; existing shareholders ~28.8M of the 34.3M total | All issued and outstanding shares acquired by the buyer |
| Price discovery | Ongoing, set by public trading after listing | Fixed at close, negotiated months earlier |
| Timeline risk | Market window; pricing can slip below range | Regulatory review can extend closing by a year |
| Afterward | Public reporting, quarterly scrutiny, lockup expiry | Integration into the buyer; brand may survive or not |
One number in Klarna's structure deserves emphasis: of the roughly 34.3 million shares on offer, only about 5.6 million were sold by the company itself — the large majority came from existing shareholders cashing out. IPOs are exit events for insiders first and fundraising events second, a fact glossed over in most coverage.
When does each path actually make sense?
The choice is rarely free. Initial public offerings reward companies with a public-market story — growth, durable margins, governance a fund manager can underwrite — and punish those without one, which is why boards treat a cold IPO window the way farmers treat a drought. Acquisitions suit companies whose technology is worth more inside a larger platform than standing alone: HashiCorp's Terraform made IBM's hybrid-cloud portfolio more complete, a logic that supports a cash premium no public market would necessarily pay on day one.
Market timing dominates both. Ritter's long-run dataset exists precisely because IPO volume swings wildly with market conditions — hot years with hundreds of listings alternate with near-empty ones — while acquisition activity is steadier but gated by antitrust review for large deals. Founders do not choose in the abstract; they choose among the offers and windows actually in front of them, often in the same quarter.
Who receives money, and when?
Priority runs through the capital stack. Investors with liquidation preferences receive their contracted multiples before common shareholders see anything; option-holding employees convert only if the per-share price clears their strike price, after taxes. In an all-cash acquisition the timing is mechanical — proceeds arrive at close. In an IPO, insiders wait out the lockup, and the paper value of vested shares moves with the market: Klarna's own debut demonstrated the volatility, with the share price moving sharply from its $35–$37 launch range in the first sessions of trading (documented in launch coverage).
The dilution ledger also differs before any exit. Companies that raise heavily to reach IPO scale — and Klarna, founded in 2005, raised across two decades to get there — spread equity across many rounds, so each founder and employee percentage is the residue of every prior negotiation. Acquisitions can arrive earlier in that sequence, freezing the ledger at a stage where early holders still own more. Neither path changes the arithmetic; both cash it out.
Taxes finish the picture and vary by jurisdiction, instrument and holding period — the one area where general explanations genuinely cannot substitute for individual advice, and where the specifics of options versus restricted stock, and cash versus shares as consideration, dominate what a seller actually keeps.
Where can you check the record yourself?
The public paper trail is unusually good. Registration statements and amendments sit on the SEC's EDGAR database; acquisition terms appear in press releases and merger proxies. For the market-level view, University of Florida economist Jay Ritter maintains the standard academic dataset — IPO statistics covering monthly counts and average first-day returns from 1980 through 2025 — the same series researchers use to study underpricing and hot-and-cold cycles. Any founder weighing the two doors should read one prospectus and one merger agreement end to end; the terms live in the documents, not the headlines.
