Answer: trade sale.

## Explanation This question tests knowledge of private equity exit strategies. **Key Concepts:** 1. **Trade Sale**: When a private equity firm sells a portfolio company to a strategic buyer (typically another company in the same or related industry). This is often the most common exit route. 2. **Secondary Sale**: When a private equity firm sells its stake in a portfolio company to another private equity firm or financial buyer. 3. **Initial Public Offering (IPO)**: When a portfolio company's shares are offered to the public for the first time on a stock exchange. **Analysis:** - The question specifies that the buyer is "active in the same industry as the portfolio company." This indicates a strategic buyer, not a financial buyer. - A strategic buyer (trade sale) typically pays higher prices because they can achieve synergies with their existing operations. - A secondary sale would involve selling to another private equity firm or financial investor, not an industry competitor. - An IPO involves selling shares to public investors through a stock exchange. **Correct Answer:** A (trade sale) **Why not the other options:** - **B (secondary sale)**: Incorrect because secondary sales involve financial buyers (other private equity firms), not strategic industry buyers. - **C (initial public offering)**: Incorrect because an IPO involves selling to public market investors, not to a specific industry buyer. **Additional Context:** Trade sales are often preferred by private equity firms when they can find strategic buyers willing to pay premium prices due to potential synergies, market consolidation benefits, or strategic fit with the buyer's existing business.

Author: LeetQuiz .