Liquidity

Cash is perfectly liquid — you can spend it instantly. Stock in a public company is close behind: you can sell it in seconds at a known price. A privately held business sits at the far other end. There's no daily market, few qualified buyers, and converting it to cash means running a months-long sale process with an uncertain outcome. For a founder, this is the core problem an exit solves. On paper you may be worth millions, but that value is trapped — you can't pay for a house, diversify your risk, or retire on equity you can't sell. A liquidity event (selling the company, bringing on a partner, or a recapitalization) is what finally converts paper value into spendable cash. The catch: because a business is illiquid, its real value is whatever a buyer will actually pay after diligence — not the number in your head. The gap between the two is where much of an owner's expected wealth quietly disappears.