> When you have outside investors, you have an obligation to give them an opportunity to cash out.
A moral obligation perhaps, but no legal obligation. As long as you control the board, nothing prevents you from taking investors money and essentially pocketing it as long as you can find enough suckers. In fact, one could view the public market as the suckers of last resort, particularly for companies that don't pay dividends and have two-tiered stock structures (e.g. Google and Facebook).
In a world where you could get a VC to sign any deal, sure, but realistically any VC investing on a large enough scale will require provisions for a trigger they can pull to get their money back out if their investment survives long enough without liquidity. I'm sure someone can provide more detail but if I recall correctly they tend to be about 10 years out and require that the companies go public or allow the VCs to sell there shares (possibly back to the company) at some certain value.
Profitable company's can just get a loan to buy those shares based on a reasonable valuation of the companies value. IPO's are only nessisarily if you need to rase money or are overvalued. Bonds, private equity, institional investors, and plenty of other options exist when you don't need a greater fool.
Debt for equity swaps are only of use up to a point. The issue is the ration of one to the other. Which will be proportionate to cash flow and not to paid-in capital (or a multiple therof).
It's fairly common to have a number of provisions in a financing round that make the obligation legal and not moral. Also, it's not uncommon for things like "Drag Along" rights to push a company into a sale.
A moral obligation perhaps, but no legal obligation. As long as you control the board, nothing prevents you from taking investors money and essentially pocketing it as long as you can find enough suckers. In fact, one could view the public market as the suckers of last resort, particularly for companies that don't pay dividends and have two-tiered stock structures (e.g. Google and Facebook).