Exit Strategy

An exit strategy is a planned approach for an investor, business owner, or entrepreneur to sell or reduce their stake in a business, investment, or venture. Exit strategies are used to maximize returns, minimize losses, or free up resources for other opportunities. Common exit strategies include selling the business, going public through an IPO, merging with another company, or liquidating assets. For investors, particularly in venture capital and private equity, an exit strategy outlines how they will realize profits from their investments, often after a predetermined period. Having a well-defined exit strategy helps manage risk and align expectations with business goals.

Example

A venture capitalist might have an exit strategy to sell their stake in a startup through an acquisition after a few years of growth.