An exit strategy is a contingency plan that is executed by an investor, venture capitalist or business owner to liquidate a position in a financial asset or dispose of tangible business assets once certain predetermined criteria for either has been met or exceeded. An exit strategy may be executed for the purpose of exiting a non-performing investment or closing a business that is not generating profits. In this case, the purpose of the exit strategy is to limit losses.
An exit strategy may also be executed when an investment or business venture has met its profit objective. Other reasons for executing an exit strategy may include a significant change in market conditions due to a catastrophic event; legal reasons, such as estate planning, liability lawsuits or a divorce; or for the simple reason that a business owner/investor is retiring and wants to cash out.
In the case of a startup business, an effective exit strategy should be planned for every positive and negative contingency regardless of the type of investment, trade or business venture that is entered into. This planning should be an integral part of a business plan to determining the risk associated with the investment, trade or business venture, the contingencies and potential scenarios for an orderly exit minimizing or even maximizing the business sellout or trade.
Assessing the current enterprise net position and planning the exit options by analyzing market and financial conditions is key to maximize the investment recovery. Our comprehensive exit strategy plans will give you the tools to accomplish your way out in a orderly fashion.