12 Exit Strategy Examples

✨ Top-12 Exit Strategy Examples
🔚 Exit Strategy: Definitions
📜 How to Prepare a Business Exit Strategy?
🎇 Exceptional Exit Strategy Examples

An exit strategy is an essential piece of preparation a business must consider in case things go south. On this page, we explain what it is in further detail. You will also find some useful exit strategy examples that will help you in your studies.

✨ Top-12 Exit Strategy Examples

🔚 Exit Strategy: Definitions

An exit strategy is a plan for getting out of a situation once a specific goal has been reached or to lessen the impact of failure. It is essential to have an exit strategy in mind because an organization or a person can be trapped without an escape plan.

It is when a trader, investor, business owner, or venture capitalist plan to liquidate their position in one or more financial assets or to sell tangible company assets.

What Is Exit Strategy in Business?

An entrepreneur’s strategic plan to transfer control of a business to investors or another firm is known as an exit strategy. A business owner can reduce his ownership in a company with the help of an exit plan and make a sizeable profit if the company is still profitable.

An exit strategy, also known as an exit plan, allows you to reduce losses if the business fails. An investor may also utilize an exit strategy to prepare for a cash-out of an investment.

When Is the Right Time to Begin Thinking about an Exit Strategy?

Ideally, it would help if you start planning seriously five years before the exit or before you enter the field. You must pre-plan your exit strategy to successfully execute your decision about exiting from your business.

📜 How to Prepare a Business Exit Strategy?

The following are some options for preparing a business exit strategy:

Use the Fundamentals
You can continually analyze if a trade still complies with your goals and risk tolerance by tracking and evaluating an investment. For instance, if you purchased stocks due to a price decrease that you believed was attractive, you may constantly reevaluate them using new financial information, trade news, price multiples, and other factors.
Support and Resistance
A price where traders believe there may be buyers to stop the price from falling further is known as a support level. To prevent losses or lock in profits, traders with short-term time frames occasionally think about setting sell orders at or just below support levels to exit long positions if they believe the price will decline below the level.

A price where buyers believe there may be sellers to stop the price from rising is known as a resistance level. If short-term traders believe the price will reach a resistance level, they may place sell orders to liquidate long positions.
Target Profit/Loss Ratio
Target profit is essential because you can create profit and loss objectives from a purchase price. For instance, a rule might specify a 2:1 or 3:1 profit/loss target. You can also express your goals in percentage terms, such as 10% profit/5% loss or, if you’d prefer a tighter stop, 9% profit/3% loss.
Time the Exit Strategy
Timing specifies the maximum time frame you intend to be exposed to a specific investment. Time withdrawal strategies can be effective when the security is moving sideways for a long time, when prices are moving against you but not significantly enough to trigger a stop-loss (an order that triggers at a specific price and executes at the next open price), or when the security is rising too slowly for your tastes.

🎇 Exceptional Exit Strategy Examples

Merger and Acquisition(M&A).
Mergers and acquisitions are when a larger company acquires a small company. Usually, this process complements both companies by acquiring their complementary skills to enhance profit which helps them to capture more stock market share. This process is comparatively more efficient and quicker to grow and create new organic products.
Internal Public Offering (IPO).
Internal Public Offering was once the preferred method and the fastest path to getting rich. The IPO rate had decreased every year since the Internet bubble burst in 2000 until 2010 when it was roughly 15%. However, these days, entrepreneurs are not recommended to use this strategy.
Sell to a Friendly Individual.
Since two separate organizations are not being combined, this is not an M&A. However, it’s a terrific method to “cash out” so you can pay your investors and have some time off before getting ready to have fun. The ideal acquirer is someone who can scale the business and has more operational expertise and interest.
Make It Your Cash Cow.
If your business is in a safe, secure market with a consistent revenue stream, you should pay off any investors and hire a trustworthy manager to run it while you use the money left over to come up with your next big idea. Both the annuity and ownership belong to you. But cash cows require constant grazing to remain healthy.
Liquidation and Close.
Since two entities are not being combined into one, this is not an M&A. However, liquidation is a terrific method to “cash out” to pay your creditors and yourself. The perfect candidate is a buyer who can scale the business and has extraordinary operational expertise and interest.

We hope that this short introduction to exit strategies was useful. Below, you will find even more samples that will further educate you on this topic.