What is an exit strategy?
An exit strategy is how a founder plans to sell their shares in a company in order to monetize their position. The most pleasant cause for executing an exit strategy is when the company has grown big enough to be profitable, and the founders want to enjoy the profits of their hard work or put the money to use elsewhere. It can also happen, however, that the company is struggling, and the founders want to cut their losses and get out of the whole thing with as little loss as they can. Different exit strategies can be:
- Merging – Combining two businesses into one
- Acquisition – Another company buys the company
- Selling – An individual buys the company
- IPO – The company goes public by releasing stocks