Exit Strategy Law and Legal Definition

An exit strategy is a means of escaping one's current situation, usually an unfavorable situation. In the context of businesses, it refers to the way one transitions the ownership of a company for a maximum value. Entrepreneurs and investors plan exit strategies for getting back the capital they have invested in a company along with an acceptable return on that investment. The most common exit strategy is the sale of equity to someone else through a trade sale. Another exit strategy is merging the ownership of a company into another company in the same or complimentary business. A less appealing, but sometimes necessary, exit strategy is to shut down a business, or a portion of a business.