Business Exit Strategy

An Exit Strategy is essential for any business that is entering into any agreement that could be associated with risk. Technically, an Exit Strategy is not limited to business and the term is frequently used in regards to military engagement or even in simple plans not related to business or warfare. It means a plan to remove a person or company from a damaging situation. When a person or company executes one of these strategies, the idea is that they will get the most benefit possible from the bad situation. When a strategy to exit does not exist, the company or person could have a serious problem in removing itself from the situation. The best exit strategies allow removal from the situation in a manner that puts a positive light on the escape. Even a bad strategy will allow the person or company to remain their dignity and limit embarrassment.

When speaking of war, an Exit Strategy has a very specific meaning. It is used when a combatant wants to remove itself from the war with the minimum amount of loss of human resources and expensive equipment. The most famous use of the term in the United States came with the country’s conflict in Vietnam. However, the use of the term was only within internal circles, therefore it was not known by the average public person. Instead, the first time that the term Exit Strategy began to be used in common parlance was during the Battle of Mogadishu in Somalia. It is during this time the President Bill Clinton was claimed to be responsible for the loss of lives because there was no Exit Strategy in place for the removal of troops. The term has since been used in later conflicts, such as the wars in Bosnia and Kosovo. Most recently, the term has been applied to the wars in Iraq and Afghanistan and the best way to reduce the military presence in both of these countries.

When a strategy for exit is not being used in warfare, it is most commonly being used for speaking of business conditions. A Business Exit Strategy is part of an overall plan as part of entrepreneurship. An entrepreneur or strategic management team will need to find a way to transfer ownership of all or part of the company without losing money due to investment or starting costs. A Business Exit Strategy will include detailed steps about this process and how to do it in the most efficient manner. This is frequently done by using a sale of equity to transfer ownership of the company. In addition, there are several professionals whose sole job is to help owners and other businessmen create an effective Business Exit Strategy. Known as transition companies, they handle many acquisitions and mergers, and are experts in preparing the best strategies for minimal loss.