Exit Strategy

Dictionary Says

Definition of 'Exit Strategy'

1. The method by which a venture capitalist or business owner intends to get out of an investment that he or she has made in the past. In other words, the exit strategy is a way of "cashing out" an investment. Examples include an initial public offering (IPO) or being bought out by a larger player in the industry. Also referred to as a "harvest strategy" or "liquidity event".

2. In the context of an active trader, a plan as to when a trade will be closed out.
Investopedia Says

Investopedia explains 'Exit Strategy'

1. It's more difficult for a VC or entrepreneur to get money out of an investment because they are generally dealing with private companies. When a firm is private, the shares cannot be sold nearly as easily as when the firm is publicly traded on a stock exchange. So, even though a private startup firm could be worth millions of dollars, the VC/entrepreneur has little access to this wealth. You can think of the exit strategy as the first opportunity to trade an illiquid asset (shares in a private firm) for a very liquid asset (cash).

2. For example, a trader might set a stop-loss order to exit a trade if a stock drops a certain percentage.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Drive-By Deal

    Slang referring ...
  2. Initial Public Offering - IPO

    The first sale ...
  3. Venture Capital

    Money provided ...
  4. Liquidity

    1. The degree to ...
  5. Acquisition

    A corporate ...
  6. Support (Support Level)

    The price level ...
  7. Venture-Capital-Backed IPO

    The selling to ...
  8. Investment Thesis

    The beliefs that ...
  9. Liquidator

    In the most ...
  10. Risk Capital

    Investment funds ...

Articles Of Interest

  1. A Look At Exit Strategies

    Setting appropriate exit points should help you avoid taking premature profits or running losses.
  2. Patience Is A Trader's Virtue

    Waiting may be the biggest key to reeling in that trophy investment.
  3. Prepare To Sell Your Business

    Follow these tips to ensure you get the most out of your hard work.
  4. Trade On Support For The Best Exit Strategy

    Find your sound exit strategy based on support and resistance levels, while understanding the psychology behind them.
  5. IPO Basics Tutorial

    What's an IPO, and how did everybody get so rich off them during the dotcom boom? We give you the scoop.
  6. In Small Business, Success Is Spelled With 5 "C"s

    Incorporating these steps will help your business thrive in a competitive market.
  7. Famous Advice From Successful Entrepreneurs

    These famous quotes from some of the most successful entrepreneurs of all time can be used as inspiration for your entrepreneurial dreams.
  8. Are You An Entrepreneur?

    Many people want to start a business, but not everyone has what it takes to succeed.
  9. The Basics Of Financing A Business

    From debt financing to equity financing, there are numerous ways to fund a business startup. But which is the best?
  10. Grow Your Business With Business Incubators

    This article looks at business incubators and what they can do for you.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center