Definition Exit Strategy. Description.
A Exit Strategy is a strategic withdrawal of a corporation
out of a typically declining or not very profitable market, brand, product,
product line, or entire company.
Also it can be used to describe the method by which
Venture Capitalists or
a business owner intends to get out of a business / investment that he or
she has created / made in the past. For example via an
Initial Public Offering
or selling their businesses to individuals or other companies.
Exit Barriers
All the factors that make it difficult for a company to end loss-making business activities. Exit barriers may include the following:
- Social factors: required procedures regarding layoffs and the resistance of employees who are in danger of losing their jobs present very important exit barriers.
- Strongly specialized assets: the liquidation value of a strongly specialized machine is often significantly lover than the utility value.
- Connection of a product to one or more other products: for example through the collective use of means of production (a building or a machine).
- Emotional factors: such as attachment to a certain product by the owner or management.
- Government support: support for companies in trouble may present an exit barrier.
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Compare with:
Harvest Strategy |
Disaggregation |
Turnaround Management
| Spin-Off |
Divestiture |
Abandonment Value |
Liquidation Value |
Start-up Company |
Outsourcing |
Restructuring |
Downsizing |
Leveraged Buy-Out |
Management Buy-Out
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