Exitplan

Exitplan is a term used in business planning to describe a formal strategy for disengaging from a venture. It encompasses the intended liquidity event or wind-down, along with the steps needed to maximize value, protect stakeholders, and ensure a smooth transition. The term is commonly used in entrepreneurship, private equity, and corporate governance contexts.

A typical exit plan outlines objectives and timeline; target valuation or liquidity; potential exit routes; leadership and governance handover; financial arrangements; and communications with investors, employees, customers, and lenders.

Common exit routes include sale to a strategic buyer, sale to a financial buyer, initial public offering, management buyout, secondary sale to another investor, or orderly dissolution. In practice, exit planning often begins well before an imminent exit and evolves with growth, financing rounds, and market conditions.

Process steps include situational assessment and goal setting; a value-creation plan to improve attractiveness; documentation of financials, contracts, IP, and organizational structure; identification and outreach to potential buyers or routes; due diligence; negotiation; and transition execution.

Stakeholders involved typically include founders, investors, employees, suppliers, customers, lenders, and regulators; communications plans and retention strategies may be part of the plan to preserve relationships and minimize disruption.

Legal and governance considerations encompass fiduciary duties, confidentiality, non-disclosure agreements, non-compete restrictions where permissible, and regulatory compliance. Risks include market volatility, valuation gaps, cultural or operational disruption, and post-exit integration challenges.

See also: succession planning, liquidity event, business valuation.