A planned approach to liquidating one’s position in an asset, investment, or venture in hopes of minimizing loss or maximizing gain. Exit strategies may be executed when an investment has stopped being profitable, or has met its objective. Other factors that may contribute to an exit include a change in market conditions or legal reasons.
Executing an exit strategy goes beyond removing yourself from an investment that has turned unprofitable or has met its goal. In real estate, for example, your exit strategy may consider the tax consequences that will result from the sale of a property. Executing a 1031 exchange, 721 UPREIT Exchange, or paying taxes may all be considered part of an exit strategy.