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An exit strategy is a means of leaving one's current situation, either after a predetermined objective has been achieved, justifying premises or decision markers for any given operational planning changed substantially, or as a strategy to mitigate inminent or possible failure. An organisation or individual without an exit strategy may be in a quagmire. At worst, an exit strategy will save face; at best, an exit strategy will deliver an objective worth more than the cost of continuing the execution of a previous plan considered "deemed to fail" by weight of the present situation.
The term was used technically in internal Pentagon critiques of the Vietnam War (cf. President Richard Nixon's promise of Peace With Honor), but remained obscure to the general public until the Battle of Mogadishu, Somalia when the U.S. military involvement in that U.N. peacekeeping operation cost the lives of U.S. troops without a clear objective. Republican critics of President Bill Clinton derided him for having no exit strategy, although he had inherited an active military operation from his predecessor, President George H. W. Bush. The criticism was revived later against the U.S. involvement in the Yugoslav wars, including peacekeeping operations in Bosnia and Kosovo and the Kosovo war against Serbia.
The term has been adopted by critics of U.S. involvement in Afghanistan and especially Iraq. President George W. Bush was said to have no exit strategy to remove troops from Iraq, and critics worried about the number of Coalition soldiers and Iraqi civilians who would suffer injury or death as a result. President Barack Obama also has not publicly announced an exit strategy for the troops in Afghanistan.
In public policy
An exit strategy may operate as a means of implementing the termination of a policy or to demonstrate that termination is feasible, for example from joining the Euro.
In entrepreneurship and strategic management an exit strategy or exit plan is a way to transition the ownership of a company to another company (e.g. through a merger or acquisition) or to investors (e.g. through an Initial public offering). Other types of exit strategy include management buyouts or employee buyouts (common in the manufacturing industry). Moreover, winding up a company or bankruptcy is also a type of exit strategy. Bringing on board strategic or financial partners may also be considered a form of exit, albeit partial exit, as it may help ensure succession and survival of the business.
Exit strategies are also used to ensure businesses are prepared for the termination of significant contracts or other business relationships. "There are many reasons why contracts come to an end, including non-performance by one or both parties, a significant change in the requirements of either party, or that the contract has run its course. In almost all cases, having a well-developed exit strategy is critical. The strategy is usually developed as the means by which to withdraw from a working relationship with a supplier. It can incorporate the process of returning assets, transferring back key employees and the conditions under which a relationship can terminate, for example, the failure to meet service level agreements, changes in circumstances, and ethical breaches".
Transition companies are professional mergers and acquisitions companies that assist business owners with their exit strategy. Services offered are often referred to as transition management services.
- Iraq Study Group Report
- Pyrrhic victory
- No-win situation
- Total U.S. Withdrawal in the Vietnam War
- "Exit Strategy Planning: Grooming Your Business for Sale Or Succession - John Hawkey - Google Books". Google Books. Retrieved 8 September 2014.
- "How to Build a Successful Consulting Practice - Jack Phillips - Google Books". Google Books. Retrieved 8 September 2014.
- Hoover Institute, An Exit Strategy From the Euro, 9 January 2012, accessed 2 March 2016
- Nemethy, Les, Business Exit Planning: Options, Value Enhancement, and Transaction Management for Business Owners. John Wiley & Sons, 2011
- CIPS Australasia, CIPS Procurement Topics: Exit Strategies, accessed 2 March 2016
- 1993 White House press briefing - quoting Brent Scowcroft on exit strategy
- Black Walnut Group, How do I make my company more sellable? 7 exit strategy steps