Business Exit Strategies: 7 Types + How to Write (W/Example)

When you’re writing or updating a business plan, the exit strategy section can be one of the hardest parts to get right.

You may still be focused on starting the business, growing sales, or reaching profitability, so thinking about how you might eventually leave can feel strange or premature.

But you do not need to know exactly when that will happen or how ownership will change. You only need a realistic view of the most likely long-term outcome and why it makes sense for the business you are building today.

That’s what I’ll cover in this guide. I’ll walk you through the main business exit strategies, help you decide which one fits your situation, and show you how to explain it clearly in your business plan.

That does not necessarily mean the business will end when that happens. It may continue under a new owner, stay within the existing team or family, combine with another company, or, in some cases, close altogether.

For a business plan, the goal is simply to explain that you have considered a realistic long-term path based on what you know today. You are not committing to an exact buyer, sale price, or timeline.

Does every business plan require an exit strategy?

Not necessarily. It depends largely on who the plan is for.

So if you are preparing an investor-focused plan, you may need to explain your exit thinking in more detail. However, I’d say adding one well-considered paragraph may be enough for a simple lender-focused or internal plan.

Now, let’s understand the main types of exit strategies.

7 common types of business exit strategies

There is no single exit strategy that works for every business. A profitable plumbing company, a SaaS startup, and a family-owned manufacturer may all have very different ownership paths.

The main differences come down to who takes over the ownership, whether you keep any stake, and whether the business continues after you leave.

Here is a quick overview:

Let’s look at what each one actually means.

Sale to a third party

In a third-party sale, someone outside the business buys all or most of your ownership.

The buyer could be:

• Another entrepreneur/operator
• An investor or private equity firm
• A larger company in your industry

For many established small businesses, this is one of the most straightforward exit routes.

For example, the owner of a profitable HVAC company may sell the business to another operator who takes over its customers, employees, equipment, and daily operations.

For startups, the buyer may be another company that wants something strategically valuable, such as your technology, customer base, product, intellectual property, or market position. This is commonly called a strategic acquisition.

I would only treat this as a realistic strategy if the business has value that can continue after you leave. If most customers, sales, or daily decisions depend entirely on you, the business may be much harder to sell.

Partner or co-owner buyout

If the business has multiple owners, one owner may eventually buy another owner’s share.

Suppose two founders each own 50% of a company. One wants to retire while the other wants to continue running it. Instead of selling the whole business, the remaining founder could buy the departing founder’s stake.

This can be a relatively straightforward transition because the buyer already understands the company.

The main questions are usually how the ownership stake will be valued and whether the remaining owner can afford the buyout. You do not need to work out every detail in an early business plan, but the route itself should be realistic.

Management or employee buyout

Ownership can also pass to people who already work in the business.

• A management buyout happens when existing managers purchase the company.
• An employee buyout transfers ownership more broadly to employees. Some established businesses use a formal structure such as an Employee Stock Ownership Plan (ESOP).

This option is more realistic when the business already has a strong team that can operate without the current owner.

In a business exit plan, you usually do not need to explain how the future purchase will be financed or legally structured. What matters is whether there is a credible management team or employee group that could eventually take over.

Family succession

You may decide to transfer the business to a child, sibling, or another family member.

This is common when the owner wants the business to remain in the family rather than sell it to an outsider.

But a family connection alone is not enough. A realistic successor should:

• Want to take over
• Understand the business
• Have the skills to run it
• Be able to take on more responsibility over time

For example, a restaurant owner may plan to transfer the business to a daughter who already manages staff, suppliers, and daily operations.

That is much more credible than simply writing, “My children will eventually take over.”

Partial sale or recapitalization

An exit does not have to mean selling the entire company.

You can sell part of your ownership, take some money out of the business, and keep the remaining stake.

For example, you might sell 60% of the company to an investor while retaining 40%.

This may make sense if you want to:

• Reduce your financial exposure
• Bring in new capital
• Step back from daily operations
• Keep some ownership if the business grows further

You may also see this described as a partial exit or recapitalization.

The important distinction is that you are reducing your ownership, not leaving the business completely.

Go public through an IPO

An initial public offering (IPO) makes shares in the company available to public investors.

For founders and early investors, this can create a way to gradually sell some or all of their shares over time.

An IPO is different from selling the entire business to one buyer. Founders may still own shares and remain involved after the company goes public.

I would not treat an IPO as a default exit simply because you are building a startup. It is generally relevant only to companies that have reached substantial scale and can handle the financial, legal, and reporting requirements of being public.

For most small businesses and early-stage startups, another exit route will be more realistic.

Liquidation or closure

Sometimes there is no buyer or successor, or there is simply no reason to keep the business operating.

In that case, the owner may close the company and sell its remaining assets.

For example, instead of selling an auto repair shop as an operating business, the owner may close it and sell the lifts, tools, vehicles, inventory, and other equipment separately.

This is different from a normal business sale because the company does not continue under new ownership.

In short, you do not need to choose an exit simply because it sounds attractive or common for your industry. The better option is the one that is realistic for your goals and the business you are actually building.

How to choose the right exit strategy for your business?

Knowing the main exit options is one thing. Deciding which one actually fits your business is the harder part.

Here, I would recommend that you narrow it down using three practical checks:

(1) Start with the outcome you want

Do you want to walk away fully? Keep some ownership? Stay on in a smaller role? Or keep it in the family? Your answer can rule out a few options right away.

(2) Identify a realistic next owner

Think about who could actually take over. That might be a partner, family member, management team, outside buyer, or another company.

(3) Check how dependent the business is on you

If customers, key decisions, or daily work still rely mainly on you, a sale or handover gets harder. The business needs to run without you first.

Most of the time, these three checks point you in the right direction for now.

You do not need to promise you’re locked into it. Your best exit can shift as the business grows, ownership changes, or your own goals change.

Once you have a likely option in mind, the next step is writing a business exit strategy into your plan.

How to write an exit strategy in your business plan?

I’d avoid explaining every detail of how the exit might eventually happen.

A good exit strategy should briefly cover the route you are planning for, why it fits your business, and what would need to happen before that exit becomes realistic.

And yes, there is no fixed place where the exit strategy must appear. It usually comes later in the plan, often near the ownership, management, funding, or financial sections. If you are using a business plan template, following its existing structure is usually fine.

Once you know where the section will fit, build it around these four parts:

State the exit you currently expect

Start with the route that seems most realistic today. For example:

“The owner’s preferred long-term exit is to sell the business to another operator in the industry.”

Or:

“The founders currently see acquisition by a larger software company as the most likely exit.”

Keep this simple. You do not need to list every possible alternative.

Show why that exit makes sense

Give one clear reason the strategy fits the business.

If you expect an acquisition, explain what another company could find valuable, such as your technology, customer base, intellectual property, or market position.

If you expect a family succession, mention the likely successor and why they could really take over.

If you expect an outside sale, explain why the business could continue under another owner.

This is what makes the strategy feel considered rather than generic.

Explain what needs to happen before the exit is realistic

Next, identify the few things that would need to change first. Depending on the strategy, that could include:

• Reaching consistent profitability
• Building recurring revenue
• Growing the customer base
• Reducing dependence on the owner
• Developing a management team
• Preparing a successor

You do not need to include all of these. Focus only on what would support your chosen exit more realistically.

For example:

“The owner would consider a sale once the business has established consistent profitability and a management team that can handle daily operations without direct owner involvement.”

Now the reader can see not only what the exit is, but also what needs to be true before it can happen.

Add timing only when you have a reason for it

You do not need to choose an exact year just to make the section look complete.

For example, writing “We plan to sell the company in five years” does not explain why five years is the right point.

It is usually more useful to connect the exit to meaningful business milestones. Something like this:

“The founders would consider acquisition once the company has built a strong recurring customer base and can operate independently of the founding team.”

If you do have a real timeframe, such as an owner planning to retire within 7–10 years, then it makes sense to include it.

Overall, keep your exit strategy realistic. You don’t need an exact buyer, sale price, or exit date unless you have a strong reason for those details.

Here I’m adding a simple template to help you put the business plan exit strategy clearly:

You can use this as a starting point. But adapt the wording to your business.

Now, let’s look at what a finished exit strategy can actually look like in a business plan.

Exit strategy examples for a business plan

The details will look different depending on the business and the exit you are planning for. Here are three examples showing how different ownership situations can lead to different exit strategies.

Conclusion

Summing up! You do not need to know exactly how or when you will leave your business to write a useful exit strategy.

For now, choose the ownership path that makes the most sense based on what you know, and explain it clearly in your plan. If your business is still new, the strategy can stay fairly broad.

As the business grows, revisit it when something important changes, such as your goals, business ownership, who may take over, or interest from a possible buyer. This helps keep the strategy useful as the business changes.

If you are still working on your business plan, Upmetrics can help you build each section step by step and keep your exit strategy connected with the rest of your plan. From there, focus on building a business that can realistically support the exit you have in mind.

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