It represents a contingency plan that can be executed by an investor, trader, venture capitalist, or business owner to liquidate a position in a financial asset or dispose of tangible business assets once predetermined criteria for either has been met or exceeded.

An exit strategy represents a safe way out. It may be executed to exit a non-performing investment or close an unprofitable business. The goal is to limit losses or it can also be performed when a business venture has met its profit objective, and there is no need to continue it.