---
title: "Exit Strategy"
url: "https://mahouse.world/glossary/exit-strategy"
type: "glossary term"
topic: "Investment process"
author: "Ihor Vlasov"
reviewed: "2026-09-20"
published: "2026-08-10"
---

# Exit Strategy

An exit strategy is the plan for how a company's investors and founders will turn their shares into cash — a sale to a strategic buyer or a fund, a listing, a secondary sale of a stake, or a wind-down — and when. Every venture and private equity investment is made with an exit in view, because the fund must return money within its life; companies that plan the exit early are worth more when it comes.

**Also known as:** Exit, Exit plan, Liquidity event

## Key facts

- **Used at:** the investment case of every fund, the shareholders' agreement (drag-along, tag-along, registration rights), board strategy from Series B onward, and the founders' own planning
- **Binding:** the exit rights in the shareholders' agreement are; the strategy itself is a plan
- **Typical routes and shares:** trade sale to a strategic buyer (the most common exit for fintech companies), sale to a private equity fund (secondary buy-out), IPO or direct listing (rare, and closed for most fintechs since 2022), secondary sale of a stake (partial exit), and management buy-out
- **Typical timing:** venture investors expect an exit five to ten years after their round; a buy-out fund four to six years after its purchase; the choice narrows as the fund's life ends
- **Parties:** the founders, each class of investor (whose preferences may point to different exits), the board, advisers, and the buyers or the market

## How an exit strategy works in practice

At the Series A the lead investor's memo already says how it expects to get out: a sale to one of five named acquirers, or a listing if the company reaches €100m of revenue. The shareholders' agreement carries the machinery — a drag-along so the majority can deliver the whole company, registration rights for a listing, a tag-along for the minority. From the Series B the board discusses the exit as strategy: which buyers to be visible to, which metrics they pay for, when to run a process. By year five the fund's life and the founders' patience converge on a decision.

The routes trade certainty, price and time. A trade sale is the most likely and the most complete — cash, a strategic premium, a buyer that wants what the company has — and it ends the founders' control. A sale to another fund keeps the company private and the team in place, at a financial buyer's price. A listing keeps the company independent and gives liquidity over time, at the cost of public-company life and a market that may not be open. Secondaries let early investors and employees out without an exit for the company at all.

For fintech the strategic sale dominates, because the buyers — banks, processors, software groups — pay for the licence, the customers and the capability, and because the listing route has been shut for all but the largest since 2022.

## Example

A payments fintech's Series B investor writes an exit case in 2020: a trade sale in 2025 at 6–8× revenue to one of four acquirers, or an IPO if revenue passes €120m. By 2024 revenue is €70m; the IPO window is closed; two of the four acquirers have made other deals. The board runs a dual track — a sale process and a listing preparation — and the sale wins: a strategic buyer pays €480m, 6.9× revenue. The Series B fund's 22% returns €95m on €18m invested; the founders' 35% is €150m, of which €40m is deferred over two years to keep them; the employees' options pay €38m. The exit case of 2020 was right about the route and the multiple and wrong about two of the four buyers — which is why it named four.

## Common mistakes

- Founders raising venture money without understanding that the fund needs an exit on its timetable, not theirs.
- Investors with different preference stacks wanting different exits, and a board that discovers this in the process.
- Planning for an IPO in a market that has not opened for the sector in three years.
- No drag-along, so a minority holder can stall the exit the majority has agreed.
- Running a sale process with no plan B, so the one bidder knows it.

## Related terms

- [Initial Public Offering](https://mahouse.world/glossary/initial-public-offering.md)
- [Secondary Market](https://mahouse.world/glossary/secondary-market.md)
- [Auction Process](https://mahouse.world/glossary/auction-process.md)
- [Drag-Along Right](https://mahouse.world/glossary/drag-along-right.md)
- [Venture Capital](https://mahouse.world/glossary/venture-capital.md)
- [Private Equity](https://mahouse.world/glossary/private-equity.md)

— Ihor Vlasov, M&A FinTech Expert. Last reviewed 2026-09-20. https://mahouse.world/authors/ihor-vlasov