This study examines the choices of modes of entry and exit in the process of new business exploration. We find that exit mode choices ave determined by a different set of factors from those that are important for the entry mode decision and the exit decision per se. Our study indicates that when the resource profiles of a parent firm and the business unit are more dissimilar, and there has been less development of firm-specific idiosyncratic assets, firms are more likely to sell businesses than dissolve them. Further, the study reports a strong relationship between the mode of exit from a line of business (sell-off vs, dissolution) and the original mode of entry (acquisition versus internal development). Copyright (C) 1999 John Wiley & Sons, Ltd.