Link Exchange Primer
One thing that can be done is to run links through a redirect script. Such scripts aren't always made to block the transfer of PR, often the site owner might just want to track clicks. However if the redirect is not done correctly a search engine may not be able to follow it. Additionally if the redirect script is blocked by robots.txt then the search engines definitely will not be able to follow it. If your partner uses redirects you should have a look at his robots.txt file and also see if you can see links from his site when searching for backwards links on one of his current link partners.
Another thing that someone could do is block their links page altogether using robots.txt. This is quick, easy, and effective. Yet another reason why you should check out the robots.txt file of any page you wish to exchange links with.
Limiting Loss
There is nothing wrong with not wanting to give too much PageRank away to your partners, just so long as you're not deceptive about it. Things you definitely do not want to do is link to someone from every page of your site (unless they're doing the same and your values even out) or link to your links page on every page of your site.
For instance supposed you have 5 items on your menu, one of which is a link to your links page. That means that 20% of your PR flows through your links page. Then what if half of the links on your links page are external? That means that 10% of your overall PageRank is being siphoned out by your links page.
The best thing you can do is link to your links page from only one place, such as your home page, also the more internal links you place on your pages the more PR will continue to run through your site. If you have a large number of links you can break them into multiple pages by grouping them into categories. This will greatly reduce the amount of PR loss you have due to the larger number of internal links one will be exposed to while browsing your categories.
Maximizing Benefit
Other than picking good partners, which is discussed above, there is almost nothing you can do to maximize the benefit you receive from link exchanges. I did say almost nothing however. One thing that will increase your benefit significantly is if your partners put your keywords in the text they use to link to your site. Since changing the wording of your link will in no way hurt them they'll usually be very accommodating to your request. So if you want to rank highly on the words "purple widgets" you'll want your link partners to use that as either all or part of the anchor text they use to link to your site. This is very important and can make a substantial difference in your rankings if you have a lot of link partners.
Conclusion
Remember that just because you have read this article doesn't mean that you potential link partner has, so do not be afraid to ask a site that is larger than yours for a link exchange, they might just accept. Additionally if a site that is smaller than yours wants an exchange you might want to consider it. If the site looks like it has potential it might one day rival or exceed yours in size and developing a relationship with the site now may pay off at a later date.
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