Exam 13: Planning for the Harvest

As a financial buyer,Ted is likely to evaluate acquisition candidates according to their:

Matt owns a car dealership that is very profitable.Since he plans to retire in 5-10 years,Matt has decided to retain ownership for now,but without continuing to grow the business.This change would also allow him to invest for retirement some of the cash that the business is now generating.Which harvesting method does this example illustrate?

Jack is a professional who assists in the buying and selling of businesses.Jack is:

Match the term with its definition. a.Build-up LBO b.Business broker c.Bust-up LBO d.Double taxation e.Employee Stock Ownership Plan f.Harvesting g.Initial public offering h.Leveraged buyout i.Management buyout j.Opportunity cost of funds k.Private equity recapitalization l.Seller financing -A method by which a firm is sold either in part or in total to its employees

Match the term with its definition. a.Build-up LBO b.Business broker c.Bust-up LBO d.Double taxation e.Employee Stock Ownership Plan f.Harvesting g.Initial public offering h.Leveraged buyout i.Management buyout j.Opportunity cost of funds k.Private equity recapitalization l.Seller financing -The process used by entrepreneurs and investors to reap the value of a business when they leave it

Paul and Vivian have decided to create a harvest plan for their landscaping business.They recognize selling the company will affect them since they won't be going to work every day but have asked you for advice on what to expect as to the impact and how to best proceed.What will you say to them?

The effects of the harvesting process include

Before he executes his exit strategy,Arthur should:

Vasily is selling his business.As a harvesting owner we would expect him to prefer _____ over _____.

While investors always think ahead about how to exit an enterprise,the entrepreneur should focus on daily operational strategies more than the exit strategy.

ESOPs may require educating the buyer about the company's operations for continued company growth.

When is the right time to begin thinking about an exit strategy?

Strategic buyers evaluate acquisition candidates according to the

Sylvia,the owner of a clothing boutique,has agreed to sell her business to one of her buyers.This transaction would likely be described as a sale to a(n)_____ buyer.

Harvesting owners can be paid in cash or in stock of the acquiring firm,with stock generally being preferred over cash.

Entrepreneurs who accept stock in payment for the sale of their businesses are usually pleased with the results because they escape a significant tax burden.

Uncertainties accompanying an impending sale of a business often

Owing to the formulas that guide practice,business valuation has become an exact science.

Many entrepreneurs successfully grow their firms,but fail to develop an effective exit plan.

As Jacob considers exiting or harvesting,he is concerned with which of the following?