Exam 13: Planning for the Harvest

In earlier years,leveraged buyouts became synonymous with the ____ LBO.

Going public can be beneficial to a firm by helping it

For the entrepreneur who is simply tired of the day-to-day operations of the business,slowly withdrawing cash flows over time may require too much patience.

The value of a business is determined by

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 leveraged buyout involving the purchase of a company with the intent of selling off its assets

Marvin is planning to sell his company to his management team.Marvin will be financing part of the purchase.This type of arrangement is a form of:

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 first sale of shares of a company's stock to the public

An IPO occurs when a company offers its stock to

Charles and Nancy have decided to sell their family business and would like to transfer ownership to the next generation.Which harvesting form would be best?

Entrepreneurs should think very carefully about their motives for exiting a business and what they plan to do after the harvest.

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 -An infusion of equity from private investors that allows an entrepreneur to cash out a portion of his investment while possibly continuing to operate the business

The availability of a company's exit options is an important determinant of the appeal of the firm to

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 leveraged buyout in which the firm's top managers become significant shareholders in the acquired firm

The sale of a firm is solely about determining the value of a company.

The mere fact that a firm is earning high rates of return on the firm's asset indicates that

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 rate of return that could be earned on another investment of similar risk

The build-up leveraged buyout is typically used in industries that are dominated by large firms.

Two years ago,Harold inherited $30,000 and decided to open a coffee shop in his hometown instead of buying stock in Ford Motor Company.The rate of return he could have earned on his investment in Ford stock represents his

Jill is purchasing a web design company that has patented a new form of technology.Which purchase would be best for her in relation to the web design company's liabilities?

The harvesting of a business should cause the entrepreneur to ask for advice from the experts who helped build the company.