Exam 15: The Deal: Valuation, structure, and Negotiation

The goal of valuation techniques is to be able to arrive at a single number.

Why is it important that an entrepreneur understand the capital markets' food chain?

While follow-on rounds can severely dilute the equity of the founders,early-round investors are insulated from that risk.

Explain how legal circumference relates to fund raising.

Discuss the characteristics of successful deals.

Investors stage their capital commitments as a way to motivate the entrepreneurial team.

Entrepreneurs should rely on expert legal and accounting advice to protect them during the deal-making process.

How long is the typical expected holding period for a second stage venture capital investment?

What range of return will a venture capital investor seek from a first stage investment?

Which of the following is not an example of a valuation method?

________ financing is a strategy of last resort that wipes out all previously issued stocks when existing preferred shareholders will not commit additional funds.

Under a ________ provision,if management does not find a buyer or cannot take the company public by a certain date,then the investors can proceed to find a buyer at terms they agree upon.

Experienced entrepreneurs are able to avoid creating strategic circumference by carefully structuring deals.

A company currently has 500,000 shares outstanding,which are owned by the current owners.If the venture capitalist requires a 28.5 percent ownership,what will be the total number of shares outstanding after the investment?

ROR stands for ________.

In the venture capital valuation method,terminal value is found by multiplying net income and the P/E ratio.

Venture capitalists may dilute a founder's equity with each additional round of capital,but they are not permitted to fire them.

The ROR required by a venture capitalist determines the required share of ownership.

By ________ their capital contributions,venture capitalists preserve the right to abandon a project whose prospects look dim.

Strategic circumference is never an intentional outcome.