Small Business Management: Launching and Growing Entrepreneurial Ventures CHAPTER 13 – Flashcards
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harvesting (exiting)
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the process used by entrepreneurs and investors to reap the value of a business when they leave it
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business broker
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a professional who assists in the buying and selling of a business
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leveraged buyout (LBO)
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a purchase heavily financed with debt, where the future cash flows of the target company are expected to be sufficient to meet debt repayments
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bust-up LBO
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a leveraged buyout involving the purchase of a company with the intent of selling off its assets
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build-up LBO
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a leveraged buyout involving the purchase of a group of similar companies with the intent of making the firms into one larger company for eventual sale
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management buyout (MBO)
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a leveraged buyout in which the firm's top managers become significant shareholders in the acquired firm
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employee stock ownership plan (ESOP)
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a method by which a firm is sold either in part of in total to its employees
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seller financing
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financing in which the seller accepts a note from a buyer in lieu of cash in partial payment for a business
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double taxation
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taxation of income that occurs twice--first as corporate earning and then as stockholder dividends
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initial public offering (IPO)
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the first sale of shares of a company's stock to the public
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private equity recapitalization
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private investors provide financing to a business that allows an entrepreneur to cash out a portion while possibly continuing to operate the business
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lower employee morale
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uncertainties accompanying an impending sale of a business often lead to
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opportunity cost of funds
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the rate of return that could be earned on another investment of similar risk
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What is the value of her firm?
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Valerie is beginning to think of harvesting her company. Which question should be asked first?
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culture conflict
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Evangeline has sold her small boutique to a large retail chain but has agreed to stay on and manage the store. Evangeline should expect:
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negotiation skills
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Which best characterizes business valuation?
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Offer to finance the remaining 20% with payments.
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Steve wants to sell his business but the bank will not lend the buyer enough money. The buyer has 80% of the price. Steve should...
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poor performance
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the effects of the harvesting process include
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cash, stock
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Vasily is selling his business. As a harvesting owner, we would expect him to prefer _____ over _____.
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distributing the firm's cash flows
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He plans to retire soon, so Matt has decided to retain ownership for now without growing the business. He will invest excess cash that the business is generating for retirement. Which harvesting method is this?
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exiting a business
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Harvesting refers to
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Get advice from someone who has sold a business.
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Arthur's company is doing well but he has grown a bit tired of the daily grind. The idea of selling is appealing to him. What would you recommend Arthur do next?
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bust-up
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In earlier years, leveraged buyouts became synonymous with the ____ LBO.
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liquid currency
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Going public can be beneficial to a firm by helping it create a
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LBO
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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:
