Small Business Management: Launching and Growing Entrepreneurial Ventures CHAPTER 13

Flashcard maker : Lily Taylor
harvesting (exiting)
the process used by entrepreneurs and investors to reap the value of a business when they leave it
business broker
a professional who assists in the buying and selling of a business
leveraged buyout (LBO)
a purchase heavily financed with debt, where the future cash flows of the target company are expected to be sufficient to meet debt repayments
bust-up LBO
a leveraged buyout involving the purchase of a company with the intent of selling off its assets
build-up LBO
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
management buyout (MBO)
a leveraged buyout in which the firm’s top managers become significant shareholders in the acquired firm
employee stock ownership plan (ESOP)
a method by which a firm is sold either in part of in total to its employees
seller financing
financing in which the seller accepts a note from a buyer in lieu of cash in partial payment for a business
double taxation
taxation of income that occurs twice–first as corporate earning and then as stockholder dividends
initial public offering (IPO)
the first sale of shares of a company’s stock to the public
private equity recapitalization
private investors provide financing to a business that allows an entrepreneur to cash out a portion while possibly continuing to operate the business
lower employee morale
uncertainties accompanying an impending sale of a business often lead to
opportunity cost of funds
the rate of return that could be earned on another investment of similar risk
What is the value of her firm?
Valerie is beginning to think of harvesting her company. Which question should be asked first?
culture conflict
Evangeline has sold her small boutique to a large retail chain but has agreed to stay on and manage the store. Evangeline should expect:
negotiation skills
Which best characterizes business valuation?
Offer to finance the remaining 20% with payments.
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…
poor performance
the effects of the harvesting process include
cash, stock
Vasily is selling his business. As a harvesting owner, we would expect him to prefer _____ over _____.
distributing the firm’s cash flows
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?
exiting a business
Harvesting refers to
Get advice from someone who has sold a business.
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?
bust-up
In earlier years, leveraged buyouts became synonymous with the ____ LBO.
liquid currency
Going public can be beneficial to a firm by helping it create a
LBO
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:

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