Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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?

Accepted Answer

A)   Buy the firm's assets.
B)   Buy the firm's stock.
C)   Merge the company with her present company.
D)   Any of the above three would be acceptable.E) A) and D)
F) C) and D)

Question 3

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

Accepted Answer

A)   When the owner wants to retire
B)   When a willing buyer expresses an interest
C)   When declining health forces the owner to leave active management
D)   When the money is first invested in the businessE) C) and D)
F) B) and C)

Question 4

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?

Accepted Answer

A)   Ask his advisory board for their opinions.
B)   Ask a business broker what his business is worth.
C)   Go public.
D)   Get advice from someone who has sold a business.E) A) and D)
F) A) and C)

Question 5

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

Accepted Answer

A)   a stock broker.
B)   an investment broker.
C)   a real estate broker.
D)   a business broker.E) C) and D)
F) B) and D)

Question 6

List and describe three types of LBO sales to financial buyers.

Accepted Answer

1. Bust-up LBO - A leveraged buyout invo...

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Ellen is a dentist and has decided to develop a harvest plan. She wants her efforts to be successful and effective. Discuss suggestions for crafting an effective exit strategy.

Accepted Answer

- Anticipate the Harvest: Hopefully Elle...

Question 9

Which statement best characterizes business valuation?

Accepted Answer

A)   Valuation is almost a perfect science.
B)   Since there are so many intangibles, valuation is mostly an art.
C)   The buyer determines the value of a business.
D)   Negotiation skills play an important part in valuation.E) B) and C)
F) A) and D)

Question 10

Match the term with its definition.
-Financing in which the seller accepts a note from the buyer in lieu of cash in partial payment for a business

Accepted Answer

A)  Build-up LBO
B)  Business broker
C)  Bust-up LBO
D)  Double taxation
E)  Employee Stock Ownership PlanF) HarvestingG) Initial public offeringH) Leveraged buyoutI) Management buyoutJ) Opportunity cost of fundsK) Private equity recapitalizationL) Seller financingM) H) and J)
N) H) and L)

Question 11

Uncertainties accompanying an impending sale of a business often

Accepted Answer

A)   lead to lower employee morale.
B)   attract the attention of the Securities and Exchange Commission.
C)   cause the deal to fall through.
D)   increase costs from added legal services.E) B) and C)
F) A) and B)

Question 12

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

Accepted Answer

A)   stand-alone, cash generating potential of a target business.
B)   synergies they think the target business will create.
C)   potential of the target business to preserve employment.
D)   level of debt the target business has accumulated.E) C) and D)
F) B) and C)

Question 13

One of the drawbacks of harvesting by withdrawing cash flows slowly is that the owner must seek out a buyer for the eventual sale of the business.

Accepted Answer

A) True 
 B)False

Question 14

Having publicly traded stock can be beneficial to owners in that a public market offers

Accepted Answer

A)   greater liquidity.
B)   protection against an unwanted harvest.
C)   insight into how to improve the performance of the firm.
D)   a justification for refusing requests for ESOP options.E) A) and D)
F) C) and D)

Question 15

List and briefly explain the four basic harvest strategies for the small business.

Accepted Answer

1. Selling the firm involves transferrin...

Question 16

Investors in a startup company are mainly interested in the new firm's growth and are not particularly interested in an exit plan.

Accepted Answer

A) True 
 B)False

Question 17

Opportunity cost of funds is the rate of return that an investor can earn on another investment of similar risk.

Accepted Answer

A) True 
 B)False

Question 18

An IPO occurs when a company offers its stock to

Accepted Answer

A)   investment practitioner organizations.
B)   family.
C)   intrastate private investors.
D)   the general public.E) None of the above
F) A) and D)

Question 19

List the three basic types of acquisitions and identify the purpose of each type.

Accepted Answer

1. Strategic acquisitions focus on syner...

Question 20

The effects of the harvesting process include

Accepted Answer

A)   a reduction in time and energy.
B)   an increased managerial focus.
C)   an increase in momentum.
D)   poor performance.E) None of the above
F) C) and D)

Exam 13: Planning for the Harvest

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

Correct AnswerverifiedShow Answer

The effects of the harvesting process include

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Match the term with its definition. -Financing in which the seller accepts a note from the buyer in lieu of cash in partial payment for a business

Correct AnswerverifiedShow Answer

Which statement best characterizes business valuation?

Correct AnswerverifiedShow Answer

List the three basic types of acquisitions and identify the purpose of each type.

Correct Answerverified1. Strategic acquisitions focus on syner...View AnswerShow Answer

Investors in a startup company are mainly interested in the new firm's growth and are not particularly interested in an exit plan.

Correct AnswerverifiedShow Answer

An IPO occurs when a company offers its stock to

Correct AnswerverifiedShow Answer

List and briefly explain the four basic harvest strategies for the small business.

Correct Answerverified1. Selling the firm involves transferrin...View AnswerShow Answer

List and describe three types of LBO sales to financial buyers.

Correct Answerverified1. Bust-up LBO - A leveraged buyout invo...View AnswerShow Answer

Ellen is a dentist and has decided to develop a harvest plan. She wants her efforts to be successful and effective. Discuss suggestions for crafting an effective exit strategy.

Correct Answerverified- Anticipate the Harvest: Hopefully Elle...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Uncertainties accompanying an impending sale of a business often

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Opportunity cost of funds is the rate of return that an investor can earn on another investment of similar risk.

Correct AnswerverifiedShow Answer

Having publicly traded stock can be beneficial to owners in that a public market offers

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

One of the drawbacks of harvesting by withdrawing cash flows slowly is that the owner must seek out a buyer for the eventual sale of the business.

Correct AnswerverifiedShow Answer

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1. Strategic acquisitions focus on syner...
View Answer

Correct Answer
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Correct Answer
verified

Correct Answer
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1. Selling the firm involves transferrin...
View Answer

Correct Answer
verified
1. Bust-up LBO - A leveraged buyout invo...
View Answer

Correct Answer
verified
- Anticipate the Harvest: Hopefully Elle...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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