Question 1

Which of the following is not one of the common harvest strategies used by small businesses?

Accepted Answer

A)  Releasing the firm's cash flows to its owners 
B)  Offering stock to the public in an IPO 
C)  Completing a private placement of a stock 
D)  Inviting a friendly takeover 
A)  Releasing the firm's cash flows to its owners 
B)  Offering stock to the public in an IPO 
C)  Completing a private placement of a stock 
D)  Inviting a friendly takeover D

Question 2

A(n) _____ exists when a company offers its stock to the general public

Accepted Answer

A)  ESOP 
B)  IPO 
C)  MBO 
D)  LBO 
A)  ESOP 
B)  IPO 
C)  MBO 
D)  LBO B

Question 3

The different types of transactions involving small businesses are

Accepted Answer

A)  strategic, financial, and employee acquisitions. 
B)  financial, employee, and internal acquisitions. 
C)  strategic, internal, and financial acquisitions. 
D)  internal, external, and complex acquisitions. 
A)  strategic, financial, and employee acquisitions. 
B)  financial, employee, and internal acquisitions. 
C)  strategic, internal, and financial acquisitions. 
D)  internal, external, and complex acquisitions. A

Question 4

The IPO process may be one of the most _____ experiences of an entrepreneur's life.

Accepted Answer

A)  exhilarating, frustrating, and exhausting 
B)  frustrating, tempting, and exhausting 
C)  tempting, exhausting, and exhilarating 
D)  encouraging and nerve-wrecking 
A)  exhilarating, frustrating, and exhausting 
B)  frustrating, tempting, and exhausting 
C)  tempting, exhausting, and exhilarating 
D)  encouraging and nerve-wrecking

Question 5

As in any exit strategy, the sale of a firm is solely about determining the value of a company.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

An MBO is a potentially viable means of transferring ownership from the founder to the

Accepted Answer

A)  marketing team. 
B)  market build-up team. 
C)  management team. 
D)  market bust-up team. 
A)  marketing team. 
B)  market build-up team. 
C)  management team. 
D)  market bust-up team.

Question 8

Post-harvest entrepreneurs may become disillusioned when they realize their sense of identity

Accepted Answer

A)  was associated with the quest for wealth. 
B)  derived from interactions with employees. 
C)  was intertwined with their business. 
D)  does not return after joining in social or charitable work. 
A)  was associated with the quest for wealth. 
B)  derived from interactions with employees. 
C)  was intertwined with their business. 
D)  does not return after joining in social or charitable work.

Question 9

In a harvest situation, the exiting owners are usually paid in cash or

Accepted Answer

A)  tangible assets. 
B)  imputed goodwill. 
C)  favorable publicity. 
D)  stock. 
A)  tangible assets. 
B)  imputed goodwill. 
C)  favorable publicity. 
D)  stock.

Question 10

Harvesting owners can be paid in cash or in stock of the acquiring firm, with stock generally being preferred over cash.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

Selling the firm involves transferring o

Question 12

Most small business owners prefer selling their firm to a financial buyer rather than a strategic buyer.

Accepted Answer

A) True 
 B)False

Question 13

Financial Buyers evaluate acquisition candidates according to

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)  the level of debt the target business has accumulated. 
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)  the level of debt the target business has accumulated.

Question 14

A private IPO provides _____ cash than a LBO, but allows the entrepreneur to _____ control of the firm

Accepted Answer

A)  less; release 
B)  more; release 
C)  less; retain 
D)  more; retain 
A)  less; release 
B)  more; release 
C)  less; retain 
D)  more; retain

Question 15

A build-up leveraged buyout involves

Accepted Answer

A)  developing the business to make it an attractive takeover target. 
B)  acquiring businesses that occupy a higher level in the market channel. 
C)  a longer time horizon than a bust-up leveraged buyout. 
D)  constructing a larger enterprise to be taken public via an IPO. 
A)  developing the business to make it an attractive takeover target. 
B)  acquiring businesses that occupy a higher level in the market channel. 
C)  a longer time horizon than a bust-up leveraged buyout. 
D)  constructing a larger enterprise to be taken public via an IPO.

Question 16

Many entrepreneurs consider an initial public offering to be the "holy grail" of their career, even though most do not really understand the process.

Accepted Answer

A) True 
 B)False

Question 17

A management buyout can contribute significantly to a firm's operating performance.

Accepted Answer

A) True 
 B)False

Question 18

Harvesting refers to

Accepted Answer

A)  starting a business. 
B)  managing the growth of a business. 
C)  exiting a business. 
D)  diversifying a business. 
A)  starting a business. 
B)  managing the growth of a business. 
C)  exiting a business. 
D)  diversifying a business.

Question 19

With an initial public offering, the entrepreneur's goals and motivations are likely to be very different from those of the investment banker.

Accepted Answer

A) True 
 B)False

Question 20

The harvesting of a business is exclusively the selling and exiting of a business.

Accepted Answer

A) True 
 B)False

Exam 13: Planning for the Harvest

Which of the following is not one of the common harvest strategies used by small businesses?

A(n) _____ exists when a company offers its stock to the general public

The different types of transactions involving small businesses are

The IPO process may be one of the most _____ experiences of an entrepreneur's life.

As in any exit strategy, the sale of a firm is solely about determining the value of a company.

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

An MBO is a potentially viable means of transferring ownership from the founder to the

Post-harvest entrepreneurs may become disillusioned when they realize their sense of identity

In a harvest situation, the exiting owners are usually paid in cash or

Harvesting owners can be paid in cash or in stock of the acquiring firm, with stock generally being preferred over cash.

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

Most small business owners prefer selling their firm to a financial buyer rather than a strategic buyer.

Financial Buyers evaluate acquisition candidates according to

A private IPO provides _____ cash than a LBO, but allows the entrepreneur to _____ control of the firm

A build-up leveraged buyout involves

Many entrepreneurs consider an initial public offering to be the "holy grail" of their career, even though most do not really understand the process.

A management buyout can contribute significantly to a firm's operating performance.

Harvesting refers to

With an initial public offering, the entrepreneur's goals and motivations are likely to be very different from those of the investment banker.

The harvesting of a business is exclusively the selling and exiting of a business.

The Entrepreneurial Life

Entrepreneurial Integrity and Ethics

Getting Started

Franchises and Buyouts

The Family Business

The Business Plan: Visualizing the Dream

The Marketing Plan

The Human Resources Plan: Managers, Owners, Allies, and Directors

The Location Plan

Understanding a Firms Financial Statements

Forecasting Financial Requirements

A Firms Sources of Financing

Building Customer Relationships

Product and Supply Chain Management

Pricing and Credit Decisions

Promotional Planning

Global Opportunities for Small Business

Professional Management in the Entrepreneurial Firm

Managing Human Resources

Managing Operations

Managing the Firms Assets

Managing Risk in the Small Business

Filters

A private IPO provides _ cash than a LBO, but allows the entrepreneur to _ control of the firm