Exam 13: Planning for the Harvest

After harvesting, many entrepreneurs experience conflicts that are _____ in nature.

Going public can be beneficial to a firm by helping it

Many entrepreneurs have a sense of gratitude for the benefits they have received from living in a capitalist system, so they feel the need to give something back to society, both with their time and with their money.

Investors in a startup company are mainly interested in the new firm's growth; thereby increasing their value. Consequently, they are not particularly interested in an exit plan.

Entrepreneurs who accept stock in payment for the sale of their businesses are usually pleased with the results because they escape a significant tax burden.

For the entrepreneur who is simply tired of the day-to-day operations of the business, siphoning off cash flows over time may require too much patience.

A leveraged buyout involves a high level of _____ financing.

_____ acquisitions are not popular among many small business owners.

Which of the following steps in the IPO process precedes the others?

One of the reasons for going public to raise equity capital is to create a liquid market for the company's stock.

An employee buyer is most interested in the firm as a stand-alone, cash-generating business.

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

The availability of exit options is an important determinant of the appeal of the firm to

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

Which of the following is a very important question to ask as a firm moves toward a harvest?

You Make the Call-Situation 3 At age 63, Michael Lipper sold his firm to Reuters. His assessment of the sale follows: One of the reasons we sold our business to Reuters was because we knew we probably couldn't manage the technology of the future by ourselves. Any entrepreneur who builds a business for as long as I have would be dishonest if he did not suffer a certain sadness [from selling]. If [Reuters] make a wonderful success out of this, there may be some ego pain. If they muck it up, they've damaged our name and hurt our people. Lois Silverman co-founded CRA Managed Care (now known as Concentra Managed Care). When the firm went public in 1995, Silverman's stake was over $10 million. After taking Concentra public, Silverman gave up all involvement in day-to-day operations. Along with 12 other successful businesswomen, she formed the not-for-profit Commonwealth Institute, to help women entrepreneurs set up boards and secure capital. She also became involved with a newspaper called Women's Business. She later told this story: The other day a man said to me on a golf course, "I hope I hit this ball, because since I've left my business, I don't know what to do with myself." And I said to myself, "I'm so lucky."

Harvesting a business by releasing the cash flows as dividends creates the worst tax disadvantage for _____.

In earlier years, leveraged buyouts became synonymous with the ____ LBO.

Harvesting is the method entrepreneurs and investors use to grow their firms.

List and describe 3 types of LBO sales to financial buyers.