Exam 10: Buying a Business

Poor union/management relationships is considered an advantage of business a business.

Using a Venn diagram, sketch a systems view of family business.

When purchasing an existing business, it is generally advised that you replace all of the key personnel with people who are loyal to you, and whom you trust.

Describe what is meant by "earn-out".

Confidential advisors, such as your banker, are a difficult source to use when it comes to finding a new business, since they generally share their information with several of their clients.

It is generally conceded that the most important issue facing most family businesses is the question of succession.

There are many accounting techniques which allow business owners to present a less than accurate picture of the financial situation of their company.

Which of the following financial evaluations totally ignores the future earnings capability of the business?

How can you prepare for the running of a family business?

Acquisition candidates may include present or potential competitors of your current employer, suppliers, customers, and perhaps even your present employer.

What makes a family business so challenging?

It is estimated that approximately ____ percent of all businesses in North America are family businesses.

What is the rule-of-thumb for evaluating businesses with few tangible assets?

All of the following are balance sheet methods of evaluation, except:

All of the following are advantages of buying an existing business, except:

Financial ratios are open to wide interpretation and should be relied on only to get a general perspective of the relative financial health of the business.

One of the advantages of buying a new business is that the equipment needed for production is already available, and its limitations and capabilities are known in advance.

Industry Canada, as part of its SME Benchmarking Tool website can provide information regarding acceptable financial ratios in various industries.

About 80 percent of all family businesses report that they have a succession plan in place.

The data provided by the SME Benchmarking Tool database of Industry Canada can provide performance benchmarks for the financial planning of both startup and established businesses.