Exam 13: Planning for the Harvest

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?

Two years ago, Dewald inherited R30 000 and decided to open a coffee shop in his hometown instead of buying shares in Tesla Motor Company.The rate of return he could have earned on his investment in Tesla shares represents his:

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

A build-up leveraged buyout involves:

The harvesting process encompasses more than just selling and leaving a business.

Going public can be beneficial to a business by helping it:

Match the term with its definition. a.Build-up LBO b.Business broker c.Bust-up LBO d.Double taxation e.Employee Share Ownership Plan f.Harvesting g.Initial public offering h.Leveraged buyout i.Management buyout j.Opportunity cost of funds k.Private equity recapitalisation l.Seller financing -A leveraged buyout involving the purchase of a group of similar companies with the intent of making the business into one larger company for eventual sale.

More recently, the bust-up leveraged buyout was replaced with the build-up leveraged buyout.

Many entrepreneurs successfully grow their business, but fail to develop an effective exit plan.

The harvesting of a business should cause the entrepreneur to ask for advice from the experts who helped build the company.

Valerie is beginning to think of harvesting her company.Which question should be asked first?

Match the term with its definition. a.Build-up LBO b.Business broker c.Bust-up LBO d.Double taxation e.Employee Share Ownership Plan f.Harvesting g.Initial public offering h.Leveraged buyout i.Management buyout j.Opportunity cost of funds k.Private equity recapitalisation l.Seller financing -A leveraged buyout in which the business's top managers become significant shareholders in the acquired business.

Investors in a start-up company are mainly interested in the new business's growth and are not particularly interested in an exit plan.

Before he executes his exit strategy, Arthur should:

Pat, owner of Pat's Welding (Pty) Ltd., would like to let someone else run the day-to-day operations while he continues to draw an income from the business.Because the business is a (Pty) Ltd., Pat will not have to be concerned about:

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

Entrepreneurs frequently do not appreciate the difficulty of selling or exiting a business.

Match the term with its definition. a.Build-up LBO b.Business broker c.Bust-up LBO d.Double taxation e.Employee Share Ownership Plan f.Harvesting g.Initial public offering h.Leveraged buyout i.Management buyout j.Opportunity cost of funds k.Private equity recapitalisation l.Seller financing -The process used by entrepreneurs and investors to reap the value of a business when they leave it.

Vasily is selling his business.As a harvesting owner we would expect him to prefer _____ over _____.

The sale of a business is solely about determining the value of a company.