Question 1

Which of the following should a business owner do to avoid a bumpy transition?

Accepted Answer

A) Concentrate on communicating with employees. 
B) Devote time to selling the vision for the company to its key stakeholders. 
C) Consider asking the seller to serve as a consultant until the transition is complete. 
D) All of the above. 
A) Concentrate on communicating with employees. 
B) Devote time to selling the vision for the company to its key stakeholders. 
C) Consider asking the seller to serve as a consultant until the transition is complete. 
D) All of the above.

Question 2

Which of the following is typically not a question to ask in conducting a self-inventory?

Accepted Answer

A) What business activities do you enjoy least? 
B) What kind of business do you not want to avoid? 
C) Which industries interest you most? 
D) What do you expect to get out of the business? 
A) What business activities do you enjoy least? 
B) What kind of business do you not want to avoid? 
C) Which industries interest you most? 
D) What do you expect to get out of the business?

Question 3

In too many cases, the excitement of being able to implement a "fast entry" into the market causes an entrepreneur to rush into a deal and make unnecessary mistakes in judgment.

Accepted Answer

A) True 
 B)False

Question 4

The due diligence process that involves analyzing and evaluating an existing business for possible purchase is much less time-consuming than the process of developing a comprehensive business plan for a start-up.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not a document required to close the deal?

Accepted Answer

A) Letter of intent 
B) Bill of sale 
C) Asset purchase agreement 
D) Non-compete agreement 
A) Letter of intent 
B) Bill of sale 
C) Asset purchase agreement 
D) Non-compete agreement

Question 6

________ is what a business is actually worth.

Accepted Answer

A) Price 
B) Goodwill 
C) Equity 
D) Value 
A) Price 
B) Goodwill 
C) Equity 
D) Value

Question 7

Which of the following is not a source for the hidden market?

Accepted Answer

A) Networking 
B) Business brokers 
C) Industry contacts 
D) All of the above are sources for the hidden market 
A) Networking 
B) Business brokers 
C) Industry contacts 
D) All of the above are sources for the hidden market

Question 8

"Why do you want to buy the business," is one of the four important areas to investigate in the due diligence process.

Accepted Answer

A) True 
 B)False

Question 9

For a new owner of an existing business, physical facilities and equipment costs are very similar to what would have been spent on a startup with all new facilities and equipment.

Accepted Answer

A) True 
 B)False

Question 10

Accounts receivable are rarely worth face value and should be "aged" when evaluating a company's assets.

Accepted Answer

A) True 
 B)False

Question 11

The ________ method establishes the value of a company by computing the book value of its net worth, or owner's equity.

Accepted Answer

A) earnings 
B) market 
C) balance sheet 
D) multiples 
A) earnings 
B) market 
C) balance sheet 
D) multiples

Question 12

Opportunity cost is the cost of the next best alternative.

Accepted Answer

A) True 
 B)False

Question 13

________ is the difference between an established, successful business and one that has yet to prove itself.

Accepted Answer

A) Net worth 
B) Equity 
C) Multiple 
D) Goodwill 
A) Net worth 
B) Equity 
C) Multiple 
D) Goodwill

Question 14

The due diligence process in analyzing and evaluating an existing business can be just as time consuming as the development of a comprehensive business plan for a start-up.

Accepted Answer

A) True 
 B)False

Question 15

Roughly ________ businesses change ownership each year.

Accepted Answer

A) 200,000 
B) 300,000 
C) 400,000 
D) 500,000 
A) 200,000 
B) 300,000 
C) 400,000 
D) 500,000

Question 16

You can look at investing in the due diligence process as choosing to pay now or pay later.

Accepted Answer

A) True 
 B)False

Question 17

What is the "hidden market?"

Accepted Answer

In searching for a business to acquire,

Question 18

The old saying "the devil is in the details" holds true when buying a business.

Accepted Answer

A) True 
 B)False

Question 19

The business acquisition process should begin with the search for potential companies to acquire.

Accepted Answer

A) True 
 B)False

Question 20

The market approach is the most common business valuation method.

Accepted Answer

A) True 
 B)False

Which of the following should a business owner do to avoid a bumpy transition?

Which of the following is typically not a question to ask in conducting a self-inventory?

In too many cases, the excitement of being able to implement a "fast entry" into the market causes an entrepreneur to rush into a deal and make unnecessary mistakes in judgment.

The due diligence process that involves analyzing and evaluating an existing business for possible purchase is much less time-consuming than the process of developing a comprehensive business plan for a start-up.

Which of the following is not a document required to close the deal?

________ is what a business is actually worth.

Which of the following is not a source for the hidden market?

"Why do you want to buy the business," is one of the four important areas to investigate in the due diligence process.

For a new owner of an existing business, physical facilities and equipment costs are very similar to what would have been spent on a startup with all new facilities and equipment.

Accounts receivable are rarely worth face value and should be "aged" when evaluating a company's assets.

The ________ method establishes the value of a company by computing the book value of its net worth, or owner's equity.

Opportunity cost is the cost of the next best alternative.

________ is the difference between an established, successful business and one that has yet to prove itself.

The due diligence process in analyzing and evaluating an existing business can be just as time consuming as the development of a comprehensive business plan for a start-up.

Roughly ________ businesses change ownership each year.

You can look at investing in the due diligence process as choosing to pay now or pay later.

What is the "hidden market?"

The old saying "the devil is in the details" holds true when buying a business.

The business acquisition process should begin with the search for potential companies to acquire.

The market approach is the most common business valuation method.

The Foundations of Entrepreneurship

Ethics and Social Responsibility: Doing the Right Thing

Creativity and Innovation: Keys to Entrepreneurial Success

Conducting a Feasibility Analysis and Designing a Business Model

Crafting a Business Plan and Building a Solid Strategic Plan

Forms of Business Ownership

Franchising and the Entrepreneur

Building a Powerful Bootstrap Marketing Plan

E-Commerce and the Entrepreneur

Pricing and Credit Strategies

Creating a Successful Financial Plan

Managing Cash Flow

Choosing the Right Location and Layout

Sources of Financing: Equity and Debt

Global Aspects of Entrepreneurship

Building a New Venture Team and Planning for the Next Generation

Filters

Exam 7: Buying an Existing Business

Which of the following should a business owner do to avoid a bumpy transition?

Which of the following is typically not a question to ask in conducting a self-inventory?

In too many cases, the excitement of being able to implement a "fast entry" into the market causes an entrepreneur to rush into a deal and make unnecessary mistakes in judgment.

The due diligence process that involves analyzing and evaluating an existing business for possible purchase is much less time-consuming than the process of developing a comprehensive business plan for a start-up.

Which of the following is not a document required to close the deal?

________ is what a business is actually worth.

Which of the following is not a source for the hidden market?

"Why do you want to buy the business," is one of the four important areas to investigate in the due diligence process.

For a new owner of an existing business, physical facilities and equipment costs are very similar to what would have been spent on a startup with all new facilities and equipment.

Accounts receivable are rarely worth face value and should be "aged" when evaluating a company's assets.

The ________ method establishes the value of a company by computing the book value of its net worth, or owner's equity.

Opportunity cost is the cost of the next best alternative.

________ is the difference between an established, successful business and one that has yet to prove itself.

The due diligence process in analyzing and evaluating an existing business can be just as time consuming as the development of a comprehensive business plan for a start-up.

Roughly ________ businesses change ownership each year.

You can look at investing in the due diligence process as choosing to pay now or pay later.

What is the "hidden market?"

The old saying "the devil is in the details" holds true when buying a business.

The business acquisition process should begin with the search for potential companies to acquire.

The market approach is the most common business valuation method.

The Foundations of Entrepreneurship

Ethics and Social Responsibility: Doing the Right Thing

Creativity and Innovation: Keys to Entrepreneurial Success

Conducting a Feasibility Analysis and Designing a Business Model

Crafting a Business Plan and Building a Solid Strategic Plan

Forms of Business Ownership

Franchising and the Entrepreneur

Building a Powerful Bootstrap Marketing Plan

E-Commerce and the Entrepreneur

Pricing and Credit Strategies

Creating a Successful Financial Plan

Managing Cash Flow

Choosing the Right Location and Layout

Sources of Financing: Equity and Debt

Global Aspects of Entrepreneurship

Building a New Venture Team and Planning for the Next Generation

Filters