Exam 20: Management Succession and Risk Management Strategies in the Family Business

One of the fastest growing forms of insurance that protects companies against claims due to suits on grounds of the Americans with Disabilities Act and the Medical Leave Act,etc. ,is:

Free

(Multiple Choice)

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Question 1

Correct Answer:

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Describe the exit strategies available to the founder of the small business;if he/she wants to sell the company to insiders,and if he/she is willing to sell it to outsiders.

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(Essay)

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Question 2

Correct Answer:

Verified

Family business owners wanting to step down from their companies can sell to outsiders,sell to insiders,or transfer ownership to the next generation of family members.Common tools for selling to insiders (employees or managers)include sale for cash plus a note,leveraged buyouts (LBOs),and employee stock ownership plans (ESOPs).Transferring ownership to the next generation of family members requires a business owner to develop a sound management succession plan.

When considering a successor,an entrepreneur should consider taking the following actions:

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(Multiple Choice)

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Question 3

Correct Answer:

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A straight sale of the family business to outsiders is best for the founder because it is quick,easy,and has minimal tax consequences to the owner.

(True/False)

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Question 4

Current federal tax regulations allow individuals to make gifts of $11,500 per year,per parent,per recipient,that are exempt from federal gift taxes.

(True/False)

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Question 5

It is important to remember that the succession planning process inevitably creates tension and distrust as family members envy the "chosen one."

(True/False)

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Question 6

Installing a sprinkler system to minimize the threat of fire would be a risk reduction strategy.

(True/False)

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Question 7

An estate freeze minimizes estate taxes by creating two classes of stock,preferred and nonvoting common stock,and only allowing the preferred stock,which the owner holds,to appreciate.

(True/False)

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Question 8

Succession planning should begin when the children reach college age.

(True/False)

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Question 9

"Playing together" at leisure activities makes it easier for family members to cooperate at work activities in the family business.

(True/False)

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Question 10

While a large percentage of business founders plan to pass on their businesses,few create management succession plans because:

(Multiple Choice)

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Question 11

Disability insurance protects an individual in the event of unexpected and often very expensive disabilities.

(True/False)

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Question 12

The lowest risk assessment rating on the risk management pyramid would be an ADB rating.

(True/False)

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Question 13

A(n)________ is a contract that co-owners often rely on to ensure the continuity of a business.

(Multiple Choice)

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Question 14

A small business establishing a self-insurance fund is following a risk transferring strategy.

(True/False)

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Question 15

One-third of the Fortune 500 companies are family businesses.

(True/False)

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Question 16

Management succession involves a lengthy series of interconnected stages that begin very early in the life of the owner's children and extend to the point of final ownership transition.

(True/False)

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Question 17

In a(n)________,managers and/or employees borrow money from a financial institution and pay the owner the total agreed-upon price at closing;they then use the cash generated from the company's operations to pay off the debt.

(Multiple Choice)

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Question 18

Shared power refers to:

(Multiple Choice)

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Question 19

Nearly all of business owners think that their heirs will need to sell part or all of the business to satisfy estate taxes.

(True/False)

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Question 20

Showing 1 - 20 of 148

Exam 20: Management Succession and Risk Management Strategies in the Family Business

One of the fastest growing forms of insurance that protects companies against claims due to suits on grounds of the Americans with Disabilities Act and the Medical Leave Act,etc. ,is:

Describe the exit strategies available to the founder of the small business;if he/she wants to sell the company to insiders,and if he/she is willing to sell it to outsiders.

When considering a successor,an entrepreneur should consider taking the following actions:

A straight sale of the family business to outsiders is best for the founder because it is quick,easy,and has minimal tax consequences to the owner.

Current federal tax regulations allow individuals to make gifts of $11,500 per year,per parent,per recipient,that are exempt from federal gift taxes.

It is important to remember that the succession planning process inevitably creates tension and distrust as family members envy the "chosen one."

Installing a sprinkler system to minimize the threat of fire would be a risk reduction strategy.

An estate freeze minimizes estate taxes by creating two classes of stock,preferred and nonvoting common stock,and only allowing the preferred stock,which the owner holds,to appreciate.

Succession planning should begin when the children reach college age.

"Playing together" at leisure activities makes it easier for family members to cooperate at work activities in the family business.

While a large percentage of business founders plan to pass on their businesses,few create management succession plans because:

Disability insurance protects an individual in the event of unexpected and often very expensive disabilities.

The lowest risk assessment rating on the risk management pyramid would be an ADB rating.

A(n)________ is a contract that co-owners often rely on to ensure the continuity of a business.

A small business establishing a self-insurance fund is following a risk transferring strategy.

One-third of the Fortune 500 companies are family businesses.

Management succession involves a lengthy series of interconnected stages that begin very early in the life of the owner's children and extend to the point of final ownership transition.

In a(n)________,managers and/or employees borrow money from a financial institution and pay the owner the total agreed-upon price at closing;they then use the cash generated from the company's operations to pay off the debt.

Shared power refers to:

Nearly all of business owners think that their heirs will need to sell part or all of the business to satisfy estate taxes.

Entrepreneurs: the Driving Force Behind Small Business

Strategic Management and the Entrepreneur

Choosing a Form of Ownership

Franchising and the Entrepreneur

Buying an Existing Business

Conducting a Feasibility Analysis and Crafting a Winning Business Plan

Creating a Solid Financial Plan

Managing Cash Flow

Building a Guerrilla Marketing Plan

Creative Use of Advertising and Promotion

Pricing and Credit Strategies

Global Marketing Strategies

E-Commerce and Entrepreneurship

Sources of Equity Financing

Sources of Debt Financing

Location,layout,and Physical Facilities

Supply Chain Management

Managing Inventory

Staffing and Leading a Growing Company

Ethics and Social Responsibility: Doing the Right Thing

The Legal Environment: Business Law and Government Regulation

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