Deck 19: The Harvest and Beyond

Question 1

Which of the following harvest options is most likely to produce the most cash for the founder at the time of sale?

A) IPO
B) MBO
C) Outright sale
D) Strategic alliance

Answer 1

C

Question 2

Discuss why it is important to have a harvest goal in place from the beginning of a venture.

Answer 2

Setting a harvest goal achieves many purposes,not the least of which is helping an entrepreneur get after-tax cash out of an enterprise and enhancing substantially his or her net worth.Such a goal also can create high standards and a serious commitment to excellence over the course of developing the business.It can provide,in addition,a motivating force and a strategic focus that does not sacrifice customers,employees,and value-added products and services just to maximize quarterly earnings.There is a very significant societal reason as well for seeking and building a venture worthy of a harvest.These are the companies that contribute most disproportionately to technological and other innovations,to new jobs,to returns for investors,and to economic vibrancy.Also,within the harvest process,the seeds of renewal and reinvestment are sown.Such a recycling of entrepreneurial talent and capital is at the very heart of our system of private responsibility for economic renewal and individual initiative.

Question 3

A ________ is one in which a founder can realize a gain from a business by selling it to existing partners or to other key managers in the business.

Answer 3

Management buyout (MBO

Question 4

Identify four avenues by which a company can realize a harvest from the value it has created.

Question 5

Which harvest option can have the negative attribute of forcing the leadership team to focus on short-term profits and performance results?

A) MBO
B) ESOP
C) IPO
D) Strategic Alliance

Question 6

What is the most vital aspect of crafting a harvest strategy?

A) Capital
B) Timing
C) The Offering
D) Depends on the venture

Question 7

MBOs typically require the seller to take a limited amount of cash up front and a note for the balance of the purchase price over several years.

Question 8

What are some of the disadvantages of being a public company?

Question 9

The workload demanded by a harvest-oriented venture versus one in a venture that cannot achieve a harvest is typically

A) Far more,this justifying the time and energy
B) No greater than building a venture without harvest prospects
C) Far less because of a larger management team
D) About equal,but the stress levels are higher

Question 10

What is the most common challenge with a management buyout?

A) Capital
B) Expertise
C) Legal structure
D) Depends on the industry

Question 11

What are the three core aspects of shaping a harvest strategy?

Question 12

Having a harvest goal and crafting a strategy to achieve it are what separate successful entrepreneurs from the rest of the pack.

Question 13

A public offering increases public awareness of the company and contributes to the marketability of the products.

Question 14

In a ________,founders can attract capital,often in substantial amounts,from a large company interested in their technologies.

Question 15

The authors write,"If impatience is the enemy of an attractive harvest,then greed is its executioner." To what are they referring to?

Question 16

________ are harvest vehicles through which founders can realize some liquidity from their stock by sales to the plan and other employees.

Question 17

Harvesting at the right time,willingly,involves hitting one of the many ________ that entrepreneurs face.

Question 18

Which of the following is not a near-term advantages of going public?

A) The ability to fund rapid growth
B) Access to long-term capital
C) Liquidity
D) All are advantages

Question 19

If begun early in the venture building process,shaping a harvest strategy is a straightforward task.

Question 20

When entrepreneurs sell their venture in a stock-for-stock exchange,the agreement typically includes protections against a sudden drop in the share price of the acquiring company.