Question 1

Which of the following is the most significant advantage of an acquisition according to the text?

Accepted Answer

A) Established image and track record 
B) Location 
C) Cost 
D) Existing employees

Question 2

One important advantage of buying a franchise is that the entrepreneur incurs no risk.

Accepted Answer

A) True 
 B)False

Question 3

Which statement about capital requirements in franchising is not true?

Accepted Answer

A) Franchisees pool monies to lower the costs for advertising and sales promotion. 
B) Most franchisors will offer managerial assistance on the basis of need upon the start of the franchisee. 
C) Newsletters and other publications reflecting new ideas and developments are continuously sent to franchisees. 
D) The franchisee has to spend resources to establish the credibility of the business.

Question 4

When an entrepreneur bootstraps the purchase of a company,none of the price of the acquisition is cash.

Accepted Answer

A) True 
 B)False

Question 5

Negotiating parties will often focus on the distribution task and ignore the integration task.

Accepted Answer

A) True 
 B)False

Question 6

Idea lab is a combination of an incubator,a venture capitalist,and a business angel.

Accepted Answer

A) True 
 B)False

Question 7

The concept that "the whole is greater than the sum of its parts" is known as:

Accepted Answer

A) the price earnings ratio. 
B) synergy. 
C) the bargaining zone. 
D) integration.

Question 8

In order for a joint venture to be successful:

Accepted Answer

A) the expectations of the results must be reasonable. 
B) there should be symmetry between the partners. 
C) the timing must be right. 
D) all of the above.

Question 9

Quantitative methods of analyzing the fairness of an LBO's asking price include price-earnings ratios,present value of future earnings and book value.

Accepted Answer

A) True 
 B)False

Question 10

The most common type of joint venture is:

Accepted Answer

A) international joint ventures. 
B) created for cooperative research. 
C) an industry-university agreement. 
D) between two or more private sector companies.

Question 11

Franchising opportunities have often evolved from changes in the environment as well as important social trends.This is not one of the factors responsible:

Accepted Answer

A) good health. 
B) environmental consciousness. 
C) acceptance of different cultures. 
D) the second baby boom.

Question 12

A key concern in any merger or acquisition is the legality of the purchase.

Accepted Answer

A) True 
 B)False

Question 13

In most leveraged buyouts,the equity usually exceeds the debt capital equity by 5:1.

Accepted Answer

A) True 
 B)False

Question 14

Most ventures that are up for sale have good to very successful profit records.

Accepted Answer

A) True 
 B)False

Question 15

________ is an arrangement whereby the manufacturer or sole distributor of a trademarked product or service gives exclusive rights of local distribution to independent retailers in return for their payment of royalties and conformance to standardized operating procedures.

Accepted Answer

A) A joint venture 
B) Franchising 
C) A merger 
D) A leveraged buyout

Question 16

One advantage to an acquisition is that there is an established customer base.

Accepted Answer

A) True 
 B)False

Question 17

By buying a franchise the entrepreneur reduces the amount of money available for advertising.

Accepted Answer

A) True 
 B)False

Question 18

To be successful the partners in a joint venture should have symmetry.

Accepted Answer

A) True 
 B)False

Question 19

Brokers for acquisitions represent the buyer,not the seller.

Accepted Answer

A) True 
 B)False

Question 20

A _________ is a separate entity that involves a partnership between two or more active participants.

Accepted Answer

A) merger 
B) franchise 
C) joint venture 
D) leveraged buyout

Exam 14: Accessing Resources for Growth From External Sources

Which of the following is the most significant advantage of an acquisition according to the text?

One important advantage of buying a franchise is that the entrepreneur incurs no risk.

Which statement about capital requirements in franchising is not true?

When an entrepreneur bootstraps the purchase of a company,none of the price of the acquisition is cash.

Negotiating parties will often focus on the distribution task and ignore the integration task.

Idea lab is a combination of an incubator,a venture capitalist,and a business angel.

The concept that "the whole is greater than the sum of its parts" is known as:

In order for a joint venture to be successful:

Quantitative methods of analyzing the fairness of an LBO's asking price include price-earnings ratios,present value of future earnings and book value.

The most common type of joint venture is:

Franchising opportunities have often evolved from changes in the environment as well as important social trends.This is not one of the factors responsible:

A key concern in any merger or acquisition is the legality of the purchase.

In most leveraged buyouts,the equity usually exceeds the debt capital equity by 5:1.

Most ventures that are up for sale have good to very successful profit records.

________ is an arrangement whereby the manufacturer or sole distributor of a trademarked product or service gives exclusive rights of local distribution to independent retailers in return for their payment of royalties and conformance to standardized operating procedures.

One advantage to an acquisition is that there is an established customer base.

By buying a franchise the entrepreneur reduces the amount of money available for advertising.

To be successful the partners in a joint venture should have symmetry.

Brokers for acquisitions represent the buyer,not the seller.

A _________ is a separate entity that involves a partnership between two or more active participants.