Deck 14: The Deal: Valuation, Structure, and Negotiation

Question 1

Family corporate renewal is where the family's entrepreneurial activity is focused on old streams of value within the business or group through innovation and transformational change activities.

Answer 1

False

Question 2

Organizational formalization has been shown to constrain entrepreneurial behaviour in family enterprises.

Answer 2

False

Question 3

Enterprising families focus on maintaining their local advantage, safeguarding their brands, assets, and customers, and on honing their operational efficiencies.

Answer 3

False

Question 4

The family corporate venturing category is when a new family company or group starts new businesses.

Question 5

Enterprising organizations pursue managerial methods that focus on maintaining the existing structure and on implementing incremental change.

Question 6

The goal of dialogue is to find solutions that are not constrained by the boundaries of either of the original positions.

Question 7

Allocations from family investment funds are usually non-operating investments in businesses and do not represent a significant portion of the family's total wealth.

Question 8

Most often, formal family investment funds are created after a family has liquidated all or part of their family group.

Question 9

Business families who are interested in transgenerational entrepreneurship and wealth creation must cultivate the more formal approach to entrepreneurship.

Question 10

Family influenced start-ups are new businesses where the family ownership vision and/or leadership influence impacts the strategic intent, decision making, and financial goals of the company.

Question 11

Almost all of the small and mid-sized family-owned businesses in Canada are modest, "mom-and-pop" operations.

Question 12

The familiarity of a family can make it much easier to challenge assumptions and talk about differing views.

Question 13

Family investment funds are pools of family capital that families use for entrepreneurial activities.

Question 14

Families who intend to act entrepreneurially must be opportunity focused.

Question 15

Families comprise the dominant form of business organization worldwide and provide more resources for the entrepreneurial economy than any other source.

Question 16

Research shows that most often, family cash investments are given based upon formal investment criteria rather than on altruistic family sentiments.

Question 17

Enterprising families institutionalize the opportunity seeking processes in the mindset and methods of both their family ownership group and their business organizations.

Question 18

Studies indicate that family-influenced companies consistently outperform non-family businesses on annual shareholder return, return on assets, and both annual revenue and income growth.

Question 19

As enterprise refers to economic activity, enterprising is the action of generating economic activity.

Question 20

One of the primary roles families play is to provide family private cash to family members who want to start a business.

Question 21

Organizational strategy is only as effective as the leadership and relationships in the family and organization.

Question 22

In the Timmons Model for Bäckerhaus Veit, opportunity is very small but growing, with a defined time frame.

Question 23

Families have the natural potential to destroy relationship capital more ruthlessly than any other social group.

Question 24

Which of the following is not a characteristic of entrepreneurial methods for enterprising?

A) Allocating disproportionate resources to new business opportunities.
B) Creating a core competency in innovation at the business unit level.
C) Having institutionalized the entrepreneurial process in the organization.
D) Having informal routines for gathering and disseminating market intelligence.
E) Initiating competitive change to lead the market.

Question 25

Family influence must be viewed as one of the inputs that entrepreneurs need to intentionally manage.

Question 26

Family enterprising is the separation of a financial ownership mindset and entrepreneurial strategic methods.

Question 27

In family enterprising "team" encompasses the family ownership group, as well as the family and non-family entrepreneurial capabilities.

Question 28

Family leaders who strive to turn their families into a team based upon the great group philosophy overcome many of the negative caricatures often associated with family business leadership and empower the family and organization to be enterprising.

Question 29

The idiosyncratic bundle of resources and capabilities that an enterprising family can bring to bear on an opportunity is referred to as their familiness.

Question 30

Formal governance structures and policies create significant ambiguity in families and thus constrains enterprising.

Question 31

A transgenerational commitment requires families to perpetuate a "great leader" model in successive generations.

Question 32

Errors that families typically make include all of the following except:

A) Assuming that their past success will guarantee future success.
B) Overestimating the value of age and longevity of the business.
C) Assuming that the next generation will want to follow in their footsteps.
D) Excluding non-family members from leadership and ownership.
E) Assuming that the next generation will have the same risk profile and goals.

Question 33

In the Timmons Model for Bäckerhaus Veit, resources are somewhat limited.

Question 34

The financial mindset for enterprising does not include which of the following characteristics?

A) A commitment to generating next-generation entrepreneurship.
B) A willingness to stick with the existing business model.
C) An assumption that a percentage of the business will become obsolete.
D) A willingness to leverage the business to grow and find higher returns.
E) A willingness to enter into partnerships and alliances to grow.

Question 35

The mindset continuum is primarily a measure of the financial risk profile of the family owners-shareholders.

Question 36

In the Timmons Model for Bäckerhaus Veit, team needs to be built.

Question 37

In the Timmons Model for Bäckerhaus Veit, the three main parts are resources, team, and opportunity.

Question 38

The job of families who desire to be enterprising is to determine how to generate and exploit their constructive familiness and to minimize or shed their distinctive familiness.

Question 39

When entrepreneurial processes are institutionalized through the governance structures and policies it promotes growth and change activities.

Question 40

Families have the natural potential to build relationship capital better than other social group.

Question 41

Which aspect of the Timmons Model is of particular significance with regard to family enterprising?

Question 42

On what should an enterprising family's strategic thinking and planning be based?

Question 43

What are the six dimensions for family enterprising?

Question 44

Discuss the familiness systems model and how its usefulness.

Question 45

For those business families who would like to act more entrepreneurially and become an intentional enterprising family that has multiple generations seeking higher potential opportunities we suggest that there are four strategic shifts that may need to occur. List those strategic shifts.

Question 46

Define "family enterprising."

Question 47

The governance dimension for family enterprising is primarily concerned with addressing:

A) Does your family have structures and policies that stimulate change and growth?
B) Does your family have the protocols in place to force everyone to work together?
C) Does your family have the procedures necessary for auditing and control?
D) Does your family have the legal framework (contracts, wills, estate planning) to divide the family business equally among the heirs?
E) Does your family feel comfortable with their personal relationships with one another?

Question 48

"Start-up money from family member or business with a formal written agreement for market-based ROI and/or repayment" is a description of:

A) Family-influenced start-ups
B) Family corporate venturing
C) Family corporate renewal
D) Family private cash
E) Family investment funds

Question 49

For Canada's family firms, on average:

A) 3 out of 10 make it to the second generation; 1 out of 10 makes it to the third generation
B) 3 out of 10 make it to the second generation; 1 out of 20 makes it to the third generation
C) 5 out of 10 make it to the second generation; 2 out of 10 make it to the third generation
D) 5 out of 10 make it to the second generation; 1 out of 20 makes it to the third generation
E) 7 out of 10 make it to the second generation; 2 out of 10 make it to the third generation

Question 50

The 6 dimensions for family enterprising are:

A) Governance, leadership, performance, relationship, strategy, and vision
B) Governance, leadership, performance, teamwork, strategy, and action
C) Governance, performance, resources, teamwork, strategy, and action
D) Governance, performance, resources, teamwork, strategy, and vision
E) Governance, performance, relationship, teamwork, strategy, and action

Question 51

Discuss why a financial mindset is more effective than an operational mindset.

Question 52

List five examples of relationship capital.

Question 53

"Start-up money or gift from family member or business with no agreement or conversation about ROI or repayment" is a description of:

A) Family-influenced start-ups
B) Family corporate venturing
C) Family corporate renewal
D) Family private cash
E) Family investment funds

Question 54

Define "transgenerational entrepreneurship."