Deck 8: Valuation of Entrepreneurial Ventures and Harvesting the Entrepreneurial Venture

Question 1

The Oakland Scavenger case is profound to owners of family businesses in that

A)conceivably, the owner can be sued for not giving equal treatment to a son as to a daughter.
B)conceivably, the owner can be sued by an employee of a different ethnic origin based upon not being accorded the same treatment as a son or daughter.
C)conceivably, the owner can be sued for not declaring a family member his or her successor.
D)the owner can be fined for not declaring his or her first son the heir to the business.

Answer 1

conceivably, the owner can be sued by an employee of a different ethnic origin based upon not being accorded the same treatment as a son or daughter.

Question 2

Which of the following is a true statement about legal advice?

A)Legal advice is seldom beneficial.
B)There is great benefit to having an advisor who understands the succession issue.
C)It is seldom crucial for legal advisors to design a plan for succession.
D)The more you pay, the better the advice.

Answer 2

It is seldom crucial for legal advisors to design a plan for succession.

Question 3

Which of the following is a key question to ask when analyzing a business venture?

A)Who owns the business?
B)Is this a family-owned business?
C)What are the conditions of the lease?
D)What is the current product price?

Answer 3

What are the conditions of the lease?

Question 4

Business valuation is important for the entrepreneur because a person needs to know when to

A)buy or sell a business, division, or major asset.
B)establish an employee buyout plan.
C)raise growth capital through borrowing on credit cards.
D)borrow money for growth.

Question 5

Knowing the value of a business is important in case

A)of divorce between owner and spouse.
B)of a dissolution of a partnership.
C)the owner's son wants to buy in.
D)too much debt is taken on.

Question 6

Underlying issues to consider when valuating a firm include

A)the goals of the buyer and seller.
B)the goals of the lawyers.
C)the reasons for raising capital stock.
D)the emotional stability of the seller.

Question 7

Which of the following is not an underlying issue in the value of a business?

A)emotional bias of the seller
B)reasons for acquisition
C)attempting to buy out a partner
D)emotional bias of the seller.

Question 8

The seller will attempt to establish the highest possible value for his business. He will not consider which of the following factors?

A)the market
B)the economy
C)the environment
D)the transportation

Question 9

When valuating a business, the reason an entrepreneur's business is being acquired is

A)to develop more growth phase products by acquiring a firm that has developed new products in the company's industry.
B)because of differing goals of the buyer and the seller.
C)to determine the possible lowest price.
D)the emotional bias of the seller.

Question 10

When considering market and compensation, the entrepreneur should be concerned about

A)the name of the competitor's CEO.
B)the name of the competitor's janitor.
C)the sales literature on products.
D)product price.

Question 11

In establishing the value of the firm, part of the process is

A)estimations.
B)management details.
C)project completions.
D)finding out what prospective buyers would pay.

Question 12

Market value

A)needs an unknown price paid for a similar business.
B)is valuable only as a reference point.
C)is easy to find recent comparisons.
D)is the same as product value.

Question 13

When buying a business one should

A)get a stockbroker.
B)consider the market.
C)have the former owner sign a noncompete clause.
D)sever ties with the former owner.

Question 14

Which factors listed below influence the final valuation of the venture?

A)avoiding start-up costs
B)projected future profits
C)history of the company
D)location of the company