Matt owns a car dealership that is very profitable.Since he plans to retire in 5-10 years,Matt has decided to retain ownership for now,but without continuing to grow the business.This change would also allow him to invest for retirement some of the cash that the business is now generating.Which harvesting method does this example illustrate?

Question

Quizplus · Accepted Answer

The strategy described in the example is to release the firm's free cash flows to the owners without continuing to grow the business. This aligns with the harvesting method of releasing cash flows to investors, which is option B. Delayed sellout, IPO, and private placement involve selling or exiting the business, which is not the intention of the owner in this scenario.

Matt Owns a Car Dealership That Is Very Profitable