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Match the Term with Its Definition

Question 64

Matching

Match the term with its definition.

Premises:

Responses:

A leveraged buy out involving the purchase of a group of similar companies with the intent of making the firms into one larger company for eventual sale

Seller financing

A leveraged buyout in which the firm's top managers become significant shareholders in the acquired firm

Private equity recapitalization

The process used by entrepreneurs and investors to reap the value of a business when they leave it

Bust-up LBO

The rate of return that could be earned on another investment of similar risk

Build-up LBO

A method by which a firm is sold either in part or in total to its employees

Initial public offering

An infusion of equity from private investors that allows an entrepreneur to cash out a portion of his investment while possibly continuing to operate the business

Leveraged buyout

Taxation of income that occurs twice--first as corporate earnings and then as stockholder dividends

Management buyout

Financing in which the seller accepts a note from the buyer in lieu of cash in partial payment for a business

Harvesting

A professional who assists in the buying and selling of a business

Business broker

A leveraged buyout involving the purchase of a company with the intent of selling off its assets

Double taxation

The first sale of shares of a company's stock to the public

Employee Stock Ownership Plan

Opportunity cost of funds