EC 5

<p>$35,269 (B)</p> Signup and view all the answers

<p>3 to 4 years (D)</p> Signup and view all the answers

<p>Market trends (B)</p> Signup and view all the answers

<p>Reducing risk to personal assets (D)</p> Signup and view all the answers

<p>Asset valuation (C)</p> Signup and view all the answers

<p>$220,500 (B)</p> Signup and view all the answers

<p>Bulk transfer (C)</p> Signup and view all the answers

<p>Employee resistance (D)</p> Signup and view all the answers

<p>64% (A)</p> Signup and view all the answers

<p>Frequent breakdowns (A)</p> Signup and view all the answers

<p>Performance (D)</p> Signup and view all the answers

<p>Analyze your skills and interests (C)</p> Signup and view all the answers

<p>Take a break to calm down (B)</p> Signup and view all the answers

<p>Unsuitability for current business needs (C)</p> Signup and view all the answers

<p>Family limited partnership (A)</p> Signup and view all the answers

<p>Rank your objectives in order of priority (B)</p> Signup and view all the answers

<p>Rushing to close the deal (B)</p> Signup and view all the answers

<p>Employee buy-in and motivation (C)</p> Signup and view all the answers

<p>Experience in the industry (C)</p> Signup and view all the answers

<p>Main Street Buyers (D)</p> Signup and view all the answers

<p>You can leverage the previous owner's expertise (B)</p> Signup and view all the answers

<p>A profitable exit within five to seven years (C)</p> Signup and view all the answers

<p>You've inherited existing debts or liabilities (C)</p> Signup and view all the answers

<p>$181,209 (C)</p> Signup and view all the answers

<p>Building a diverse portfolio of companies (B)</p> Signup and view all the answers

<p>Value = (Earnings - Costs) / Rate of Return (D)</p> Signup and view all the answers

<p>To determine the present value of future earnings (D)</p> Signup and view all the answers

<p>A new business can be tailored more closely to personal vision (B)</p> Signup and view all the answers

<p>Service businesses with existing contract revenue (B)</p> Signup and view all the answers

<p>$242,287 (C)</p> Signup and view all the answers

<p>Weighted Average Earnings in Year 5 / Rate of Return (D)</p> Signup and view all the answers

<p>$384,736 (B)</p> Signup and view all the answers

<p>Compute the average Price-Earnings (P/E) Ratio (B)</p> Signup and view all the answers

<p>Established business value (A)</p> Signup and view all the answers

<p>To prevent the seller from competing with the buyer (A)</p> Signup and view all the answers

<p>Give written notice to each creditor at least ten days in advance (C)</p> Signup and view all the answers

<p>A return of at least 15% to 30% (A)</p> Signup and view all the answers

<p>To ensure confidentiality of financial and operational information (C)</p> Signup and view all the answers

<p>A clause for good faith negotiations (B)</p> Signup and view all the answers

<p>To identify potential liabilities and financial trends (C)</p> Signup and view all the answers

<p>Sworn list of creditors (D)</p> Signup and view all the answers

<p>They reveal hidden liabilities and financial misrepresentation. (A)</p> Signup and view all the answers

Considering factors like experience, potential for success, required changes, price, and cash flow generation.

Buyers focused on manageable businesses with low risk, often with a desire for the seller to assist in the transition.

Buyers with corporate experience seeking businesses that leverage their skills, often focusing on service businesses with existing contracts.

Buyers aiming to acquire profitable companies with strong management, often looking to build a portfolio across different industries.

Buyers seeking highly profitable companies with substantial growth potential, often backed by venture capitalists or angel investors.

The advantage of having an already established business with existing customers, employees, suppliers, and resources.

The potential risks and hurdles that can arise when buying a business, such as price negotiation, hidden issues, and inheriting past problems.

A cautious approach to buying a business, recognizing potential risks and focusing on profitability, rather than simply acquiring a cheap asset.

The practice of thoroughly examining a business before purchasing it, including its financial records, assets, legal status, and market potential.

The value of a company's accounts receivable based on their age and likelihood of being collected. Older accounts are usually worth less than newer accounts.

The total value of a company's assets that can be easily converted into cash, such as cash, accounts receivable, and inventory.

The process of transferring the ownership of a business from one entity to another, often involving a sale or merger.

The legal process that protects a buyer of a business from claims made by unpaid creditors of the seller.

The process of analyzing the financial statements and performance of a company to determine its profitability and financial health.

The process of determining the fair market value of a business based on its assets, liabilities, and future earnings potential.

The legal right of a creditor to seize and sell an asset of a debtor to recover a debt.

A valuation method that uses the prices of similar businesses to estimate the value of a target company.

A valuation method that forecasts a company's future earnings and discounts them back to their present value.

The cost of the next best alternative, often used in valuation to assess the opportunity cost of investing in a specific business.

A valuation method that considers the adjusted net worth of a business and its extra earning power to determine its value.

A valuation method that assesses the adjusted net worth of a business, often used as a starting point in business valuation.

A contract where the seller promises not to compete with the buyer in a specific area or time period after selling their business.

The process of reviewing a business's financial health to determine its future profitability. This includes reviewing financial statements and tax returns for the past 3 to 5 years.

The first step in acquiring a company. This involves identifying potential targets, contacting them, and evaluating the company's suitability.

A legal document that requires a buyer to keep confidential all information shared about the business during the acquisition process.

A nonbinding document stating that both buyer and seller agree on the key terms of the deal, paving the way for more detailed negotiations. It has a "good faith negotiations" clause.

The key financial metric you want to see when acquiring a business. Aim for a return of 15% to 30% on your investment.

A common financial manipulation, where the seller hides some income to inflate the value of the business. This is something to look out for during the due diligence process.

A financial metric representing the value of a business's established reputation, customer relationships, and brand recognition. It reflects the difference between the business's market value and its tangible assets.

A weighted average of pessimistic, most likely, and optimistic scenarios for future earnings, reflecting a balanced outlook.

A factor used to discount future earnings to their present value, reflecting the risk and return associated with a specific investment.

The rate of return expected on a similar investment, used to discount future earnings in the Discounted Future Earnings Approach.

A valuation method that uses the average Price-Earnings (P/E) ratio of comparable businesses in the same industry to estimate a company's value.

A financial metric that measures the relationship between a company's stock price and its earnings per share.

A valuation method that estimates a business's value by dividing the difference between its earnings and its expenses by a capitalization rate. This rate represents the risk and return associated with the business.

A commonly used method of valuing a private company by multiplying its forecasted earnings by an average P/E ratio of publicly traded companies in the same industry.

A discount applied to the value of a private company to reflect its lack of liquidity and marketability compared to publicly traded companies.

The process of identifying and analyzing potential buyers and sellers for a business, with a focus on understanding their objectives, motivations, and financial capabilities.

A negotiation strategy that emphasizes finding solutions that benefit both parties involved.

The five key elements that contribute to successful negotiation outcomes: preparation, poise, patience, persuasiveness, and persistence.

A negotiation approach that focuses on achieving specific objectives, prioritizing them in order of importance, and remaining flexible in finding solutions.

The ability to understand and respond effectively to the motivations, priorities, and concerns of the opposing party in a negotiation.