Question 1 (6.67 points)

 

Planning a merger requires calculating values of both the business and all:

Question 1 options:

a)  goodwill.

b)  the management salaries.

c)  the other business.

d)  existing resources.

 

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Question 2 (6.67 points)

 

The most common method for a private equity investor to get a return is:

Question 2 options:

a)  Outright sale to another company.

b)  Receiving a regular dividend on earnings from the company.

c)  Partial sale to another company.

d)  An initial public offering.

 

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Question 3 (6.67 points)

 

When establishing an alliance, the first step is to identify the objective of the alliance.

Question 3 options:

True

False

 

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Question 4 (6.67 points)

 

An “exit strategy” is:

Question 4 options:

a)  paying a dividend to angels to keep them happy.

b)  a liquidity event.

c)  paying down your bank loan.

d)  being able to retire with sufficient funds.

 

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Question 5 (6.67 points)

 

In a selling memorandum, financial projections should be prepared for the next:

Question 5 options:

a)  3-5 years.

b)  10-15 years.

c)  1 Year.

d)  20 years.

 

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Question 6 (6.67 points)

 

If the company has sold shares only to angel investors and not to a VC firm, the entrepreneur must:

Question 6 options:

a)  Plan a liquidity event to provide the investors with an acceptable return on their investment.

b)  Convert the investors' shares into debt.

c)  Buy back the angels' shares at the price that was paid originally.

d)  Pay a dividend to the angel investors.

 

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Question 7 (6.67 points)

 

Going public is a cheap process.

Question 7 options:

True

False

 

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Question 8 (6.67 points)

 

Which of the following is NOT a part of a selling memorandum:

Question 8 options:

a)  Marketing and sales

b)  Earn-out agreements

c)  Management

d)  Employees

 

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Question 9 (6.67 points)

 

Which of the following is a disadvantage of going public?

Question 9 options:

a)  Improved financial condition

b)  Access to capital

c)  Management and employee incentives

d)  Upfront expenses

 

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Question 10 (6.67 points)

 

The transaction sequence when selling your company to another is in this order:

Question 10 options:

a)  Prepare memorandum, Find buyers, Establish value, Negotiate terms, Letter of intent, Due diligence, Close.

b)  Find buyers, Due Diligence, Establish value, Negotiate terms, Letter of intent, Close.

c)  Find buyers, Prepare memorandum, Letter of intent, Establish value, Due diligence, Negotiate terms, Close.

d)  Prepare memorandum, Establish value, Find buyers, Due diligence, Letter of intent, Negotiate terms, Close.

 

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Question 11 (6.67 points)

 

An MBO provides an exit strategy for:

Question 11 options:

a)  Banks.

b)  Employees.

c)  Managers.

d)  Founders.

 

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Question 12 (6.67 points)

 

Asking “what are the timing and extent,” in the letter of intent, is part of:

Question 12 options:

a)  the structure.

b)  bust-up fees.

c)  due diligence.

d)  exclusivity agreement.

 

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Question 13 (6.67 points)

 

A road show is:

Question 13 options:

a)  Exhibiting at a trade show.

b)  A dog-and-pony show.

c)  Pitching the sale of stock government agencies.

d)  A recruiting drive at colleges.

 

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Question 14 (6.67 points)

 

Why do most family businesses not survive through the second generation?

Question 14 options:

a)  Second generation usually cashes in

b)  Second generation is lazy

c)  Goals and objectives are rarely the same

d)  Most business survive through the second generation

 

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Question 15 (6.67 points)

 

Loss of control is an advantage of going public.

Question 15 options:

True

False