CH 15

Which of the following is not an example of pressures or interests from within a firm that affect succession issues?

. pressure from a family member to start his/her own business (pressure on the owner/manager to designate an heir, rivalry among various branches of the family, and employee wanting percentage of the business in the owner's will are)

The average life expectancy of a privately held firm is

24 years

One advantage of the delayed-entry strategy for the younger generation succeeding the older generation of a family business is that

a successor's skills are judged with greater objectivity.

A type of successor who is interested in efficiency, internal control, and effective use of resources would be considered a(n)

managerial successor.

Research on family firms demonstrates which of the following facts?

only 16 percent make it to a third generation

One advantage of an early-entry strategy for the younger generation succeeding the older generation of a family business is

skills specifically required by the business are developed.

Which of the following is not a contextual aspect to be considered in an effective succession plan?

technology

"Harvest" does not mean

the challenges and responsibilities of the entrepreneur are over.

Succession pressure inside the firm exists

when family members want to keep and manage the business themselves

An entrepreneurial successor is someone who is interested in efficiency and the effective use of resources.

F

Once the decision is made to harvest the business, the way forward is easy.

F

A harvest plan defines how and when the owners and investors will realize an actual cash return on their investment.

T

An exit strategy is defined as that component of the business plan where an entrepreneur describes a method by which investors can realize a tangible return on their investment.

T

Nonfamily members sometimes bring pressure on the owner-manager in an effort to protect their personal interests.

T

The forcing events that require an entrepreneur to step aside and let someone direct the operation are usually unforeseen and create major problems for the business.

T

The harvest decision may come when the venture has grown to a stage where an IPO is a possibility.

T

The liquidity event stands for positioning the venture for the realization of a cash return for the owners and investors.

T

The steps in developing a succession strategy are understanding the contextual aspects, identifying successor qualities, and carrying out the succession plan.

T

There are two types of succession pressures: family and nonfamily.

T

Which of the following steps should be carried out third when deciding to sell a business?

Value the business

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

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.

A typical example of a forcing event is

death

A harvest plan

defines when and how business owners will realize a cash return on investment.

A type of successor who is high in ingenuity, creativity, and drive would be considered a(n)

entrepreneurial successor.

Which is an influencing factor in succession?

family and business cultural issues