MGT 3360 CH. 20
Walkaways
Business terminations in which the entrepreneur ends the business with its obligations met
Resource maturity
Characterized by a stable level of sales and profits over several years. At this stage, the functional areas, the market, and the products or services are all being dealt with consistently and efficiently
Slack resources
Profits that are available to be used to satisfy the preferences of the owner in how the business is run
Harvest
Recover value through a sale of a firm or its assets
Supplemental profits
Returns above cost intended as a secondary income for entrepreneurs (where self-employment is secondary to their main job)
Success profits
Returns at levels higher than the entrepreneur could make working for others
Substitution profits
Returns intended to equal and replace the salary or wages the entrepreneur could draw working for someone else
Liquidation
The popular name for a chapter 7 bankruptcy in which a bankrupt firm's assets are sold by the bankruptcy trustee and the proceeds used to pay the firm's debts
Reorganization
The popular name for chapter 13 bankruptcy in which a bankruptcy firm continues to operate while paying off debts identified by the bankruptcy trustee
Business life cycle
The sequence or pattern of developmental stages any business goes through during its life span
Liability of newness
The set of risks faced by firms early in their life cycles that comes from lack of knowledge by the owners about the business they are in and by customers about the new business
Initial public offering (IPO)
Transfer method describing the first-time public sale of a stock listed on a public stock exchange
Workout
A form of business termination in which the firm's legal or financial obligations are not fully met at closing
Employee stock ownership plan
A formalized legal method to transfer some or all of the ownership of a business to its employees
Consolidation
A transfer method in which a small business is bought by a larger firm for the purpose of quickly growing the larger firm
Transfer
An endgame strategy in which ownership is moved from one person or group to another
Termination
An endgame strategy in which the owner closes down the business
Liquidity enhancement
An estate planning strategy which focuses on generating cash to cover likely estate taxes
Tax management
An estate planning strategy which focuses on minimizing estate tax payments
Estate freeze
An estate planning strategy which focuses on transferring assets to heirs when the asset costs are low
Bankruptcy
An extreme form of business termination which uses a legal method for closing a business and paying off creditors when debts are substantially greater than assets
Emergence
In which a person thinks about and takes actions toward starting a firm
Success
Occurs once the firm is established in its market
Serial entrepreneurs
People who open multiple businesses throughout their career
Existence
Which is defined by having the business in operation, but not yet stable in terms of markets, operations, and finances