Ent. CH6

revolving credit

A credit agreement that allows the borrower to pay all or part of the balance at any time; as the loan balance is paid off, it becomes available to be borrowed again.

serial entrepreneur

A person who opens multiple businesses throughout his or her career.

Franchise

A prepackaged business bought, rented, or leased from a company called a franchisor.

Pass off

A type of business transfer where the owner gives the business to someone else without a payment. This is most often done to maintain employment for the staff and service for the customers, but the business is not profitable enough to give the original owner any revenue.

Termination

An endgame strategy in which the owner closes down a business."

Bankruptcy

An extreme form of business termination that uses a legal method for closing a business and paying off creditors when debts are substantially greater than assets.

accelerator

An organization that supports start-ups, typically of a particular type (e.g., Internet, biotech, fashion, sports, women-owned firms, etc.) with a financial investment, free or inexpensive office space, mentoring, a variety of free or low-cost support services, and other resources.

Intangibles

Assets, such as patents or trademarks, and liabilities, such as accounts payable, that have no physical existence."

Walkaway

Business termination in which the entrepreneur ends the business with its obligations met.

due diligence

The process of investigating a business to determine its value and potential for investment.

Brokers

advertise and facilitate the sale of businesses for a fee, usually a percentage of the ultimate selling price.

Trade name franchising

is an agreement that provides only the rights to use the franchisor's trade name and/or trademarks. Two examples of this are True Value Hardware and Associated Grocers, Inc.

Networking

is an excellent way to find businesses for sale.

caveat emptor

or "let the buyer beware"

Spin-off

A business that is created by separating part of an operating business into a separate entity.

Synergy

A combination in which the whole is greater than the sum of its component parts.

"heuristic

A commonsense rule; a rule of thumb"

Founders

People who start up a new business

Asset

Something the business owns that is expected to have economic value in the future.

Replacement Value

The cost to acquire an essentially identical asset."

Book Value

The difference between the original acquisition cost and the amount of accumulated depreciation."