Entrepreneurship 3

• quicker easier start-up
• reduced risk
• bargain potential your knowledge can be beneficial

• failure to disclose
• business may be a poor fit
• use due dillagence
• investment requirements
• buying someone elses problems

• dissatisfied customers, suppliers, employees, or creditors
• plant or equipment obsolete or inefficient
• lack of innovation or market trends
• patents no longer valid

a company or individual that buys or sells businesses for a fee

the exercise of reasonable care in the evaluation of a business opportunity

• identify real reason owner is selling
• lack of sufficient cash flow
• unprofitability
• staffing
• change in industry or market conditions
• new competitors
• litigation

a legal document enumerating the type of information that is to remain confidential

a method that analyzes the inderlying value of the firms assets as a basis for negotiating price

• book value
• adjusted book value
• liquidation value
• replacement value

a method that assesses the value of the firm based upon a stream of earnings that is multiplied either by an agreed-upon factor (the capitalization factor) or by the p/e ratio (for a publicly traded company)

• historical earnings
• future earnings under current ownership
• future earnings under new ownership

a method of calculating the worth of a business by using projected future cash flows and the time value of money

• assset valuation
• earnings valuation
• cash flow valuation
• consider value of nonfinancial factors
• arrive at offer and max price before entering negotiations

a firm that has two or more members of the same family managing and or working in it, that is owned or operated for the benefit of that family's members

• identify personal goals and objectives to create best match
• use resources available to identify prospective purchases
• due dillegence for most complete and accurate information

• recoginize mutual goal despite differing individual goals
• negotiate price and set terms
• holf formal closing and coplete all legal documents with support of qualified legal and accounting counsel