HARVESTING

Question 1

What is harvesting?

Answer 1

Harvesting is a process used by entrepreneurs and investors to get value of the business when they get out.

Question 2

Reasons for harvesting?

Answer 2

1. Personal goals of the entrepreneur - entrepreneurs frequently create goals for themselves, and after achieving those goals they can sell their business and focus on other interests.
2. Succession- in order to maintain their legacy, entrepreneurs want to see their business flourish under new leadership.
3. Retirement - In order for entrepreneurs to save money and to have financial security for themselves for the future, entrepreneurs often sell their businesses.
4. Due to failure - Selling a failing business might help with losses and might recover the money that was invested.
5. Death

Question 3

Severity of the situation is determined by?

Answer 3

1. Strategic pressure
2. Urgency or crisis
3. Personal situation of the entrepreneur

Question 4

What are the broad strategies?

Answer 4

1. Growth strategy
2. Retrechment
3. Stability

Question 5

What are the performance levels of harvesting?

Answer 5

1. Good performance - Achieves goals.
2. Underperformance - gross margin decreases.
3. Trouble - net margin decreases and cash flow problems.
4. Crisis - negative cash flow for long periods.
5. Failure - lost control.

Question 6

What are harvest options?

Answer 6

1. Outright selling the business venture.
2. Selling to a competitor
3. Selling to a firm looking for acquisition
4. Management buyout
5. Public offering
6. Merger with another venture.