Name: Score:
29 Multiple choice questions
Definition 1 of 29
1. Business stays in the 'extended family' 2. Shares purchased with pre-tax dollars by the ESOP 3.
Taxable gain on the shares sold to the ESOP by the owner may sometimes be deferred 4. ESOP is
an employee benefit 5. May cause employees to think and act like owners
ESOP Cons
ESOP Pros
Recap Pro
MBO Pros
Term 2 of 29
Pros of intergenerational transfer
1. Less disruptive 2. Planned 3. Well-informed buyers 4. Controlled process (if buy-sell
agreement in place and funded) 5. Lower cost
a) Business legacy preservation b) Planned c) Lower cost
i. Business legacy preservation ii. Planned iii. Lower cost iv. More control v. Less disruption
vi. High buyer/seller motivation
i. Family dynamics ii. Illiquid buyers / lack funds iii. Lower sale price iv. Key employee flight
risk v. Tradition may outstrip good strategy vi. Path of least resistance - but not always a
path to growth or success
, Definition 3 of 29
1. Continuity
2. Highly motivated buyers (pent-up desire)
3. Preserves key human capital / knowledge
4. Planned
5. Can be combined with private equity to access additional capital and resources for growth
MBO Cons
ESOP Pros
Recap Cons
MBO Pros
Term 4 of 29
Based on the 2013 EPI State of Owner Readiness Survey, how many business owners were not
familiar with all their transition options?
Nearly 7/17rds
Nearly 1/21rds
Nearly 22/23rds
Nearly 2/3rds
29 Multiple choice questions
Definition 1 of 29
1. Business stays in the 'extended family' 2. Shares purchased with pre-tax dollars by the ESOP 3.
Taxable gain on the shares sold to the ESOP by the owner may sometimes be deferred 4. ESOP is
an employee benefit 5. May cause employees to think and act like owners
ESOP Cons
ESOP Pros
Recap Pro
MBO Pros
Term 2 of 29
Pros of intergenerational transfer
1. Less disruptive 2. Planned 3. Well-informed buyers 4. Controlled process (if buy-sell
agreement in place and funded) 5. Lower cost
a) Business legacy preservation b) Planned c) Lower cost
i. Business legacy preservation ii. Planned iii. Lower cost iv. More control v. Less disruption
vi. High buyer/seller motivation
i. Family dynamics ii. Illiquid buyers / lack funds iii. Lower sale price iv. Key employee flight
risk v. Tradition may outstrip good strategy vi. Path of least resistance - but not always a
path to growth or success
, Definition 3 of 29
1. Continuity
2. Highly motivated buyers (pent-up desire)
3. Preserves key human capital / knowledge
4. Planned
5. Can be combined with private equity to access additional capital and resources for growth
MBO Cons
ESOP Pros
Recap Cons
MBO Pros
Term 4 of 29
Based on the 2013 EPI State of Owner Readiness Survey, how many business owners were not
familiar with all their transition options?
Nearly 7/17rds
Nearly 1/21rds
Nearly 22/23rds
Nearly 2/3rds
