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International Entrepreneurship through Acquisition (Final Exam, May 2023) Flashcards | StudBud
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International Entrepreneurship through Acquisition (Final Exam, May 2023)
International Entrepreneurship through Acquisition (Final Exam, May 2023)
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StudBud Administration
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The Final Exam of International Entrepreneurship through Acquisition elective at IE Business School.
Flashcards
40 cards
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Practice quiz
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Questions
40
Answers
1
Brokers are the main source of opportunities for Search Fund acquisitions in Emerging Economies.
True
False
2
What is the key
personality trait
searchers need to have in order to be successful?
Fast & Furious
Hardly stressed
Entrepreneurial
Positive
3
Traditional Search Funds are usually
undertaken
alone or with 3 partners.
True
False
4
Searchers
rely on
3rd parties such as brokers, investment banks, accounting firms, and law firms to find companies.
False
True
5
Most Search Fund principals have limited or
no experience
managing a company at the CEO level.
True
False
6
Which kind of
investment
brings connections, business expertise and social resources?
Lottery
IPO
Bank Loan
Smart Money
7
Liquidity events for Searchers and Investors
can occur
in which of the following ways (
choose 3 only
):
The company can be sold.
The company can be IPOed (taken public).
The company can issue dividends.
The company can obtain bank loans.
8
Searchers and their investors
tend to prefer
turnaround situations over healthy, profitable companies.
False
True
9
Searchers receive equity in
trenches
:
4 trenches: upon search, acquisition, vesting and exit.
3 trenches: upon acquisition, vesting and performance.
2 trenches: upon acquisition and performance.
5 trenches: upon acquisition, growth, vesting, performance and exit.
10
Currency denomination for Searchers' vesting
is not
a problem in structuring international Search Funds.
True
False
11
Historical acquisition EBITDA
multiple
in Traditional Search Funds:
Between 4 and 7.
Between 2 and 3.
Between 12 and 18.
Between 8 and 12.
12
In what decade did the Search Fund concept
originate
?
1970's
1990's
1980's
2000's
13
Corporate governance suggests an odd number of board members; for Search Fund acquired companies:
5 to 7 board members.
13 to 15 board members.
17 to 21 board members.
9 to 11 board members.
14
Choosing a
growing industry
with a “tailwind” allows companies to grow without fighting for market share.
False
True
15
What are the
four stages
of the Traditional Search Fund life cycle?
Fundraising, Acquiring, Merging, and Exiting.
Searching, Acquiring, Selling and Growth.
Fundraising, Search and Acquisition, Operation, and Exit.
Operating, Selling, Exiting and Acquiring.
16
Chances of
finding
a business for acquisition via Traditional Search Funds are below 30% in the USA.
False
True
17
In exchange for the initial Search Capital, if a company is acquired, each investor receives a
step-up
basis of:
250% of the invested capital.
200% of the invested capital.
100% of the invested capital.
150% of the invested capital.
18
In the first 6 to 18 months after the acquisition, searchers typically make
strong changes
to the acquired business.
False
True
19
Traditional Search Funds typically acquire companies in the
price range
between X and Y million US dollars.
$5 and 20$.
100$ and 300$.
1$ and 5$.
20$ and 100$.
20
Which of the following funding types is riskier if considering the risk of
LOSING ALL
the investment.
Seed Capital.
Private Equity.
Search Fund.
Venture Capital.
21
It's riskier to acquire and manage an
existing
healthy company than a start one from scratch.
True
False
22
There are 3 primary levers used to create
equity value
in any company: Operations, Finance and Valuation Multiple.
True
False
23
Select
two ways
in which Searcher CEOs can create value in their new acquisitions (
choose 2 only
).
Add-on acquisitions.
Firing collaborators.
Hiring a Sales Director.
Revenue growth.
24
When
fundraising
, the best option is to have a mix of different investors.
False
True
25
Searchers should match their personal risk/reward
profiles
and operating strengths with the company's characteristics.
False
True
26
Sell at higher multiples due to professionalization of management is the
most common
Search Fund strategy.
False
True
27
Alternative investment class consisting of funds that directly invest acquiring participation in
private
companies.
IPO.
CAIA.
Stock Exchange.
Private Equity & Venture Capital.
28
If the Search Capital is
exhausted
before an acquisition is completed, the Searcher may choose close the fund.
False
True
29
For Emerging Economies, Search Fund Investors request adjusts to avoid "free return" created by
inflation
.
True
False
30
Successful fundraisers generally approach the following people as
investors
(
choose 3 only
):
Search Fund Investors.
High net worth individuals.
Business owners.
Investment bankers.
31
Chances of
finding
a business for acquisition via Traditional Search Funds are above 60% outside of the USA.
False
True
32
Undesirable
companies to acquire via Traditional Search Funds (
choose 2 only
):
Companies in a growing industry.
Companies in a highly consolidated industry.
Companies that are easy to manage.
Companies in a declining industry.
33
Traditional Searchers raise money in two stages:
Initial Capital and Growth Capital.
Intel Capital and Corporate Capital.
Search Capital and Acquisition Capital.
Exit Capital and Fundraising Capital.
34
Companies with EBITDA margins smaller than 10% provide reasonable margin of
safety
.
False
True
35
What kind of
degree
is highly appreciated in Search Funds?
PHD
MBA
LLM
DBA
36
The main risks of Traditional Search Funds are (
choose 3 only
):
Risks related to finding a company.
Risks related to raise Search Capital.
Risks related to managing and growing a company.
Risks related to completing an acquisition.
37
Undesirable
companies to acquire via Traditional Search Funds (
choose 2 only
):
High customer churn.
Selling motivated for nonbusiness reason.
High recurring revenue.
Companies in turnaround situation.
38
The main
document
prepared to attract investors to a Traditional Search Fund is:
Smart contract
PPM
SHA
Business Plan
39
How long does it take to run a Traditional Search Fund and acquire a company?
Between 2 and 6 months.
Between 3 and 6 years.
Between 12 and 30 months.
Between 12 and 36 weeks.
40
Traditional Search Funds are usually
structured
as limited liability companies.
False
True
