Why, all else equal, would an entrepreneur do better by selling most of the equity in a

Question:

Why, all else equal, would an entrepreneur do better by selling most of the equity in a new venture to a well-diversified investor than by retaining most of the equity?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Entrepreneurial Finance Strategy, Valuation, And Deal Structure

ISBN: 9780804770910

1st Edition

Authors: Janet Smith, Richard Smith, Richard Bliss

See More Books

Question Posted: Apr 30, 2024 01:02 AM

See More Questions

In early 2018, Nick Tommarello could be proud of what he and his partners had accomplished. Their company, Wefunder, Inc., was the acknowledged leader in the equity crowdfunding industry, an industry...
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
Googles ease of use and superior search results have propelled the search engine to its num- ber one status, ousting the early dominance of competitors such as WebCrawler and Infos- eek. Even later...
Two thousand kg of water, initially a saturated liquid at 150C, is heated in a closed, rigid tank to a final state where the pressure is 2.5 MPa. Determine the final temperature, in C. the volume of...
What general factors govern the choice between single-sampling plans and multiple sampling plans?
Composition. Are criteria followed in assembling the team? Who establishes and evaluates the criteria? How many members does the team have, and does this size benefit or disadvantage the team? Are...
Claim: 2; a=0.10. Sample statistics: = 0.015, s = 0.011, n = 8 and 2 =0.019, s = 0.004, n =6. Assume variances are not equal.
GreenBeam Ltd. claims that its compact fluorescent bulbs average no more than 3.50 mg of mercury. A sample of 25 bulbs shows a mean of 3.59 mg of mercury. (a) Write the hypotheses for a right-tailed...
6 2 . How do auditors address potential fraud risks during an audit?
If entrepreneurs discount the future cash flows of a venture at a higher rate than do diversified investors, why do entrepreneurs generally hold substantial equity interests in their ventures, and...
Why, all else equal, would shifting nonmarket risk to a well-diversified investor increase the value of an opportunity?
How does the result in this case further the purpose of the attorney-client privilege? Suppose that a hearing had been held on the question of the attorney-client privilege before Baldwin testified....
7. This is a question about electromagnetic waves. (a) Starting from Maxwell's equations in a vacuum show that the electric field E and magnetic field B obey wave equations and identify the velocity...
Participate in workplace health and safety Third- party report Task 1: Case scenario: Workplace hazard collection and risk control form You are required to review this workplace inspection form and...
The red curve is the position-time x-t graph for the ladybug. Each tick mark on the time axis of the graph marks off 0.5 s. Note: you can hit reset graph and graph again to watch the graph form again...
Oma's Bakery is thinking about replacing the convection oven with a new, more energy-efficient model. Information related to the old and new ovens follows: (Click the icon to view the information...
One could argue that substantial travel for work is an undesirable characteristic of any job. What would the theory of compensating differentials predict about the relative wages of a sales position...
Elsie has decided that buttermilk may sell better if it were marketed for baking and sold in pints. This would involve additional packaging at an incremental cost of $0.25 per pint. Each pint could...
Should we separate the debt and equity features of convertible debt? Team 1: Pro separation: Present arguments in favor of separating the debt and equity features of convertible debt. Team 2: Against...
A proposed $2.5 M investment in new equipment at a 100 MG/y M&Ms factory will save the plant $800,000/y in energy costs. Assuming an annual interest rate of 5%/y (compounded annually), and an...
Brief Exercise 10-7 Coronado Company obtained land by issuing 2,250 shares of its $14 par value common stock. The land was recently appraised at $103,240. The common stock is actively traded at $44...
The following schedule reconciles Cele Co.'s pretax GAAP income Pretax GAAP income Nondeductible expense for fines Tax deductible depreciation in excess of GAAP depreciation expens Taxable rental...

Why, all else equal, would an entrepreneur do better by selling most of the equity in a

Question:

Step by Step Answer:

All else equal an entrepreneur may potentially do better by selling most of the equity in a new venture to a welldiversified investor rather than reta...View the full answer

Entrepreneurial Finance Strategy, Valuation, And Deal Structure

Students also viewed these Business questions