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Ending The Venture Sesi 11 J0692 - Entrepreneurship.

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Presentation on theme: "Ending The Venture Sesi 11 J0692 - Entrepreneurship."— Presentation transcript:

1 Ending The Venture Sesi 11 J Entrepreneurship

2 Agenda Management of Succession Other Exit Barrier
J Entrepreneurship

3 Bankruptcy’s Lessons Overextension To Markets
Protects From Creditors Not Competitors Entrepreneur = Business Recognize Failure Too Late Emotionally Painful J Entrepreneurship

4 Reorganization Least Severe Alternative- “Breathing Room”
Cash Flow Problems Can Be Overcome Plan Prepared & Approved By Court Extension- Postpone Claims Substitution- Exchange Something For Debt Composition- Prorated Settlement J Entrepreneurship

5 Bankruptcy Survival Bargaining Chip- Restructure And Reorganize
File Before Failure Of Cash Or Revenue Chapter 11- Only If Chance Of Recovery Examination Of Transactions For Fraud Maintain Good Records Understand Completely Transfer Litigation To Bankruptcy Court Realistic Reorganization Plan J Entrepreneurship

6 Extended Payment Budgets Future Income To Outstanding Debt
Payment Of All Priority Claims J Entrepreneurship

7 Priorities Secured Creditors Administrative Expense
Claims From Operations Wage Claims Contributions To Benefit Plans Claims Of Consumer Creditors Taxes General Creditors J Entrepreneurship

8 Liquidation Voluntary vs. Involuntary Involuntary Requirements
Debts Not Being Paid When Due (1 – 3 Creditors) Custodian Appointed Fair Value Of Assets < Debts (Balance Sheet Test) J Entrepreneurship

9 Bankruptcy Trustee Elected By Creditors- Interim Appointed By Court
Becomes Owner Of All Nonexempt Property Can Set Aside Petitions Transfers Property To Creditor J Entrepreneurship

10 Strategy During Reorganization
Prepare Plan Sell Plan Communicate No Checks That Can’t Be Covered J Entrepreneurship

11 Reducing Risk Of Failure
Avoid Excess Optimism Prepare Good Marketing Plan Make Good Cash Projections Keep Abreast Of Market Identify Business Stress Points J Entrepreneurship

12 Bankruptcy Warning Signs
Financial Management Lax Inability To Document/Explain Transactions Large Discounts To Speed Up Cash Flow Contracts Below Standard Amounts Bank Wants Subordination Key Personnel Leave Lack Of Materials Unpaid Taxes Demand For Cash Payment Customer Complaints Increase J Entrepreneurship

13 Failure Reality Consult with Family/Friends Seek Outside Assistance
Drop Venture That Is Draining Resources J Entrepreneurship

14 Succession Planning Issues
Senior Management Committed To Plan Well-Defined Job Descriptions Open Process J Entrepreneurship

15 Harvesting Direct Sale Employee Stock Option
2-3 Year Plan to Sell To Employees Create Trust Fund Management Buy-Out- Based On Value Of Goodwill & Asset Appraisal J Entrepreneurship

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