Mission
Statement
To provide Confidential, Professional, no-nonsense, Business Management & Consulting :
Offering Business Valuation, Acquisition and Exit Strategies .
Honesty and Integrity assured.
1) Confidentiality
Has been defined by the International
Organization for Standardization (ISO) as "ensuring that information is
accessible only to those authorized to have access" and is one of the
cornerstones of Information security. Confidentiality is one of
the design goals for many cryptosystems, made possible in practice by the
techniques of modern cryptography.
Confidentiality
also refers to an ethical principle associated with several professions (eg,
medicine, law, religion, journalism,…). In ethics, and (in
some places) in law
and alternative forms of legal dispute resolution such as mediation,
some types of communication between a person and one of these professionals are
"privileged" and may not be discussed or divulged to third parties. In
those jurisdictions in which the law makes provision for such confidentiality,
there are usually penalties for its violation.
Confidentiality
of information, enforced in an adaptation of military's classic "need-to-know"
principle, forms the cornerstone of information security in today's
corporations.
2) Professional
Can be a person
either in a profession (certain types of skilled work requiring formal training
/ education) or in sports (a sportsman / sportswoman doing sports for payment).
Sometimes it is also used to indicate a special level of quality of goods or
tools. Work: A professional is a worker
required to possess a large body of knowledge derived from extensive academic
study (usually tertiary), with the training usually formalized.
Professions
are at least to a degree self-regulating, in that they control the training and
evaluation processes that admit new persons to the field, and in judging whether
the work done by their members is up to standard. This differs from other kinds
of work where regulation (if considered necessary) is imposed by the
state, or where official quality standards are often lacking. Professions
have some historical links to Guilds in these regards.
Professionals
usually have autonomy in the workplace - they are expected to utilize their
independent judgment and professional ethics in carrying out their
responsibilities. This holds true even if they are employees
instead of working on their own. Typically a professional provides a service (in
exchange for payment
or salary), in
accordance with established protocols for licensing, ethics, procedures,
standards of service and training / certification.
3) Nonsense
Is an utterance or written text in what appears to
be a human language
or other symbolic system that does not in fact carry any identifiable meaning.
Distinguishing sense from nonsense
While
Emily
Dickinson wrote that: Much madness is divinest Sense
To the discerning Eye…
The
problem lies in the discernment. Distinguishing meaningful utterances from
nonsense is not a trivial task. Confronted with a lengthy text in an unknown script,
how does one determine whether those characters in fact contained a meaningful
text, or were simply set using the equivalent of printer’s pi or a lorem ipsum-style
text?
The
problem is important in cryptography and other intelligence fields, where it is important to
distinguish signal from noise.
Cryptanalysts
have devised algorithms
for this purpose, to determine whether a given text is in fact nonsense or not.
These algorithms typically analyze the presence of repetitions
and redundancy in a text; in meaningful texts,
certain frequently used words—for example, the, is, and in a
text in the English language—will occur repeatedly. A random scattering
of letters, punctuation marks, and spaces will not exhibit these regularities. Zipf’s Law
attempts to state this analysis in the language of mathematics. By contrast,
cryptographers typically seek to make their cipher texts
resemble random distributions, to avoid telltale repetitions and patterns that
may give an opening for cryptanalysis.
4) Business Management & Consulting
Which comprises strategy consulting
and operations consulting) refers to both the practice of helping
companies to improve performance through analysis of existing business problems
and development of future plans, as well as to the industry composed of firms
that specialize in this sort of consulting. Management consulting may involve
the identification and cross-fertilization of best
practices, analytical techniques, change
management and coaching skills, technology implementations, strategy
development, or operational improvement. Often times management, consultants
also rely on their outsider's perspective to provide unbiased recommendations.
Management consultants generally bring formal frameworks or methodologies
to identify problems or suggest more effective or efficient ways of performing business
tasks.
Management
Consulting is becoming more prevalent in non-business related fields as well. As
the need for professional and specialized advice grows, other industries such as
government, quasi-government and not-for-profit agencies are turning to the same
managerial principles that have helped the private sector for years.
While
management consulting refers to providing business consulting services, it can
be hard to definitely distinguish between management consulting and other
consulting practices such as Information technology consulting
and human resource consulting because these
fields directly support business operations and often overlap the field of
management consulting.
5) Business Valuation
Is a process applied
by qualified valuation experts to determine the fair
market value of an owner’s interest in a business. Business valuation is
often used to resolve disputes related to estate and gift taxation, divorce litigation,
allocation of business purchase price, and many other business and legal
disputes.
“Fair
market value” is defined as the price, expressed in terms of cash equivalents,
at which property would change hands between a hypothetical willing and able
buyer and a hypothetical willing and able seller, acting at arms length in an
open and unrestricted market, when neither is under compulsion to buy or sell
and when both have reasonable knowledge of the relevant facts. See IRS Rev.
Rule. 59-60, 1959-1, Cum. Bulletin 237, codified at 26 C.F.R. § 20.2031-1(b).
The fair market value standard incorporates certain
assumptions, including the assumptions that the hypothetical purchaser is
reasonably prudent and rational but is not motivated by any synergistic or
strategic influences; that the business will continue as a going concern and not
be liquidated; that the hypothetical transaction will be conducted in cash or
equivalents; and that the parties are willing and able to consummate the
transaction. These assumptions might not, and probably do not, reflect the
actual conditions of the market in which the subject business might be sold.
However, these conditions are assumed because they yield a uniform standard of
value, after applying generally accepted valuation techniques, which allows
meaningful comparison between businesses, which are similarly situated.
A
business valuation report generally begins with a description of national,
regional and local economic conditions existing as of the valuation date, as
well as the conditions of the industry in which the subject business operates.
This section of the business valuation report provides a context in which the
subject business can be studied and compared to other businesses. Stock market
trends, gross domestic product, employment, inflation,
interest rates, and consumer spending are some of the economic indicators that are usually discussed
in the first section of a business valuation report. The conditions are examined
as of the valuation date, which may substantially pre-date the date of the
report. Business valuation professionals are permitted to consider only facts
that are known or knowable as of the valuation date. Events that were not
reasonably foreseeable on the valuation date cannot affect the business
valuator’s opinion of value. A common source of economic information for the
first section of the business valuation report is the Federal Reserve Board’s Beige Book,
published quarterly by the Federal Reserve Bank. State governments and
industry associations often publish useful statistics describing regional and
industry conditions.
After
reviewing economic conditions to provide context, the business valuation report
examines the subject company. A history of the company is often included, as
well as a description of the organization, its business lines, products and
services, its management, customers, competitors, and employees, and its
financial performance. The financial statement analysis generally follows a
description of the subject company. One of the first techniques that a business
valuation professional applies is called “normalization” of the subject
company’s financial statements. Normalizing the company's
financial statements permits the valuation
expert to compare the subject company to other businesses in the same geographic
area and industry, and to discover trends affecting the company over time. By
comparing a company’s financial statements in different time periods,
the valuation expert can view growth or decline in revenues or expenses,
increases or decreases in assets or liabilities, or other financial trends
within the subject company. Valuation professionals also review the subject
company’s financial ratios, such as the current
ratio, quick ratio, and other liquidity
ratios; collection ratios; and other measures of a company’s financial
performance.
The
most common normalization adjustments fall into the following four categories:
Three
different approaches are commonly used in business valuation: the income
approach, the asset-based approach, and the market approach. Within each of
these approaches, there are various techniques for determining the fair
market value of a business. Generally, the income approaches determine value
by calculating the net present value of the benefit stream generated
by the business; the asset-based approaches determine value by adding the sum of
the parts of the business; and the market approaches determine value by
comparing the subject company to other companies in the same industry, of the
same size, and/or within the same region. In determining which of these
approaches to use, the valuation professional must exercise discretion? Each
technique has advantages and drawbacks, which must be considered when applying
those techniques to a particular subject company. Most treatises and court
decisions encourage the valuator to consider more than one technique, which must
be reconciled with each other to arrive at a value conclusion. A measure of
common sense and a good grasp of mathematics are helpful.
The
income approaches determine fair
market value by multiplying the benefit stream generated by the subject
company times a discount or capitalization rate. The discount or capitalization
rate converts the stream of benefits into present value. There are several
different income approaches, including capitalization of earnings or cash flows,
discounted future cash flows (“DCF”), and the excess earnings method (which
is a hybrid of asset and income approaches). Most of the income approaches
consider the subject company’s historical financial data; only the DCF method
requires the subject company to provide projected financial data. Most of the
income approaches look to the company’s adjusted historical financial data for
a single period; only DCF requires data for multiple future periods. The
discount or capitalization rate must be matched to the type of benefit stream to
which it is applied. The result of a value calculation under the income approach
is generally the fair market value of a controlling, marketable
interest in the subject company, since the entire benefit stream of the subject
company is most often valued, and the capitalization and discount rates are
derived from statistics concerning public companies.
A
discount or capitalization rate is used to determine the present value of the
expected returns of a business. The discount rate and capitalization rate are
closely related to each other, but distinguishable. Generally speaking, the
discount rate or capitalization rate may be defined as the yield necessary to
attract investors to a particular investment, given the risks associated with
that investment. The discount rate is applied only to discounted cash flow (DCF)
valuations, which are based on projected business data over multiple periods of
time. In DCF valuations, a series of projected cash flows is divided by the
discount rate to derive the present value of the discounted cash flows. The sum
of the discounted cash flows is added to a terminal value, which represents the
present value of business cash flows into perpetuity. The sum of the discounted
cash flows and the terminal value is the value of the business. On the other
hand, a capitalization rate is applied in methods of business valuation that are
based on historical business data for a single period of time. The after-tax net
cash flow capitalization rate is equal to the discount rate minus the long-term
sustainable growth rate. The after-tax net cash flow of a business is divided by
the capitalization rate to derive the present value. Capitalization rates may be
modified so that they may be applied to after-tax net income or pre-tax cash
flows or income. There are several different methods of determining the
appropriate discount rates. The discount rate is comprised of two elements: (1)
the risk-free rate, which is the return that an investor would expect from a
secure, practically risk-free investment, such as a government bond; plus (2) a
risk premium that compensates an investor for the relative level of risk
associated with a particular investment in excess of the risk-free rate. Most
importantly, the selected discount or capitalization rate must be consistent
with stream of benefits to which it is to be applied.
The
Build-Up Method is a widely recognized method of determining the after-tax net
cash flow discount rate, which in turn yields the capitalization rate. The
figures used in the Build-Up Method are derived from various sources. This
method is called a “build-up” method because it is the sum of risks
associated with various classes of assets. It is based on the principle that
investors would require a greater return on classes of assets that are more
risky. The first element of a Build-Up capitalization rate is the risk-free
rate, which is the rate of return for long-term government bonds. Investors who
buy large-cap equity stocks, which are inherently more risky than long-term
government bonds, require a greater return, so the next element of the Build-Up
method is the equity risk premium. In determining a company’s value, the
long-horizon equity risk premium is used because the Company’s life is assumed
to be infinite. The sum of the risk-free rate and the equity risk premium yields
the long-term average market rate of return on large public company stocks.
Similarly, investors who invest in small cap stocks, which are riskier than
blue-chip stocks, require a greater return, called the “size premium.” Size
premium data is generally available from two sources: Ibbotson & Associates'
Stocks, Bonds, Bills & Inflation and Duff & Phelps' Risk Premium Report.
By adding the first three elements of a Build-Up discount rate, we can determine
the rate of return that investors would require on their investments in small
public company stocks. These three elements of the Build-Up discount rate are
known collectively as the “systematic risks.” In addition to systematic
risks, the discount rate must include “unsystematic risks,” which fall into
two categories. One of those categories is the “industry risk premium.”
Ibbotson’s yearbooks contain empirical data to quantify the risks associated
with various industries, grouped by SIC industry code. The other category of
unsystematic risk is referred to as “specific company risk.” No published
data is available to quantify specific company risks. Instead, specific company
risks are determined by the valuation professional, based upon the specific
characteristics of the business and the professional’s reasonable discretion
applied to appropriate criteria. It is important to understand why this
capitalization rate for small, privately held companies is significantly higher
than the return that an investor might expect to receive from other common types
of investments, such as money market accounts, mutual funds, or even real
estate. Those investments involve substantially lower levels of risk than an
investment in a closely held company. Depository accounts are insured by the
federal government (up to certain limits); mutual funds are comprised of
publicly traded stocks, for which risk can be substantially minimized through
portfolio diversification; and real estate almost invariably appreciates in
value of long time horizons. Closely held companies, on the other hand,
frequently fail for a variety of reasons too numerous to name. Examples of the
risk can be witnessed in the storefronts on every
The
Capital Asset Pricing model is another method of determining the appropriate
discount rate in business valuations. The CAP-M method originated from the Nobel
Prize winning studies of Harry Markowitz, James Tobin and William Sharpe. Like
the Ibbotson Build-Up method, the CAP-M method derives the discount rate by
adding a risk premium to the risk-free rate. In this instance, however, the risk
premium is derived by multiplying the equity risk premium times “beta,”
which is a measure of stock price volatility. Beta is published by various
sources (including Ibbotson Associates, which was used in this valuation) for
particular industries and companies. Beta is associated with the systematic
risks of an investment. One of the criticisms of the CAP-M method is that beta
is derived from the volatility of prices of publicly-traded companies, which are
likely to differ from private companies in their capital structures,
diversification of products and markets, access to credit markets, size,
management depth, and many other respects. Where private companies can be shown
to be sufficiently similar to public companies, however, the CAP-M model may be
appropriate.
The
weighted average cost of capital is the third major approach to determining a
discount rate. The WACC method determines the subject company’s actual cost of
capital by calculating the weighted average of the company’s cost of debt and
cost of equity. The WACC capitalization rate must be applied to the subject
company’s net cash flow to invested equity. One of the problems with this
method is that the valuator may elect to calculate WACC according to the subject
company’s existing capital structure, the average industry capital structure,
or the optimal capital structure. Such discretion detracts from the objectivity
of this approach, in the minds of some critics. Once the capitalization or
discount rate is determined, it must be applied to an appropriate benefit
streams: pretax cash flow, after-tax cash flow, pretax net income, after tax net
income, excess earnings, projected cash flow, etc. The result of this formula is
the indicated value before discounts. Before moving on to calculate discounts,
however, the valuation professional must consider the indicated value under the
asset and market approaches.
The
value of a business is equal to the sum of its part. That is the theory
underlying the asset-based approaches to business valuation. In contrast to the
income-based approaches, which require the valuation professional to make
subjective judgments about capitalization or discount rates, the adjusted net book value
method is relatively objective. Pursuant to accounting convention, most assets
are reported on the books of the subject company at their acquisition value, net
of depreciation where applicable. These values must be adjusted to fair
market value wherever possible. The value of a company’s intangible
assets, such as goodwill, is generally impossible to determine apart from the
company’s overall enterprise value. For this reason, the asset-based approach
is not the most probative method of determining the value of going business
concerns. In these cases, the asset based approach yields a result that is
probably lesser than the fair
market value of the business. In considering an asset-based approach, the
valuation professional must consider whether the shareholder whose interest is
being value would have any authority to access the value of the assets directly.
Shareholders own shares in a corporation, but not its assets, which are owned by
the corporation. A controlling shareholder may have the authority to direct the
corporation to sell all or part of the assets it owns and to distribute the
proceeds to the shareholder(s). The non-controlling shareholder, however, lacks
this authority and cannot access the value of the assets. As a result, the value
of a corporation's assets is rarely the most relevant indicator of value to a
shareholder who cannot avail himself of that value. Adjusted net book value may
be the most relevant standard of value where liquidation is imminent or ongoing;
where a company earnings or cash flow are nominal, negative or worth less than
its assets; or where net book value is
standard in the industry in which the company operates. None of these situations
applies to the Company, which is the subject of this valuation report. However,
the adjusted net book value may
be used as a “sanity check” when compared to other methods of valuation,
such as the income and market approaches.
The
market approach to business valuation is rooted in the economic principle of
substitution: that buyers would not pay more for an item than the price at which
they can obtain an equally desirable substitute. It is similar in many respects
to the “comparable sales” method that is commonly used in real estate
appraisal. The market price of the stocks of publicly traded companies engaged
in the same or a similar line of business, whose shares are actively traded in a
free and open market, can be a valid indicator of value when the transactions in
which stocks are traded are sufficiently similar to permit meaningful
comparison. The difficulty lies in identifying public companies that are
sufficiently comparable to the subject company for this purpose.
The
Guideline Public Company method entails a comparison of the subject company to
publicly traded companies. The comparison is generally based on published data
regarding the public companies’ stock price and earnings, sales, or revenues,
which is expressed as a fraction known as a “multiple.” If the guideline
public companies are sufficiently similar to each other and the subject company
to permit a meaningful comparison, then their multiples should be nearly equal.
The public companies identified for comparison purposes should be similar to the
subject company in terms of industry, product lines, market, growth, and risk.
In another variation of this method, the valuator may determine market multiples
by reviewing published data regarding actual transactions involving either
minority or controlling interests in either publicly traded or closely held
companies. In judging whether a reasonable basis for comparison exists, the
valuator must consider: (1) the similarity of qualitative and quantitative
investment and investor characteristics; (2) the extent to which reliable data
is known about the transactions in which interests in the guideline companies
were bought and sold; and (3) whether or not the price paid for the guideline
companies was in an arms-length transaction, or a forced or distressed sale. To
identify guideline companies that might be comparable to the Company that is the
subject of this valuation report, we reviewed data provided by the Center for
Economic and Industry Research, a service affiliated with the National
Association of Certified Valuation Analysts. The data was compiled by BIZCOMPS
and Multex, two widely used providers of data.
The
valuation approaches yield the fair
market value of the Company as a whole. In valuing a minority,
non-controlling interest in a business, however, the valuation professional must
consider the applicability of discounts that affect such interests. Discussions
of discounts and premiums frequently begin with a review of the “levels of
value.” There are three common levels of value: controlling interest,
marketable minority, and non-marketable minority. The intermediate level,
marketable minority interest, is lesser than the controlling interest level and
higher than the non-marketable minority interest level. The marketable minority
interest level represents the perceived value of equity interests that are
freely traded without any restrictions. These interests are generally traded on
the New York Stock Exchange, AMEX, NASDAQ, and other exchanges where there is a
ready market for equity securities. These values represent a minority interest
in the subject companies – small blocks of stock that represent less than 50%
of the company’s equity, and usually much less than 50%. Controlling interest
level is the value that an investor would be willing to pay to acquire more than
50% of a company’s stock, thereby gaining the attendant prerogatives of
control. Some of the prerogatives of control include electing directors, hiring
and firing the company’s management and determining their compensation;
declaring dividends and distributions, determining the company’s strategy and
line of business, and acquiring, selling or liquidating the business. This level
of value generally contains a control premium over the intermediate level of
value, which typically ranges from 25% to 50%. An additional premium may be paid
by strategic investors who are motivated by synergistic motives. Non-marketable,
minority level is the lowest level on the chart, representing the level at which
non-controlling equity interests in private companies are generally valued or
traded. This level of value is discounted because no ready market exists in
which to purchase or sell interests. Private companies are less “liquid”
than publicly traded companies are, and transactions in private companies take
longer and are more uncertain. Between the intermediate and lowest levels of the
chart, there are restricted shares of publicly traded companies. Despite a
growing inclination of the IRS and Tax Courts to challenge valuation discounts,
Shannon Pratt suggested in a scholarly presentation recently that valuation
discounts are actually increasing as the differences between public and private
companies is widening. Publicly traded stocks have grown more liquid in the past
decade due to rapid electronic trading, reduced commissions, and governmental
deregulation. These developments have not improved the liquidity of interests in
private companies, however. Valuation discounts are multiplicative, so they must
be considered in order. Control premiums and their inverse, minority interest
discounts, are considered before marketability discounts are applied.
The
first discount that must be considered is the discount for lack of control,
which in this instance is also a minority interest discount. Minority interest
discounts are the inverse of control premiums, to which the following
mathematical relationship exists: MID = 1 – [ 1 / (1 + CP)] The most common
source of data regarding control premiums is the Control Premium Study,
published annually by Mergerstat since 1972. Mergerstat compiles data regarding
publicly announced mergers, acquisitions and divestitures involving 10% or more
of the equity interests in public companies, where the purchase price is $1
million or more and at least one of the parties to the transaction is a
Another
factor to be considered in valuing closely held companies is the marketability
of an interest in such businesses. Marketability is defined as the ability to
convert the business interest into cash quickly, with minimum transaction and
administrative costs, and with a high degree of certainty as to the amount of
net proceeds. There is usually a cost and a time lag associated with locating
interested and capable buyers of interests in privately held companies, because
there is no established market of readily available buyers and sellers. All
other factors being equal, an interest in a publicly traded company is worth
more because it is readily marketable. Conversely, an interest in a private-held
company is worth less because no established market exists. The IRS Valuation
Guide for Income, Estate and Gift Taxes, Valuation Training for Appeals Officers
acknowledges the relationship between value and marketability, stating:
“Investors prefer an asset which is easy to sell, that is, liquid.” The
discount for lack of control is separate and distinguishable from the discount
for lack of marketability. It is the valuation professional’s task to quantify
the lack of marketability of an interest in a privately held company. Because,
in this case, the subject interest is not a controlling interest in the Company,
the owner of that interest cannot compel liquidation to convert the subject
interest to cash quickly, and no established market exists on which that
interest could be sold, the discount for lack of marketability is appropriate.
Several empirical studies have been published that attempt to quantify the
discount for lack of marketability. These studies include the restricted stock
studies and the pre-IPO studies. The aggregate of these studies indicate average
discounts of 35% and 50%, respectively.
Restricted
stocks are equity securities of public companies that are similar in all
respects to the freely traded stocks of those companies except that they carry a
restriction that prevents them from being traded on the open market for a
certain period of time, which is usually one year (two years prior to 1990).
This restriction from active trading, which amounts to a lack of marketability,
is the only distinction between the restricted stock and its freely traded
counterpart. Restricted stock can be traded in private transactions and usually
do so at a discount. The restricted stock studies attempt to verify the
difference in price at which the restricted shares trade versus the price at
which the same unrestricted securities trade in the open market as of the same
date. The underlying data by which these studies arrived at their conclusions
has not been made public. Consequently, it is not possible when valuing a
particular company to compare the characteristics of that company to the study
data. Still, the existence of a marketability discount has been recognized by
valuation professionals and the Courts, and the restricted stock studies are
frequently cited as empirical evidence. Notably, the lowest average discount
reported by these studies was 26% and the highest average discount was 45%.
In
addition to the restricted stock studies, U.S. publicly traded companies are
able to sell stock to offshore investors (SEC Regulation
S, enacted in 1990) without registering the shares with the Securities and Exchange Commission.
The offshore buyers may resell these shares in the
Another
approach to measure the marketability
discount is to compare the prices of stock offered in initial public offerings (IPOs) to
transactions in the same company’s stocks prior to the IPO. Companies that are
going public are required to disclose all transactions in their stocks for a
period of three years prior to the IPO. The pre-IPO studies are the leading
alternative to the restricted stock stocks in quantifying the marketability
discount. The pre-IPO studies are sometimes criticized because the
sample size is relatively small, the pre-IPO transactions may not be arm’s
length, and the financial structure and product lines of the studied companies
may have changed during the three-year pre-IPO window.
The
studies confirm what the marketplace knows intuitively: Investors covet
liquidity and loathe obstacles that impair liquidity. Prudent investors buy
illiquid investments only when there is a sufficient discount in the price to
increase the rate of return to a level, which brings risk-reward
back into balance. The referenced studies establish a reasonable range of
valuation discounts from the mid-30%s to the low 50%s. The more recent studies
appeared to yield a more conservative range of discounts than older studies,
which may have suffered from smaller sample sizes. Other methods of quantifying
the lack of marketability discount, such as the Quantifying Marketability
Discounts Model (QMDM) have not been considered and are beyond the scope of this
report.
6) Business Acquisition
Is
the process of acquiring a company to build on strengths or weaknesses of the
acquiring company. A merger is similar to an acquisition but refers more
strictly to combining all of the interests of both companies in to a stronger
single company. The end result is to grow the business in a quicker and more
profitable manner than normal organic growth would allow.
The
process begins with defining the type of business that
would make a good acquisition. Generally, businesses within the same segment or
a highly complimentary market segment are targeted. Once defined the target
business is approached and if interest is shown due
diligence is performed to ascertain the financial condition of the business.
When
the financial terms are agreed upon, and the contract is signed the merger
portion of the acquisition begins. Overlapping processes, personnel and products
are evaluated and the better performing pieces are retained, while the less
desirable are cut. Difficulty often arises when management teams are combined
and responsibilities distributed between the acquiring business and the
acquired.
A
single acquisition refers to one company buying the assets and operations of
another company and absorbing what is needed while simply discarding duplicated
or unnecessary pieces of the acquired business. Split and sell acquisitions
involve buying an entire business in order to gain one or two pieces of the
business. The acquiring business may wish to retain the customer list and a
product line, while moving manufacturing and other production related duties to
an existing line. In this case, the excess is often sold off to recapture some
of the acquisition cost.
Businesses
that use affiliates to sell and market their products may find themselves in the
position of losing control of the marketing portion. This presents a danger as
the entire business cycle is dependent on the sales cycle, which is now external
to the business. In this scenario, the acquiring business may be forced in to
paying a premium to the affiliate to regain control of the process without
upsetting current customers and cash flow. In rare instances the affiliate
will gain so much influence that it can purchase the parent company.
An exit
strategy is a means of escaping one's current situation, typically an
unfavorable situation. An organization or individual without an exit strategy
may be in a quagmire. At worst, an exit strategy will save
face; at best, an exit strategy will peg a withdrawal to the achievement of an
objective worth more than the cost of continued involvement
In entrepreneurship
and strategic management an exit strategy, exit
plan, or strategic withdrawal, is a way to terminate either one's ownership of a
company or the operation of some part of the company. Entrepreneurs
and investors
devise ways of recouping the capital they have invested in a company. The most
common strategy is simply to sell his or her equity position to someone else.
From time to time management may decide it is necessary to downsize its
operations. This typically involves discontinuing less profitable brands, products, product
lines, or operating divisions.
8) Honesty
Is the human quality of communicating and acting truthfully. It is
related to truth
as a value. This includes listening, and any action in the human repertoire —
as well as speaking.
Superficially, honesty means
simply, stating facts and views as best one truly believes them to be. It
includes both honesty to others, and to oneself (see: self-deception)
and about ones own motives and inner reality.
9) Integrity
Is the basing of one's actions on a consistent framework of principles. Depth of
principles and adherence of each level to the next are key determining factors.
One is said to have integrity to the extent that everything he does and believes
is based on the same core set of values. While those values may change, it is
their consistency with each other and with the person's actions that determine
his integrity.
The concept of integrity is directly linked to responsibility in that implementation spawning from principles is designed with a specific outcome in mind. When the action fails to achieve the desired effect, a change of principles is indicated. Accountability is achieved when a faulty principle is identified and changed to produce a more useful action.
An adversarial process can have general integrity when both sides demonstrate willingness to share evidence, follow guidelines of debate and accept rulings from an arbitrator in a good faith effort to arrive at either the truth or a mutually equitable outcome. An honorable presentation of the case measures both sides of the argument with a consistent set of principles. Failure to present principles in accordance with observation or to try them unequally can weaken a case.
10) Conclusion :
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In research and experimentation,
conclusions are determinations made by studying the results of preceding work
within some methodology (for example the scientific
method). These often take the form of theories. The
conclusion is typically the result of a discussion of the premises. Without a
discussion of the premises, there is no conclusion, only assertions and without
evidence, it is an allegation. Naturally, the accuracy of a given conclusion is
dependent on the truth of the chosen.
A
conclusion is the final section of an essay in which the
writer ties together what was presented in the passage, summing up the main
point, explaining how the thesis was proven, and successfully closing the discussion.
The conclusion is often the most difficult part of an essay to write, and many
writers feel that they have nothing left to say after having presented points
proving their thesis in the body of the paper. However, the conclusion is often
the part of the paper that a reader remembers best and thus must be effective to
be strong. This definition also applies more broadly to any progressive academic
or artistic work. Compare with Introduction (essay).
Main article: Logical consequence
In a mathematical proof or a syllogism, a
conclusion is a statement that is the logical consequence of preceding
statements.
Main article: Main
contention
In argument
mapping and informal logic a conclusion is given a different
order and is placed at the start of an argument and not at the end.