Cash Out (Accounting)

A detailed Summary of Cash Out (Accounting)

In an October 1998 issue of "Fortune Magazine" in the finance section, an article entitled "Cash Out on Your Own Terms" speaks about a relatively old concept refined for a new market. In the centuries past, wealthy landowners would allow working farmers to live and work on their land and tend the crops and cattle for a portion of the goods and maybe a portion of the profit. The farmer was happy because he didn't have enough money to buy his own land yet he could still do what he loved and support his family. The wealthy landowner was happy because he had his land working for him and was getting fairly cheap labor and a good return on his goods.

Today the same concept applies to owners of family businesses. When a CEO of a company either needs liquidity or has no relative or partner to pass the ownership to is the main time that owners think about where their business might be going. Many owners of a family business don't do estate planning or strategy until it's too late. Even when the owner tries to plan for the inevitable, he has minority shareholders or kids who don't want to run the business. Every option for the owner has a downside. Selling usually means the owner must give up contro

I had heard of this market idea before in companies like Venture Capital but it wasn't until I read this "Fortune" article that I grasped the whole concept. From what I had perceived before this market niche isn't looked highly upon by many people. Some small-businesses may think that these companies perform forceful buyouts and therefore big business destroys small-business. My reason for selecting this topic is because I now realize after researching this subject that it is because of market inventions like this one that our country is the land of opportunity.

In order to make their company attractive to buyers, owners should begin to develop and put in place a real management team. The CEO should be a dynamic, visionary leader. The chief financial officer should be able to offer "instant reporting of data and be a strategic thinker," and should have a well-known CPA firm begin auditing their financial statements if they haven't already. Small-businesses should beware of the investor who comes in at a huge price, because it's likely he will retrade the deal. "Does he intend to make money by building the value of the company through growth or financial engineering?" "Tremendously resist pressure from investment bankers to provide unattainable projections. When you tell people you're going to hit certain numbers, you'd better hit them. Nobody wins if you come in too aggressively." This is a prime example of conservatism in the real world. Investors are looking

Some common words found in the essay are:
Heritage Partners, Own Terms, Venture Capital, Fortune Magazine, heritage partners, Cash October, company heritage, hard people, wealthy landowner, family businesses, business owners, companies heritage, owners family,

Approximate Word count = 999
Approximate Pages = 4 (250 words per page double spaced)

Category: Miscellaneous