|
LOS e: Explain the role of exit routes in private equity and how it affects value.
Q1. The primary advantage of an initial public offering (IPO) as an exit route in private equity is that it:
A) offers the highest exit value potential.
B) is more cost-efficient and flexible than alternative exit routes.
C) is appropriate for firms regardless of firm size and operating history.
Q2. Which of the following lists correctly identifies exit routes in private equity, arranged from lowest to the highest exit values?
A) Initial public offering (IPO), management buyout, secondary market sale.
B) Liquidation, secondary market sale, IPO.
C) Management buyout, liquidation, IPO.
Q3. Christina Wagner is a CFA level 2 candidate currently studying about hedge funds, private equity and commodity futures. One of her friends is fascinated by what Wagner is learning and asks several questions on the topic. In particular, she is curious to know what exit options are available to a promising young venture capital (VC) firm if it is having difficulty attracting buyers due to poor market conditions. What should be Wagner’s most appropriate response?
A) The VC firm should be liquidated in the absence of prospective buyers through the sale of the firm’s assets.
B) Since an initial public offering is not feasible, the VC firm should be sold to another firm through a buyout or secondary market sale.
C) The VC firm should consider the acquisition of another firm and sell the merged entity once capital market conditions have improved. | 
发表于 2009-3-10 11:16
| 
