ECON 1 Lecture Notes - Lecture 25: Linear Discriminant Analysis, Gambling, Plus Markets Group
Document Summary
Many entrepreneurs start a business without thinking about their exit route. External influences: economy, luck gambler"s ruin: entrepreneur as the roulette-wheel gambler betting resources on the outcome of each business decision they make, market/industry structure, other opportunity. Internal influences: personal character, managerial capabilities, financial resources. Uses a sample of failed and non-failed firms to select financial ratios that best discriminate between two groups and then combine them into a simple number z-score. Formal voluntary agreements (make new arrangements with people/institutions you owe money) Harvest options number of options for entrepreneurs to harvest their investment. Floating the company and selling shares: become a public company with shares, off-exchange (ofex, alternative investment market (aim, stock exchange main market. Initial public offering (ipo) for a company new to the stock market. Valuing the business two widely used ways. If the buyer wishes to sell their shares, there is no established market to sell them on (unlike for public company)
