True/False: the two most common means of acquisition are the entrepreneur's direct purchase of the firm's entire stock or assets or the bootstrap purchase of these assets.

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Business

Camden Cobb

Today, 14:12

True/False: the two most common means of acquisition are the entrepreneur's direct purchase of the firm's entire stock or assets or the bootstrap purchase of these assets.

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Skyler Andrade · Answer 1

True

Explanation:

According to Thomas Duening and Robert Hisrich book "Technology Entrepreneurship: Taking Innovation to the Marketplace", the direct purchase has some problems: long-term capital gain to the seller and double taxation. The bootstrap purchase eliminates those problems: the acquiring company can acquire a small amount of the firm, 20 or 30% in cash and the remaining with a long-term note.