1. © Prentice Hall, 2007Excellence in Business, 3eChapter 5 - 1 Forms of Business Ownership

2. © Prentice Hall, 2007Excellence in Business, 3eChapter 5 - 2 Business Ownership Three Common Forms Sole Proprietorships Sole Proprietorships Partnerships Corporations

3. © Prentice Hall, 2007Excellence in Business, 3eChapter 5 - 3 Ease of establishment Self-satisfaction Privacy Tax advantages Unlimited liability Personal pressure Difficult to get funding Limited life Sole Proprietorship AdvantagesDisadvantages

4. © Prentice Hall, 2007Excellence in Business, 3eChapter 5 - 4 Business Partnerships General Partnerships Limited Partnerships UnlimitedLiabilityUnlimitedLiability EqualPartnersEqualPartners ShareOwnershipShareOwnershipLimitedLiabilityLimitedLiability UnequalPartnersUnequalPartners PassiveInvestorsPassiveInvestors

5. © Prentice Hall, 2007Excellence in Business, 3eChapter 5 - 5 Easy to Establish Tax Advantages Strength in Numbers Diversity of Skills Extended Life Increased Capital Partnership Advantages

6. © Prentice Hall, 2007Excellence in Business, 3eChapter 5 - 6 Partnership Disadvantages Unlimited Liability Unlimited Liability Interpersonal Problems Interpersonal Problems Unproductive Partners Unproductive Partners Managing Partner Managing Partner Law Suits Debts

7. © Prentice Hall, 2007Excellence in Business, 3eChapter 5 - 7 Partnership Agreement Decision-Making Authority Dispute Resolution Division of Profits Expected Contributions

8. © Prentice Hall, 2007Excellence in Business, 3eChapter 5 - 8 Corporations Enter Into Contracts Buy and Sell Property Sue and Be Sued Face Limited Liability

9. © Prentice Hall, 2007Excellence in Business, 3eChapter 5 - 9 Ownership of Corporations Shareholders Last Claim on Distributed Profits and Assets Cash or Stock Dividends Full Voting Rights Common Stock First Claim on Dividends and Assets Cash or Stock Dividends Minimal Voting Rights Preferred Stock

10. © Prentice Hall, 2007Excellence in Business, 3eChapter 5 - 10 Public Versus Private Ownership PublicCorporationPublicCorporationPrivateCorporationPrivateCorporation Not Publicly Traded TradedFewShareholdersFewShareholdersPubliclyTradedPubliclyTradedManyShareholdersManyShareholders

11. © Prentice Hall, 2007Excellence in Business, 3eChapter 5 - 11 Advantages of “Going Public” Ready supply of capital Increased liquidity Enhanced visibility Independent market value Increased flexibility

12. © Prentice Hall, 2007Excellence in Business, 3eChapter 5 - 12 Disadvantages of “Going Public” High cost SEC filing requirements Reduced ownership control Demands of public exposure Pressure for quarterly results

13. © Prentice Hall, 2007Excellence in Business, 3eChapter 5 - 13 Corporations  Access to capital  Limited liability  Increased liquidity  Unlimited life span  Excess paperwork  Burdensome costs  Double taxation  Disclosure requirements AdvantagesDisadvantages

14. © Prentice Hall, 2007Excellence in Business, 3eChapter 5 - 14 Types of Corporations Subchapter S Corporation Limited Liability Company Subsidiary Corporation

15. © Prentice Hall, 2007Excellence in Business, 3eChapter 5 - 15 Corporate Governance Common Shareholders Individuals Companies Non-profits Pensions Mutual Funds Board of Directors Dividends Corporate Affairs Strategic Plans Select Officers Finances Corporate Officers Chief Executive Chief Financial Chief Operations Employees of the Company Operations Finance Marketing Personnel Engineering ElectAppointHire

16. © Prentice Hall, 2007Excellence in Business, 3eChapter 5 - 16 Reform: Board-Related Issues Composition Education Liability Recruiting

17. © Prentice Hall, 2007Excellence in Business, 3eChapter 5 - 17 Business Combinations MergersMergersConsolidationsConsolidations LeveragedBuy-OutsLeveragedBuy-OutsAcquisitionsAcquisitions

18. © Prentice Hall, 2007Excellence in Business, 3eChapter 5 - 18 Types of Business Mergers Vertical Horizontal Conglomerate Market Extension Product Extension

19. © Prentice Hall, 2007Excellence in Business, 3eChapter 5 - 19 Mergers and Acquisitions AdvantagesAdvantages Economies of Scale EfficienciesEfficiencies SynergiesSynergiesDisadvantagesDisadvantages High-Risk Corporate Debt Management Distractions Culture Clashes

20. © Prentice Hall, 2007Excellence in Business, 3eChapter 5 - 20 Trends in Mergers and Acquisitions YearNumberValue (in billions) 1970 1975 1980 1985 1990 1995 2000 2003 5,152 2,297 1,889 3,001 2,074 3,510 11,123 8,232 $16 $12 $44 $180 $108 $356 $1,269 $530

21. © Prentice Hall, 2007Excellence in Business, 3eChapter 5 - 21 Defenses Against Mergers and Acquisitions White Knight Shark Repellent Poison Pill HostileTakeoversHostileTakeovers Tender Offers Proxy Fights

22. © Prentice Hall, 2007Excellence in Business, 3eChapter 5 - 22 Strategic Alliances and Joint Ventures Gain Credibility Expand Markets Access Technology Diversity Offerings Share Best Practices