Instead of waiting for a month to go by, I'm going to try to post more regularly and in smaller chunks. That way, the info is more fresh and more comprehensible.
The general topic of this post is finance, and the two lessons regarding asset purchase agreements and leasing come from the entrepreneurial finance class I'm taking this quarter.
The material can at times appear dry, but I've enjoyed digging deep into the actual details and semantics behind real world business deals and operations, and this week I've learned a bit about how small businesses are purchased in the real world and some additional reasons behind why companies lease equipment that I would not have considered otherwise.
Asset Purchase Agreements: Small Business M&A
We had the pleasure of hearing a guest speaker in our class who came from the car dealership industry. He had purchased and developed several profitable dealerships around California and was giving us a lot of the inside "scoop" on how the deals really got done.
The first and most major new point that I took away was that small business balance sheets are mostly all "fiction" and not to be trusted. When buying a small business, the purchaser should really just buy the assets through an asset purchase agreement and not the actual company entity (stock). This will allow the purchaser to focus on the tangible, (more) easily appraisable values of the assets and not worry about the liabilities or any hidden cans of worms that can spring open from the purchased business in years to come. I never knew asset purchases were a possibility; I thought it was all just whole company purchases, so that was neat to learn.
I always thought that companies leased equipment when they don't need to use it for too long, are strapped for cash, or when the equipment can quickly become obsolete. I learned through a case analysis of a lease versus buy decision that there are many additional conditions when companies would prefer to lease as opposed to buy assets:
About one month has flown by since I finished orientation at UCLA Anderson, and it's been an incredibly busy yet productive month. I have been surprised by how little tedious work there has been and how much valuable information and how many useful experiences I have already been lucky to have.
I've been meaning to post about each of the lessons below as the month went by (as I learned them), but I just couldn't find the time. Perhaps I will expound on them in future dedicated blog posts.
Some of the lessons below are a lot more technical and narrow than others; some are directly from a specific class and others more from a general business-school team learning experience. The order of the lessons listed below is somewhat random but generally goes from technical/specific to non-technical/general/life lessons. Most of the lessons involve my areas of interest (finance, technology, and entrepreneurship) and highlight new perspectives I've gained through my first month at Anderson. Part of my purpose in writing these down here is to track my progress (and not forget), and the other part is obviously to share it with anyone else interested.
Entertainment and Business Law
Communications, Networking, and Time Management
Wow, that was a long post, so congratulations if you made it to the end.