Question

Matt owns a car dealership that is very profitable. Since he plans to retire in 5-10 years, Matt has decided to retain ownership for now, but without continuing to grow the business. This change would also allow him to invest for retirement some of the cash that the business is now generating. Which harvesting method does this example illustrate?

a. A delayed sellout

b. A strategy to release the firm's free cash flows to the owners

c. Offering stock to the public through an IPO

d. Issuing a private placement of stock

Answer

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