Notes 555
cussed in the next chapter. This example is
simplified for computation purposes.
- R. E. Silverman, and T. Herman, “IRS Steps
Up Scrutiny of Family Partnerships,” The
Wall Street Journal,January 25, 2006: D1.
- Retrieved from the Web July 17, 2006,
http://www.sec.gov/info/smallbus/qasbsec.
htm.
- As used in Section 2(15)(ii) of the Securities
Act of 1933 shall include the following per-
sons:
(a) Any savings and loan association or other
institution specified in Section 3(a)(5)(A)
of the Act whether acting in its individual
or fiduciary capacity; any broker or dealer
registered pursuant to Section 15 of the
Securities and Exchange Act of 1934; any
plan established and maintained by a state
or its political subdivisions, or any agency
or instrumentality of a state or its political
subdivisions, for the benefit of its employ-
ees, if such plan has total assets in excess
of $5 million; any employee benefit plan
within the meaning of Title I of the
Employee Retirement Income Security
Act of 1974, if the investment decision is
made by a plan fiduciary, as defined in
Section 3(21) of such Act, which is a sav-
ings and loan association, or if the
employee benefit plan has assets in excess
of $5 million or, if a self-directed plan,
with investment decisions made solely by
persons that are accredited investors;
(b) Any private business development com-
pany as defined in Section 202(a)(22) of
the Investment Advisers Act of 1940;
(c) Any organization described in Section
501(c)(3) of the Internal Revenue Code,
corporation, Massachusetts or similar
business trust, or partnership not formed
for the specific purpose of acquiring the
securities offered, with total assets in
excess of $5 million;
(d) Any director, executive officer, or general
partner if the issuer of the securities being
offered or sold, or any director, executive
officer, or general partner of the issuer;
(e) Any natural person whose individual net
worth, or joint net worth with that per-
son’s spouse, at the time of the purchase
exceeds $1 million;
(f) Any natural person who had an individ-
ual income in excess of $200,000 in each
of the two most recent years or joint in-
come with that person’s spouse in excess
of $300,000 in each of those years and
has a reasonable expectation of reaching
the same income level on the current
year;
(g) Any trust, with total assets in excess of $5
million, not formed for the specific pur-
pose of acquiring the securities offered,
whose purchase is directed by a sophisti-
cated person as described in Rule
506(b)(2)(ii); and
(h) Any entity in which all of the equity own-
ers are accredited investors.”
- These observations are from comments made
by Stephen J. Hackman, Esq., in a talk enti-
tled “Financing Entrepreneurial Ventures” at
the Indiana Entrepreneurial Educational
Conference, Indianapolis, Indiana, March 1,
1991.
- See E. Altman, R. Haldeman, and P.
Narayanan, “ZETA-Analysis: A New Model
to Identify Bankruptcy Risk,” Journal of
Banking and Finance,June 1977: 29–54.
- Retrieved from the Web July 18, 2006,
http://www.law.cornell.edu/wex/index.php/B
ankruptcy.
Chapter 8
- H. Stevenson, I. Grosbeck, M. Roberts, New
Business Ventures and the Entrepreneur,3rd ed.
(Homewood, IL: Irwin, 1989): chapter 6.
- This follows Stevenson et al., 1989.
- D. Cable, and S. Shane, “A Prisoner’s
Dilemma Approach to Entrepreneur-Venture
Capitalist Relationships,” Academy of
Management Review22, no. 1, 1997: 142-76.
- H. Sapienza and M. Korsgaard, “Procedural
Justice in Entrepreneur-Investor Relations,”
Academy of Management Journal39, no. 3,
1996: 544-574.
- This follows J. Timmons, New Venture Cre-
ation(Homewood, IL: Irwin, 1990).
- Kauffman Foundation, http://www.kauff-
man.org/. Reported in R. Breeden, “Family,
Friends Can Offer a Strong Financial Base,”
The Wall Street Journal.Retrieved from the
Web August 23, 2003, http://wsj.com.
- L. Napoli, “Giving Start-Ups a Leg Up, for a
Slice of the Pie,” New York Times,September
