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A family succession is different from all other exit options in so far as the emphasis is often not on maximising the owner’s exit price, but rather on ensuring that the business continues successfully under the ownership of the successor. Consequently, the tailoring (or grooming) is concentrated on the successor, rather than on the business. This alters the perspective of the business’s suitability for the exit option chosen and the notion of what purchasers are looking for. This will become clearer from what follows below.

Generally speaking, most types of businesses qualify for a family succession. However, if the successor is required to borrow money against the business’s assets to acquire the business, the business will need to be able to support the borrowings and the successor will need to have a professionally produced business plan demonstrating this ability.

As I have said, the emphasis in family successions is usually more on the suitability of the heir than the suitability of the business, so this question has to be changed to: ‘What are we looking for in the successor?’ This will influence the choice of successor and the way he or she should be groomed for the take over.

We will now look at the steps necessary for grooming (or tailoring) the heir for taking over the business.

Today, many organizations disappear from the list of successful business organizations on the popular ranking of some professional bodies (Agrawal, 2006). One of the factors generally reported as its root cause is the failure to manage innovation within the system. A critical psychological analysis of the attitude (statements as refl ected on interviews to
the media or the address of the Annual General Meeting) and behaviour of the respected business leaders and CEOs (as actually perceived by the group within or insiders, who really know the person well) reveals a wide discrepancy. It cannot be objectively established but inferences could be drawn that probably Indian business leaders and successful entrepreneurs possess a common style of managing people. At some stage in every level it is the personal relationship that matters in the fi nal decisionmaking.

This is based on the perceptual response analysis of those who aspire to get a chance to lead the organization. In case my thesis gets empirical support and validity, then the absence of entrepreneurial leadership in India requires further empirical examination. Thus, this leads only to routine success and normal achievement, which could be relatively better in that business environment. Any global business/ entrepreneurial leader of this century has to go beyond personalized relationships and feelings of insecurity (loss/absence of power) in order to compete and keep going. Therefore, societies, where leaders say something and do just the opposite, will have diffi culties in fostering and developing an entrepreneurial existence. The role of the top management in an organization is crucial in making an entrepreneurial initiative, a reality and the process effective. Here, a CEO has to go miles away from the transformational leadership if he/she is willing to take the organization ahead.

There are also evidences to highlight the role that the government policies, and regional and cross-cultural factors play to facilitate entrepreneurial activities. Utilization of available opportunities and creation of market could be positively related to as entrepreneurial success. It is an outcome of making use of the opportunity to come out with a product that will be used in the market by the customers looking for a particular product.

Every individual has some talent or the other while in some this talent can be identifi ed, in others, it remains hidden. Entrepreneurship is not restricted to a specifi c person or group. It is an ability to explore, create and utilize the available explored and unexplored opportunities for novel or unexpected innovations and solutions. Therefore, to facilitate and create business, some competencies could be identifi ed and fostered as per the requirements of the entrepreneurship. It will help to realize where the scope for starting and pursuing entrepreneurial venture exists (sensing market). An entrepreneurial personality ignores the role of individual differences. Rather, it lays emphasis on the role of cognitive factors, and therefore we see substance in terms of entrepreneurial intentions and entrepreneurial
thinking, which occupy significant space in understanding the process of entrepreneurship. Encouraging all individuals towards developing competency that leads to the road of entrepreneurship in any field is the demand of the time and organizations must foster it.

Another major challenge of corporate entrepreneurs today is to explore, identify and recognize the opportunities available for developing new business enterprises. Large enterprises face such challenges more seriously than their counterparts, as the utilization of opportunities is crucial in the outcomes of entrepreneurship. Also, such organizations do have the problem of middle management crisis and confl ict between the young talent and the old experts. The middle management, particularly in large enterprises, is passing through a stage of transition. It does not see any space for contribution in decision-making or self development. Dissatisfaction of all kinds is clearly visible, leading to ineffective utilization of available talent for organizational effectiveness. Senior management can play an important role here in creating an environment supporting entrepreneurial initiatives and asserting their value for the organization.

The traditional fundamental approach and structural models generally are based on the same set of balance sheet inputs. But while the fundamental approach used by most credit analysts requires thorough company and industry knowledge and is therefore rather costly and time-consuming, equity-based models are an efficient means to screen broad universes of credit issuers. However, structural models allow to incorporate credit analysts’ forecasts to take account of qualitative information that is not yet reflected in the balance sheet. Projections can be used to create more realistic estimates of the default threshold or to generate different scenarios with respect to future liabilities.

The bear market for credit between 1997 and mid-2002 has put a new focus on valuing corporate credit. The debt-financed equity bull market of the second half of the 1990s was accompanied by historically high default rates and investigations of the management and reporting of corporate balance sheets.

Obviously the standard approach of using rating agency credit ratings to gauge credit risk is no longer sufficient. As a consequence, quantitative approaches have recently gained popularity, particularly structural models based on equity-market inputs. Quantitative models can be used as a tool to provide warning signals or to determine whether the spread on a corporate bond adequately compensates the investor for the risk. Due to the current low-yield/low-return environment the number of investors interested in credit products has grown worldwide. Credit models like KMV or CreditGrades have been developed to meet the growing investor demand.

These enhancements of the Merton model are able to incorporate companyspecific details and can include subjective credit analyst views. With respect to the rapidly expanding credit derivatives market, quantitative models provide critical inputs for valuation and hedging. Default correlation, a major driver for the valuation of credit portfolio products, can be modeled in both structural and reduced form models. Finally, quantitative credit models have become indispensable tools for the risk management of financial institutions.

Although various quantitative models are used by credit investors, two approaches for modeling default have gained widespread acceptance: structural models and reduced-form models. Both of these methods provide estimates of default probabilities or fair market spreads.

The securities issued by the U.S. Department of the Treasury are backed by the full faith and credit of the U.S. government. Consequently, market participants through¬out the world view,them as having no credit risk. As such, interest rates on Treasury securities are the key interest rates in the U.S. economy as well as in international capital markets. The large size of any single issue has contributed to making the Trea¬sury market the most active and hence the most liquid market in the world.

The minimum interest rate that investors want is referred to as the base interest rate or benchmark interest rate that investors will demand for investing in a non-Trea¬sury security. This rate is the yield to maturity (hereafter referred to as simply yield) offered on a comparable maturity Treasury security that was most recently issued (“on the run”). So, for example, if an investor wanted to purchase a 10-year bond on September 19, 1997, the minimum yield the investor would seek is 6.086%, the yield on the most recently issued 10-year Treasury