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Exam (elaborations)

CEPA Term - Session 2 Questions and Answers

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  • Course
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  • CEPA

What is a Triggering Event? o :## A Personal, Financial, Business assessment correlated to the business Range Of Value. What are benefits of a Triggering Event? o :## •Establishes the present & best in class business values o •Predicts the probability of succeeding with growth and transi...

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  • September 2, 2024
  • 15
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • CEPA
  • CEPA
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2024/2025 1|Page




CEPA Term - Session 2 Questions and Answers
What is a Triggering Event?

o :## A Personal, Financial, Business assessment correlated to the business Range

Of Value.




What are benefits of a Triggering Event?

o :## •Establishes the present & best in class business values

o •Predicts the probability of succeeding with growth and transition strategies

o •Identifies the PROFIT GAP

o •Identifies the VALUE GAP

o •Identifies ACTIONS needed to protect, build and harvest value




What is the equation behind Strategic (Present) Value = Simple Math

o :## R/EBITTDA x Market Multiple = Value

or

R/Sales x Market Multiple = Value




What is a businesses Tax Number when it comes to valuation?

o :## •This is the number that displays on the financial statements

• It is the number presented to tax authorities

•Usually, the objective is to minimize this number for tax purposes

, 2024/2025 2|Page


•Assets are written down to book value




What is a business Real Number when it comes to valuation?

o :## •This number is calculated by adjusting the financial statements; called

Financial Recasting

• It reflects the most likely earnings and balance sheet of an ongoing concern

• Tangible assets adjusted to market value upon transfer (NOTE: does not include

intangibles)

• The objective is to maximize this number for wealth creation




What does EBITDA stand for?

o :## EBITDA: Earnings Before Interest Taxes Depreciation Amortization




What is Recasted EBITDA?

o :## Market's measure of earnings being generated from ongoing, normalized

operations. Needs to be normalized. Balance Sheet adjustments may include

inventory write offs, A/R write offs, asset write offs, debt payoffs (inter-company

or owner/employee).




The Range of Value Market Multiple is determined by ______________.

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