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CEPA Exam Prep 2024 - Certified Exit Planning Advisor: Questions With Solutions
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CEPA Exam Prep 2024 - Certified Exit Planning Advisor:Questions With Solutions
What does EBITDA stand for? Right Ans - Earnings Before Interest, Taxes,
Depreciation, & Amortization
What is the calculation for Recasted EBITDA? Right Ans - Addbacks +
EBITDA = Recasted EBITDA
What are the three gaps within the Value Acceleration Methodology? Right
Ans - Wealth Gap, Value Gap, & Profit Gap
What are the Five Stages of Value Maturity in order? Right Ans - Identify,
Protect, Build, Harvest, Manage
In the Five Stages of Value Maturity, what occurs in the "Identify" stage?
Right Ans - Identify and asses the business value. Understand how ready and
attractive the business is. What is the current value? What is it's potential
value? What are the gaps?
What are considered the "Value Creation" stages within the Five Stages of
Value Maturity? Right Ans - Protect Value and Build Value
In the Five Stages of Value Maturity, what occurs in the "Protect" stage?
Right Ans - Protect what you have because "build" means more risk. Make
sure the right systems are in place: the right financial advisor, right financial
plan, documented standard operating procedures within the business,
insurance, etc. Protect always comes before Build. Non-strategic actions are
ALWAYS before strategic actions.
In the Five Stages of Value Maturity, what occurs in the "Build" stage? Right
Ans - This is made up of strategic actions including culture building,
communication building, personnel changes, new products/improvements,
etc.
In the Five Stages of Value Maturity, what occurs in the "Harvest" stage?
Right Ans - This is when the owner exits the company and harvests its value
,Simply put, what is exit planning? Right Ans - Good Business strategy
What are the Four intangible Capitals or "Four C's"? Right Ans - Human
Capital, Structural Capital, Customer Capital, & Social Capital
How much of a business' value (in percentage) is trapped inside the four
intangible capitals or "Four C's"? Right Ans - 80%
What is Human Capital? Right Ans - It's the people in the business.
Employee tenure, experience / talent level, management team succession
plan, management team strength, etc.
What is Structural Capital? Right Ans - The most robust of the "Four C's",
this includes everything from the real estate, intellectual property, equipment,
process & documentation, IT, systems (including financial & accounting
systems), etc.
What is Customer Captial? Right Ans - Depth of customer relationships,
customer entanglement, customer concentration / diversification, contracts,
etc.
What is Social Capital? Right Ans - Culture within & outside the company.
How people relate outside of the company. This is developed over time after
all other intangible capitals are established/improved.
What are the three gates (in order) of the Value Acceleration Methodology?
Right Ans - Discover, Prepare, & Decide
What are the Three Legs of the Stool? Right Ans - Business, Financial, &
Personal
What is the Wealth Gap? Right Ans - Understanding the owner's wealth
goal (how much money they'll need to fulfill personal needs) and the current
value of their assets (not including their business). The gap or difference
between these two is usually filled by the business' value.
What is the Value Gap? Right Ans - The difference between the owner's
current business value and the Best-In-Class business value.
,What is the Profit Gap? Right Ans - The difference between the owner's
current business profit (or recasted EBITDA) and the Best-In-Class business
profit (or recasted EBITDA)
The two concurrent paths are in which gate within the Value Acceleration
Methodology? Right Ans - The Prepare Gate
What are the two concurrent paths within the Prepare Gate? Right Ans -
The risk mitigation (De-risk) / business improvement path
AND
The personal/financial ("Vision") path
What is the ONE goal of the Value Acceleration Methodology? Right Ans -
To drive value across all three legs of the stool (business, financial & personal)
How much of an owner's wealth (in percentage) is locked in their business?
Right Ans - 80-90%
What's the difference between a Lifestyle Business and Value Creator
Business? Right Ans - Lifestyle business = good income; not transferrable
Value creator business = good income; transferable (owners treat their
business like an asset)
Most owners don't address what kind of planning? Right Ans - personal
planning
What kind of planning could be the key to making an exit successful? Right
Ans - personal planning
What is the number one reason deals fail? Right Ans - seller's cold feet
The Value Maturity Index teaches owner's the concept that they can have
_____________ and ______________. Right Ans - value AND income (as long as the
owner focuses on VALUE first)
, What is the formula to calculate value? Right Ans - Cash (Recasted EBITDA)
x MM (market multiple) = Value
Sales X MM (market multiple) = Value
Every business trades in a ________________________. Right Ans - range of value
Value Acceleration focuses on working with __________________________ while
improving _____________________________. Right Ans - accounting systems;
intangible assets
Why is vision important? Right Ans - Vison is needed to execute well, and it
must come from the owner / owner's family
What is Alignment? Right Ans - When the owner aligns his/her resources
including family, staff, Advisors, etc.
Which of the Five Stages of Value Maturity are in the Discover Gate? Right
Ans - Identify
Which of the Five Stages of Value Maturity are in the Prepare Gate? Right
Ans - Protect and Build
Which of the Five Stages of Value Maturity are in the Decide Gate? Right
Ans - Harvest
What is the definition of a Triggering Event? Right Ans - A business
valuation correlated to a personal, financial, and business attractiveness and
readiness assessment to determine where the business value lands in the
range of value
What is the definition of Exit Planning? Right Ans - Exit Planning combines
the plan, concept, effort, and process into a clear, simple strategy to build a
business that is transferable through strong human, structural, customer, and
social capital. The future of you, your family, and your business are addressed
by exit planning through creating value today.
Who determines the multiple range of a company? Right Ans - The private
capital market, but company's can control where they place in that range
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