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EPI Exam Prep Guide For CEPA Exam: Q’s And A’s (A+)
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EPI Exam Prep Guide For CEPA Exam: Q’s And A’s (A+)What percentage of privately held businesses offered for sale each year do
NOT sell? Right Ans - 80%
Business Survival Rate across generations? Right Ans - Second gen = 30%
Third gen = 12%
Fourth gen = 3%
What percentage of owners have done no exit planning at all? Right Ans -
49%
What are the five D's? Right Ans - Death, Divorce, Distress, Disabled,
Disagreement
Advisors of the Future change owner/peer paradigms about what exit
planning actually is by Right Ans - a. Exit planning is business strategy
b. Value is all about transferability
c. They work from a common framework that focuses on value growth and
aligning business, personal, and
financial goals
Exit planning ecosystem defined Right Ans - A system, or group of
interconnected disciplines, formed by the interaction of a collaborative, like-
minded community of professional advisors, with a common goal to grow,
preserve, and transition wealth for business owners
Advisor of the future Right Ans - a. Focuses on value creation.
b. Acts as the quarterback of the team.
c. Oversees a master plan.
d. Helps other advisors get engaged and resolves issues
Business owners leave money on the table because they do not focus on what
type of value? Right Ans - Enterprise value
What is exit planning? (Richard Jackim) Right Ans - a. An exit plan asks and
answers all the business, personal, financial, legal, and tax questions involved
in
transitioning a privately-owned business
,b. It includes contingencies for illness, burnout, divorce, and death
c. Its purpose is to maximize the value of the business at the time of exit,
minimize taxes, and ensure the
owner is able to accomplish all his or her personal and financial goals in the
process
Chris Snider 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
Blue oceans and value innovation Right Ans - . A Blue Ocean denotes an
industry not in existence today
b. Value innovation is a new way of thinking about and executing strategy that
results in a blue ocean and a
break from the competition
c. Focus is on making competition irrelevant by creating a leap in value
Historical data on exits Right Ans - A. One year after selling, three out of
four business owners surveyed "profoundly regretted" the decision
b. 70%-80% of businesses put on the market don't sell
c. Only 30% of all family-owned businesses survive into the second generation
Stats from EPI ownership readiness survey Right Ans - a. 66% are not
familiar with all exit options
b. 78% have no formal transition advisory team
c. 83% have no written transition plan
d. 49% have done no planning at all e. 93% have no formal life after plan
Opportunities in exit planning Right Ans - a. Baby boomers own 63% of the
private businesses in the US
b. 76% of them plan to transition over the next 10 years
c. Represents a transfer of approximately 4.5 million businesses and over $10
trillion of wealth
Challenges to exit planning Right Ans - a. Boomers don't want to exit
b. 50% of exits are caused by one of the five Ds (Death, Disability, Divorce,
Distress, Disagreement)
, c. Owners are leaving money on the table because they are focused on income
generation, not enterprise
value
Value acceleration is based on what management philosophy Right Ans -
Master Planning
Three gates of Value Acceleration Methodology Right Ans - Discover -
Prepare - Decide
Benefits of focusing on value? Right Ans - Predictable results
Employees start thinking like owners
Mitigates risk
When is Triggering event completed? Right Ans - Discover gate
Full value acceleration usually takes? Right Ans - 3-5 YR
54321 Right Ans - a. Five Stages
b. Four Capitals
c. Three Gates
d. Two Paths
e. One Goal
Why focus on value (versus just income) Right Ans - a. You can have both
income and value, but you need to focus on value first
b. Focusing on value drives all other positive outcomes
c. Typically, an owner has 70-90% of his/her wealth locked in the business
Two types of business owner styles Right Ans - Lifestyle
Value Creator
Eleven Actions to Rapidly Grow Value, Unlock Wealth, and Become a Value
Creator Right Ans - a. Shift your paradigm
b. Align your "three legs"
c. Make business value your #1 goal
d. Focus on the present
e. Manage using five stages of the Value Maturity Index
f. Create intangible asset transferability
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