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CEPA (Certified Exit Planning Advisor) Exam Prep 2024 Questions With 100% Correct Answers!!!
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CEPA (Certified Exit Planning Advisor) Exam Prep 2024 Questions With 100% Correct Answers!!!
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CEPA (Certified Exit Planning Advisor) Exam Prep 2024 Questions With 100% Correct Answers!!!What is the calculation for Recasted EBITDA? Answer- Addbacks + EBITDA = Recasted EBITDA
What does EBITDA stand for? Answer- Earnings Before Interest, Taxes, Depreciation, & Amortization
What are the three gaps within the Value Acceleration Methodology? Answer- Wealth Gap, Value Gap, & Profit Gap
What are the Five Stages of Value Maturity in order? Answer- Identify, Protect, Build, Harvest, Manage
In the Five Stages of Value Maturity, what occurs in the "Identify" stage? Answer- 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? Answer- Protect Value and Build Value
In the Five Stages of Value Maturity, what occurs in the "Protect" stage? Answer- 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? Answer- 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? Answer- This is when the owner exits the company and harvests its value
Simply put, what is exit planning? Answer- Good Business strategy What are the Four intangible Capitals or "Four C's"? Answer- 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"? Answer- 80%
What is Human Capital? Answer- It's the people in the business. Employee tenure, experience / talent level, management team succession plan, management team strength, etc.
What is Structural Capital? Answer- 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? Answer- Depth of customer relationships, customer entanglement, customer concentration / diversification, contracts, etc.
What is Social Capital? Answer- 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? Answer-
Discover, Prepare, & Decide
What are the Three Legs of the Stool? Answer- Business, Financial, & Personal
What is the Wealth Gap? Answer- 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? Answer- The difference between the owner's current business value and the Best-In-Class business value.
What is the Profit Gap? Answer- 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? Answer- The Prepare Gate
What are the two concurrent paths within the Prepare Gate? Answer- The risk mitigation (De-risk) / business improvement path
AND
The personal/financial ("Vision") path What is the ONE goal of the Value Acceleration Methodology? Answer- 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? Answer-
80-90%
What's the difference between a Lifestyle Business and Value Creator Business? Answer- 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? Answer- personal planning
What kind of planning could be the key to making an exit successful? Answer- personal planning
What is the number one reason deals fail? Answer- seller's cold feet
The Value Maturity Index teaches owner's the concept that they can have _____________ and ______________. Answer- value AND income (as long as the owner focuses on VALUE first)
What is the formula to calculate value? Answer- Cash (Recasted EBITDA) x MM (market multiple) = Value
Sales X MM (market multiple) = Value
Every business trades in a ________________________. Answer- range of value
Value Acceleration focuses on working with __________________________ while improving _____________________________. Answer- accounting systems; intangible assets
Why is vision important? Answer- Vison is needed to execute well, and it must come
from the owner / owner's family
What is Alignment? Answer- 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? Answer- Identify
Which of the Five Stages of Value Maturity are in the Prepare Gate? Answer- Protect and Build
Which of the Five Stages of Value Maturity are in the Decide Gate? Answer- Harvest What is the definition of a Triggering Event? Answer- 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? Answer- 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? Answer- The private capital market, but company's can control where they place in that range depending on the strength of their intangibles. Value acceleration occurs by managing the controllable factors (intangibles) within the company's multiple.
What're the scoring metrics for the Common Sense Scoring Scale? Answer- 1) Weak - haven't thought about it 2) Have thought about it but they don't have anything
3) Below average 4) Above average 5) Best-In-Class
6) Perfect; can't get better; this is rare Most people fall in the 2, 3, 4 or 5 range. 1's and 6's are rare.
What are the Range of Values for the Common Sense Scoring Scale? Answer- 50%
or less = weak; high risk
58% = average 67% = above average; low risk
72% or higher = best-in-class
What is the definition of Value Acceleration? Answer- A proven process that focuses
on value growth and aligning business, personal and financial goals.
As it relates to retirement planning, what are the three main business owner issues? Answer- 1) How much do I need?
2) What rate of return (ROR) do I need on my investments?
3) Addresses stock market volatility
What are the main drivers of financial planning as it fits in with exit planning? Answer- - age at retirement
- spending in retirement - current assets
- savings until retirement
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