Exam (elaborations)
CEPA - Value Acceleration Methodology: Q’s And A’s
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CEPA - Value Acceleration Methodology: Q’s And A’s
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CEPA - Value Acceleration Methodology: Q’s And A’sMaster planning - three key legs to a successful transition? Right Ans -
Personal plan, financial plan and business plan
Maximizing
the value of the business, ensuring you are personally and financially
prepared to maximize net proceeds,
and ensuring you have a plan for what you are going to do next.
What are the three gates of the Value Acceleration Methodology? Right Ans
- Gate 1 - Discover
Gate 2 - Prepare
Gate 3 - Decide
What are the five stages of Value Maturity? Right Ans - 1. Identify Value
2. Protect Value
3. Build Value
4. Harvest Value
5. Manage Value
What is the first step in the value acceleration methodology? Right Ans -
Triggering Event - a business valuation correlated to a personal, financial, and
business attractiveness and readiness to determine where the business value
lands in the range of value.
Where your business is in the range of value depends on what 3 factors?
Right Ans - (1) the results of your financial analysis and benchmarking;
(2)your attractiveness score; and (3) your readiness score.
What are the deliverables from the Discovery gate? Right Ans - - A specific
and qualified list of personal, financial, and business strengths and
weaknesses
- Correlated and used to justify present value and potential value
- To establish a dollar value with regard to what value enhancement is worth
What are the steps in the Discovery process? Right Ans - P Recast income
statement
and balance sheet
, P Complete financial analysis
P Pull benchmarking data
• Industry performance
• Recent trade multiples
P Complete a Personal, Financial, and Business Assessment which scores
the business's attractiveness and the owner's personal, financial, and business
readiness
P Correlate the interview scores with the business valuation and financial
analysis
Final Step in Discover Gate? Right Ans - Prioritized Action Plan is created
P Personal / Financial actions
P Business actions
How do you get Recasted EBITDA? Right Ans - you adjust any number on
the income statement that does not reflect a true picture of the cash flows of
the business.
Which financial benchmarks should you focus on? Right Ans - Concentrate
on gross margin as a percent to sales and EBITDA as a percent to sales.
What is the formula for determining the value of your business? Right Ans -
It is "recasted" cash, usually expressed as EBITDA, times a cash market
multiple and recasted sales times a sales market multiple
What are the four C's that can help increase the value (multiple) of the
business? Right Ans - Human Capital
Structural Capital
Customer Capital
Social Capital
What determines the range of multiples for your business? Right Ans - The
market will take this range up and down depending on the state of the private
capital markets, economy, and the
industry you are in. You can't control this. BUT YOU CAN CONTROL WHERE
YOU FALL WITHIN THE RANGE
If your value using EBITDA is less than your value using sales, what does that
tell you? And how can you double-check this? Right Ans - indicate that you
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