Name: Score:
56 Multiple choice questions
Definition 1 of 56
Clarity, Liquidity, Legacy
What Are the pros of selling to employees (esop) as an exit option?
Value Acceleration must deliver at least two of the three crucial benefits (CLL):
What are the pros of selling to a strategic third party as an exit option?
What are the 4 stages of the m&a process?
Term 2 of 56
What is a realistic timeline to give your clients when looking to set their expectations on how long
the sale process could last?
6 months
3 months
24 months
12 months
,Term 3 of 56
What is the correlation of multiples to PEG risk?
There is not enough data to determine a correlation.
They are inversely correlated.
•sale or a gift, or a combination. estate and tax planning may play a significant role
•exiting family member(s) often finance the transaction themselves
•equity may be transferred over time in smaller pieces
•earned equity requirements are sometimes attractive •diversified classes of stock can be
considered (most flexible in llc and c-corporations)
•family equity and employee ownership/incentives are not mutually exclusive
They are not correlated.
Term 4 of 56
What does a company's ownership split look like after a Corporate Divestiture?
Sponsor acquires older generation's shares to allow the younger generation management
to continue operating the business
Seller exits completely. PEG obtains majority ownership, successor generation obtains
minority ownership.
Parent company remains intact, sponsor backs current or new management team to acquire
division from parent company
PEG would have majority ownership in the split off division while new management team
would have minority.
Sponsor backs existing management team to buy out current majority shareholders.
Seller exits completely. PEG obtains majority ownership, existing management team obtains
minority ownership.
Sponsor acquires majority position in the company to provide diversification of
shareholder(s) wealth.
PEG obtains majority ownership, seller remains in the picture as minority owner.
,Term 5 of 56
What are the two general categories for private ownership exit options?
•intergenerational transfer
•management buyout
•sell to existing partners
•sell to employees
•empowering owners with choices •differentiates the advisor - qualified & well-trained
•avoids the appearance or perception of bias toward one or just a few options •helps with
"issue spotting" •organizes how the inter-disciplinary advisory team is structured •a broad
spectrum of options decreases the transition failure rate
Inside vs Outside
Majority recapitalization event - Sponsor (aka PEG) backs new management team to
acquire business from exiting shareholders.
Seller exits completely. PEG would have majority ownership while new management team
would have minority.
Term 6 of 56
What is a Private Equity Groups Charter?
It's a legal document that outlines The fees charged to investors.
Essentially, it's what they tell their LP's how they will invest.
It's a summary of the financial performance of the firm over the last decade.
It's a guideline for how to Manage the firm's internal operations.
, Term 7 of 56
What does a company's ownership split look like after a Minority Recapitalization of Growth
Capital?
Sponsor acquires older generation's shares to allow the younger generation management
to continue operating the business
Seller exits completely. PEG obtains majority ownership, successor generation obtains
minority ownership.
Sponsor acquires minority position in the company to support current management team.
The current management team retains majority ownership while PEG obtains minority
ownership.
Sponsor acquires majority position in the company to provide diversification of
shareholder(s) wealth.
PEG obtains majority ownership, seller remains in the picture as minority owner.
Sponsor backs existing management team to buy out current majority shareholders.
Seller exits completely. PEG obtains majority ownership, existing management team obtains
minority ownership.
56 Multiple choice questions
Definition 1 of 56
Clarity, Liquidity, Legacy
What Are the pros of selling to employees (esop) as an exit option?
Value Acceleration must deliver at least two of the three crucial benefits (CLL):
What are the pros of selling to a strategic third party as an exit option?
What are the 4 stages of the m&a process?
Term 2 of 56
What is a realistic timeline to give your clients when looking to set their expectations on how long
the sale process could last?
6 months
3 months
24 months
12 months
,Term 3 of 56
What is the correlation of multiples to PEG risk?
There is not enough data to determine a correlation.
They are inversely correlated.
•sale or a gift, or a combination. estate and tax planning may play a significant role
•exiting family member(s) often finance the transaction themselves
•equity may be transferred over time in smaller pieces
•earned equity requirements are sometimes attractive •diversified classes of stock can be
considered (most flexible in llc and c-corporations)
•family equity and employee ownership/incentives are not mutually exclusive
They are not correlated.
Term 4 of 56
What does a company's ownership split look like after a Corporate Divestiture?
Sponsor acquires older generation's shares to allow the younger generation management
to continue operating the business
Seller exits completely. PEG obtains majority ownership, successor generation obtains
minority ownership.
Parent company remains intact, sponsor backs current or new management team to acquire
division from parent company
PEG would have majority ownership in the split off division while new management team
would have minority.
Sponsor backs existing management team to buy out current majority shareholders.
Seller exits completely. PEG obtains majority ownership, existing management team obtains
minority ownership.
Sponsor acquires majority position in the company to provide diversification of
shareholder(s) wealth.
PEG obtains majority ownership, seller remains in the picture as minority owner.
,Term 5 of 56
What are the two general categories for private ownership exit options?
•intergenerational transfer
•management buyout
•sell to existing partners
•sell to employees
•empowering owners with choices •differentiates the advisor - qualified & well-trained
•avoids the appearance or perception of bias toward one or just a few options •helps with
"issue spotting" •organizes how the inter-disciplinary advisory team is structured •a broad
spectrum of options decreases the transition failure rate
Inside vs Outside
Majority recapitalization event - Sponsor (aka PEG) backs new management team to
acquire business from exiting shareholders.
Seller exits completely. PEG would have majority ownership while new management team
would have minority.
Term 6 of 56
What is a Private Equity Groups Charter?
It's a legal document that outlines The fees charged to investors.
Essentially, it's what they tell their LP's how they will invest.
It's a summary of the financial performance of the firm over the last decade.
It's a guideline for how to Manage the firm's internal operations.
, Term 7 of 56
What does a company's ownership split look like after a Minority Recapitalization of Growth
Capital?
Sponsor acquires older generation's shares to allow the younger generation management
to continue operating the business
Seller exits completely. PEG obtains majority ownership, successor generation obtains
minority ownership.
Sponsor acquires minority position in the company to support current management team.
The current management team retains majority ownership while PEG obtains minority
ownership.
Sponsor acquires majority position in the company to provide diversification of
shareholder(s) wealth.
PEG obtains majority ownership, seller remains in the picture as minority owner.
Sponsor backs existing management team to buy out current majority shareholders.
Seller exits completely. PEG obtains majority ownership, existing management team obtains
minority ownership.
