Name: Score:
270 Multiple choice questions
Term 1 of 270
Why is it called the Triggering Event?
Because it triggers the owner to take action.
Because it represents a financial loss.
Because it indicates a market downturn.
Because it signals the end of a business cycle.
Term 2 of 270
The primary benefit of the Discounted Cash Flow (DCF) method of valuation is that it represents a
specific forecast of future financial results.
a. True
b. False
c. Company
c. EBITDA
a. True
b) 14,000
,Term 3 of 270
What is Structural Capital?
Transfer of business stock to direct heirs, usually children. 50% of business owners want to
exercise this option -- but in reality, only about 30% actually do so.
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.
The difference between the owner's current business profit (or recasted EBITDA) and the
Best-In-Class business profit (or recasted EBITDA)
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.
,Term 4 of 270
What are the pros and cons of a Sale to a Third Party?
Pros:
- higher price (highest of the options)
- more cash up front
- walk away faster
- stability of deal terms
- business refresh (growth, new energy)
- cost-effective
- breaks deadlock at management level with family
Cons:
- long process (9-12 months)
- distraction and loss of focus
- privacy concerns
- emotional for owner
- post sale tie-downs
- highest cost options (highest benefit)
- very complex - approx. 1,000 professional hours
- can be difficult to close
The risk mitigation (De-risk) / business improvement path
AND
The personal/financial ("Vision") path
Identify, Protect, Build, Harvest, Manage
- preserving the deceased spouse's coupon
- disability trustee planning
- probate avoidance
- creditor protection
- predator protection
- bloodline protection
, Term 5 of 270
Every ESOP installation qualifies for tax free proceeds to the seller.
a. True
b. False
80-90%
a. True
b. False
range of value
Term 6 of 270
Teams help deliver a better-quality product to the business owner because they create synergy,
thus generating performance greater than the sum of the performance of its individual members.
a) True
b) False
a. Attractiveness
b) 14,000
a) True
b. False
Term 7 of 270
According to the EPI State of Readiness Survey, ____% of owners have no plan to cover the 5 D's.
60%
80%
40%
20%
270 Multiple choice questions
Term 1 of 270
Why is it called the Triggering Event?
Because it triggers the owner to take action.
Because it represents a financial loss.
Because it indicates a market downturn.
Because it signals the end of a business cycle.
Term 2 of 270
The primary benefit of the Discounted Cash Flow (DCF) method of valuation is that it represents a
specific forecast of future financial results.
a. True
b. False
c. Company
c. EBITDA
a. True
b) 14,000
,Term 3 of 270
What is Structural Capital?
Transfer of business stock to direct heirs, usually children. 50% of business owners want to
exercise this option -- but in reality, only about 30% actually do so.
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.
The difference between the owner's current business profit (or recasted EBITDA) and the
Best-In-Class business profit (or recasted EBITDA)
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.
,Term 4 of 270
What are the pros and cons of a Sale to a Third Party?
Pros:
- higher price (highest of the options)
- more cash up front
- walk away faster
- stability of deal terms
- business refresh (growth, new energy)
- cost-effective
- breaks deadlock at management level with family
Cons:
- long process (9-12 months)
- distraction and loss of focus
- privacy concerns
- emotional for owner
- post sale tie-downs
- highest cost options (highest benefit)
- very complex - approx. 1,000 professional hours
- can be difficult to close
The risk mitigation (De-risk) / business improvement path
AND
The personal/financial ("Vision") path
Identify, Protect, Build, Harvest, Manage
- preserving the deceased spouse's coupon
- disability trustee planning
- probate avoidance
- creditor protection
- predator protection
- bloodline protection
, Term 5 of 270
Every ESOP installation qualifies for tax free proceeds to the seller.
a. True
b. False
80-90%
a. True
b. False
range of value
Term 6 of 270
Teams help deliver a better-quality product to the business owner because they create synergy,
thus generating performance greater than the sum of the performance of its individual members.
a) True
b) False
a. Attractiveness
b) 14,000
a) True
b. False
Term 7 of 270
According to the EPI State of Readiness Survey, ____% of owners have no plan to cover the 5 D's.
60%
80%
40%
20%
