CEPA FREQUENTLY TESTED QUESTIONS WITH
ACCURATE SOLUTIONS FOR EXAP
PRACTICE|WITH ALL INFORMATION YOU NEED
TO PASS.
If a company had no single customer making up more than 5% of revenue,
that would support the company selling at a _____.
Higher multiple
If a company's top 10 suppliers made up 40% of their revenue, that would
support the company selling at a ____.
Mid-range multiple
Valuing a business based on its EBITDA multiple would be considered a(n)
______.
Income valuation
If an owner wanted to restructure the capitalization of the business to
best position the company for future growth, they should consider which
of the below transaction types?
Equity Recapitalization
If an owner wanted the option to retire immediately after sale, what exit
strategy should they consider?
Strategic Exit
Most private equity groups look to invest in which business types?
Manufacturing, distribution, service
,Why would you advise a business owner against timing the sale of the
business?
The economic cycle may change
Next year's anticipated growth may decrease or flatline
The business may be more valuable in its current smaller state than after
growth in the next year
When a potential buyer wants to get a sense of a company's actual cash
flow and production, what time frame in the company's history should
they review?
Last 3 years
Why should you consider including an M&A Investment Banker on the
team?
Conducts preliminary valuation/research
Speeds the process (exponentially)
Shelters principals from emotional deal-killers and poor future relations
Provides professional negotiation skills
What is a realistic timeline to give your clients when looking to set their
expectations on how long the sale M&A process could last?
12 months
Comprehensive company analysis and due diligence is completed in
which stage of the M&A process?
research and analysis
A Confidential Information Memorandum (CIM) serves as a:
Preliminary due diligence document
Sales document
Communication of opportunities and weaknesses
,Which of the following would be considered an advantage of selling to a
strategic buyer instead of a financial buyer?
Strategic buyers are often more willing to pay a premium for control
What would be considered a disadvantage of selling to a strategic buyer
instead of a financial buyer?
More severe culture changes
What is considered as part of an M&A advisor's role in a business
transaction?
Creating an active market
Maintain confidentiality
Maximizing value
NOT protecting the seller from the burden of proof
What would be considered a best practice for managing seller
expectations for the transaction?
Educate them on the process and state of the market
Family businesses face many challenges. The most important challenges
which are not being addressed include:
Breakdown of communication and trust within the family
Heirs unprepared for required roles and accountability
Non-technical people-based issues
What are reasons why family-owned firms typically outperform non-
family-owned firms in the long run?
Trust
Quick decisions
Continuity
, Which of the following is an example of an important exercise for advisors
to work through with their family business clients?
Think through and organize all assets owned by the family
What is a family enterprise?
A family business
A business family
A privately held business
What does a family transitions specialist NOT do?
Recommend the best structure for transferring assets without tax
implications
A father owns his business 100%. He has been married 35 years to the
mother of his three children. The oldest child works in the business. When
working with this family enterprise, who is the most important person to
keep happy?
The whole family
What are the benefits of collaboration with other advisors?
Not one discipline can do everything for a client
When it comes to estate planning and exit planning, who do you include?
The owner of the company
The owner's spouse
The owner's adult children
The owner's children's spouses
A family enterprise can best be described as a _____.
System
ACCURATE SOLUTIONS FOR EXAP
PRACTICE|WITH ALL INFORMATION YOU NEED
TO PASS.
If a company had no single customer making up more than 5% of revenue,
that would support the company selling at a _____.
Higher multiple
If a company's top 10 suppliers made up 40% of their revenue, that would
support the company selling at a ____.
Mid-range multiple
Valuing a business based on its EBITDA multiple would be considered a(n)
______.
Income valuation
If an owner wanted to restructure the capitalization of the business to
best position the company for future growth, they should consider which
of the below transaction types?
Equity Recapitalization
If an owner wanted the option to retire immediately after sale, what exit
strategy should they consider?
Strategic Exit
Most private equity groups look to invest in which business types?
Manufacturing, distribution, service
,Why would you advise a business owner against timing the sale of the
business?
The economic cycle may change
Next year's anticipated growth may decrease or flatline
The business may be more valuable in its current smaller state than after
growth in the next year
When a potential buyer wants to get a sense of a company's actual cash
flow and production, what time frame in the company's history should
they review?
Last 3 years
Why should you consider including an M&A Investment Banker on the
team?
Conducts preliminary valuation/research
Speeds the process (exponentially)
Shelters principals from emotional deal-killers and poor future relations
Provides professional negotiation skills
What is a realistic timeline to give your clients when looking to set their
expectations on how long the sale M&A process could last?
12 months
Comprehensive company analysis and due diligence is completed in
which stage of the M&A process?
research and analysis
A Confidential Information Memorandum (CIM) serves as a:
Preliminary due diligence document
Sales document
Communication of opportunities and weaknesses
,Which of the following would be considered an advantage of selling to a
strategic buyer instead of a financial buyer?
Strategic buyers are often more willing to pay a premium for control
What would be considered a disadvantage of selling to a strategic buyer
instead of a financial buyer?
More severe culture changes
What is considered as part of an M&A advisor's role in a business
transaction?
Creating an active market
Maintain confidentiality
Maximizing value
NOT protecting the seller from the burden of proof
What would be considered a best practice for managing seller
expectations for the transaction?
Educate them on the process and state of the market
Family businesses face many challenges. The most important challenges
which are not being addressed include:
Breakdown of communication and trust within the family
Heirs unprepared for required roles and accountability
Non-technical people-based issues
What are reasons why family-owned firms typically outperform non-
family-owned firms in the long run?
Trust
Quick decisions
Continuity
, Which of the following is an example of an important exercise for advisors
to work through with their family business clients?
Think through and organize all assets owned by the family
What is a family enterprise?
A family business
A business family
A privately held business
What does a family transitions specialist NOT do?
Recommend the best structure for transferring assets without tax
implications
A father owns his business 100%. He has been married 35 years to the
mother of his three children. The oldest child works in the business. When
working with this family enterprise, who is the most important person to
keep happy?
The whole family
What are the benefits of collaboration with other advisors?
Not one discipline can do everything for a client
When it comes to estate planning and exit planning, who do you include?
The owner of the company
The owner's spouse
The owner's adult children
The owner's children's spouses
A family enterprise can best be described as a _____.
System
