CEPA - VALUE ACCELERATION
METHODOLOGY CORRECT 100%
Master planning - three key legs to a successful transition? - ANSWERPersonal 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? - ANSWERGate 1 -
Discover
Gate 2 - Prepare
Gate 3 - Decide
What are the steps in the Discovery process? - ANSWERP 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? - ANSWERPrioritized Action Plan is created
P Personal / Financial actions
P Business actions
How do you get Recasted EBITDA? - ANSWERyou 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? - ANSWERConcentrate 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? - ANSWERIt 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? -
ANSWERHuman Capital
, Structural Capital
Customer Capital
Social Capital
What determines the range of multiples for your business? - ANSWERThe 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? - ANSWERindicate that you are underperforming
financially compared to similar companies in your industry.
Double check by calculating industry average EBITDA as % of sales and If you multiply
these percentages by your TTM sales, you produce a theoretical average and
best-in-class recasted EBITDA benchmark
Profit Gap? - ANSWERThe difference in cash flow your are producing vs BIC.
Calculated by taking BIC EBITDA as % of Sales and multiplying that by your TTM sales.
Subtract BIC from your number = Profit Gap
Business Attractiveness Score: what is average? Red Flag? Premium? - ANSWER58%
- Average
Below 50% - Red Flag
72% and above - Premium
what should be the target Business attractiveness score? - ANSWER67%
Exit Readiness Score - ANSWERSame process but determines how ready you are
personally, financially and business wise to exit.
95% of M&A advisors indicated this as the number one reason business don't sell. -
ANSWERowners perception of the business value versus its real value.
What % of businesses don't sell? - ANSWER80%
What % of businesses fail to tranistiion to the next generation? - ANSWER70%
What % of business owners regret selling their business a year after their exit? -
ANSWER75%
What three things must you consider when completing the attractiveness and readiness
assessments: - ANSWER• First, how attractive is the business from an outsider's
point of view?
METHODOLOGY CORRECT 100%
Master planning - three key legs to a successful transition? - ANSWERPersonal 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? - ANSWERGate 1 -
Discover
Gate 2 - Prepare
Gate 3 - Decide
What are the steps in the Discovery process? - ANSWERP 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? - ANSWERPrioritized Action Plan is created
P Personal / Financial actions
P Business actions
How do you get Recasted EBITDA? - ANSWERyou 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? - ANSWERConcentrate 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? - ANSWERIt 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? -
ANSWERHuman Capital
, Structural Capital
Customer Capital
Social Capital
What determines the range of multiples for your business? - ANSWERThe 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? - ANSWERindicate that you are underperforming
financially compared to similar companies in your industry.
Double check by calculating industry average EBITDA as % of sales and If you multiply
these percentages by your TTM sales, you produce a theoretical average and
best-in-class recasted EBITDA benchmark
Profit Gap? - ANSWERThe difference in cash flow your are producing vs BIC.
Calculated by taking BIC EBITDA as % of Sales and multiplying that by your TTM sales.
Subtract BIC from your number = Profit Gap
Business Attractiveness Score: what is average? Red Flag? Premium? - ANSWER58%
- Average
Below 50% - Red Flag
72% and above - Premium
what should be the target Business attractiveness score? - ANSWER67%
Exit Readiness Score - ANSWERSame process but determines how ready you are
personally, financially and business wise to exit.
95% of M&A advisors indicated this as the number one reason business don't sell. -
ANSWERowners perception of the business value versus its real value.
What % of businesses don't sell? - ANSWER80%
What % of businesses fail to tranistiion to the next generation? - ANSWER70%
What % of business owners regret selling their business a year after their exit? -
ANSWER75%
What three things must you consider when completing the attractiveness and readiness
assessments: - ANSWER• First, how attractive is the business from an outsider's
point of view?
