EEE 4653 EXAM SCRIPT 2025/2026 QUESTIONS WITH
ANSWERS MARKED A+
✔✔Preferred Stock Term Sheet - ✔✔-Investment Pricing
-Corporate governance document parameters
-Investment business fundimentals and responsibilities
-Overall board of governance and voting
-Fully diluted capitilization table
✔✔Pre-Money Valuation Trade offs - ✔✔-Increase Pre-money with dividend addition
-Increase pre-money valuations as dividend rate increases
-Increase pre-money valuations as liquidation multiple EXCEEDS a 1x
✔✔Debt Financing Pros - ✔✔-No ownership dilution
-Typically lower cost of capital
-Business income tax benefits
-Potiential for value add lends (Networking and advice)
-Larger number of providers/sources and funding types
✔✔Debt Financing Cons - ✔✔-Personal gaurantees
-Fixed period repayment schedules regardless of business profits
-Fixed repayment schedules
-Lender can legally force business into bankrupcy
-Collateral required
✔✔Debt Capital Preparation suggestions - ✔✔-Strong personal credit
-Detailed financial pro-forma statements
-Sufficient lead time
-Quality supporting documentation
✔✔Debt service ratio - ✔✔>1.25x
(Principal + interest)/EBITA
✔✔Debt Coverage Ratio - ✔✔<4.3x
Total debt/EBITA
✔✔Presentation Guidelines - ✔✔-Target 15-20 minitues & max 15 slides
-Use large font and dont clutter
-Recommend questions be held till the end
-Pictures/graphs/tables are good if not to complicated
-Focus on the market/business not the technology
-Know your stuff
✔✔Due Diligence (Organizational) - ✔✔-Certificates of organization
-Certification of good standing: secretary of state
, -Organizational chart
-Board of directors minutes
✔✔Due Diligence (Management) - ✔✔-Background releases
-Resumes
-FULL names
-Board of directors bios/resumes
-Court docket and UCC-1 searchces on all mgmt
-References
✔✔Due Diligence (Product/service) - ✔✔-Copies of any independent product
testing/certification
-Copy al product/service literature
-Copy of any US/international patent filings, actions or patents
-Copyrights/trademarks/website domains
-Any technology licensing agreements
✔✔Due Diligence (Market) - ✔✔-Market studies/reports/surveys
-Competitor reports/Analysis
-Key customer listings
-Sales pipeline report
-Copy oof any sales distributor agreements
✔✔Service Providers - ✔✔-Legal counsel contract
-CPA services agreement
-CPA services agreement
-Any key supplier.outsourcing agreements
-Litigation: Existing/pending
✔✔Due Diligence (Financial) - ✔✔-Tax returns
-payroll related tax findings
-Fully diluted cap table
-Current Financial statements
-CPA prepared financial statements
-ACCT payable aging report
-Financial projections
-Lending or leasing agreements
-Insurance verifications
-Recent bank statements
✔✔ Income Statement - ✔✔Profitability (revenue-expense)
Gross profit
EBITA
Internal capital generation
ANSWERS MARKED A+
✔✔Preferred Stock Term Sheet - ✔✔-Investment Pricing
-Corporate governance document parameters
-Investment business fundimentals and responsibilities
-Overall board of governance and voting
-Fully diluted capitilization table
✔✔Pre-Money Valuation Trade offs - ✔✔-Increase Pre-money with dividend addition
-Increase pre-money valuations as dividend rate increases
-Increase pre-money valuations as liquidation multiple EXCEEDS a 1x
✔✔Debt Financing Pros - ✔✔-No ownership dilution
-Typically lower cost of capital
-Business income tax benefits
-Potiential for value add lends (Networking and advice)
-Larger number of providers/sources and funding types
✔✔Debt Financing Cons - ✔✔-Personal gaurantees
-Fixed period repayment schedules regardless of business profits
-Fixed repayment schedules
-Lender can legally force business into bankrupcy
-Collateral required
✔✔Debt Capital Preparation suggestions - ✔✔-Strong personal credit
-Detailed financial pro-forma statements
-Sufficient lead time
-Quality supporting documentation
✔✔Debt service ratio - ✔✔>1.25x
(Principal + interest)/EBITA
✔✔Debt Coverage Ratio - ✔✔<4.3x
Total debt/EBITA
✔✔Presentation Guidelines - ✔✔-Target 15-20 minitues & max 15 slides
-Use large font and dont clutter
-Recommend questions be held till the end
-Pictures/graphs/tables are good if not to complicated
-Focus on the market/business not the technology
-Know your stuff
✔✔Due Diligence (Organizational) - ✔✔-Certificates of organization
-Certification of good standing: secretary of state
, -Organizational chart
-Board of directors minutes
✔✔Due Diligence (Management) - ✔✔-Background releases
-Resumes
-FULL names
-Board of directors bios/resumes
-Court docket and UCC-1 searchces on all mgmt
-References
✔✔Due Diligence (Product/service) - ✔✔-Copies of any independent product
testing/certification
-Copy al product/service literature
-Copy of any US/international patent filings, actions or patents
-Copyrights/trademarks/website domains
-Any technology licensing agreements
✔✔Due Diligence (Market) - ✔✔-Market studies/reports/surveys
-Competitor reports/Analysis
-Key customer listings
-Sales pipeline report
-Copy oof any sales distributor agreements
✔✔Service Providers - ✔✔-Legal counsel contract
-CPA services agreement
-CPA services agreement
-Any key supplier.outsourcing agreements
-Litigation: Existing/pending
✔✔Due Diligence (Financial) - ✔✔-Tax returns
-payroll related tax findings
-Fully diluted cap table
-Current Financial statements
-CPA prepared financial statements
-ACCT payable aging report
-Financial projections
-Lending or leasing agreements
-Insurance verifications
-Recent bank statements
✔✔ Income Statement - ✔✔Profitability (revenue-expense)
Gross profit
EBITA
Internal capital generation
