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CEPA (CERTIFIED EXIT PLANNING
ADVISOR) NEWEST 2026 PREP EXAM |150
QUESTIONS AND CORRECT DETAILED
ANSWERS |RATED A+|NEW AND REVISED
1. A business owner is considering selling their company to a
strategic buyer. Which of the following is most important
to ensure maximum value in the transaction?
A. Retaining all employees for five years post-sale
B. Ensuring the company’s financial statements are
accurate and well-documented
C. Limiting the company’s marketing expenses in the last
year
D. Avoiding discussions about the company’s customer
base
Rationale: Accurate and well-documented financial statements
provide credibility to buyers and support a higher valuation.
Documentation transparency is critical for deal confidence.
2. In the context of exit planning, which component is least
relevant when determining a company’s readiness for sale?
A. Owner’s personal retirement goals
B. Current customer concentration
C. Profit margins and EBITDA
D. Color scheme of the company logo
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Rationale: While branding is important, the logo color scheme
has minimal impact on a company’s sale readiness compared
to operational, financial, and strategic factors.
3. Which method is commonly used to value a privately held
business based on projected future cash flows?
A. Book value method
B. Asset liquidation method
C. Discounted cash flow (DCF) method
D. Market capitalization
Rationale: The DCF method projects future cash flows and
discounts them to present value, widely used for businesses
with stable earnings potential.
4. During a succession planning consultation, a client
expresses a desire to transition leadership to a family
member. What is the primary risk the advisor should
assess?
A. Emotional attachment causing overpayment
B. Capability and preparedness of the successor to
manage the business
C. Timing of the client’s retirement
D. Current market conditions
Rationale: Family succession carries significant risk if the
successor lacks necessary skills, which can affect business
continuity and value.
5. When preparing a business for sale, which financial metric
is most indicative of operational performance?
A. Total assets
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B. EBITDA (Earnings Before Interest, Taxes,
Depreciation, and Amortization)
C. Number of employees
D. Owner’s net worth
Rationale: EBITDA measures core operational profitability
without distortions from financing or accounting methods,
making it key for valuation.
6. A client wants to minimize taxes during a business exit.
Which strategy is legally appropriate?
A. Hiding income from the IRS
B. Structuring the sale as an installment sale to defer
capital gains
C. Transferring assets to a foreign trust without disclosure
D. Ignoring state tax planning
Rationale: Installment sales are a recognized tax deferral
strategy. Illegal actions, like hiding income, are not
permissible.
7. Scenario: A 10-year-old manufacturing company has a
highly concentrated customer base (50% revenue from one
client). What is the biggest concern for potential buyers?
A. Employee turnover
B. Revenue risk due to customer concentration
C. Location of the facility
D. Company branding
Rationale: Dependency on one customer increases revenue
risk and can significantly impact perceived value and deal
structure.
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8. Which governance structure is most likely to support a
smooth ownership transition?
A. Sole proprietorship with informal decision-making
B. Family-owned business with no board
C. Private company with a formal advisory board and
documented policies
D. Partnership with verbal agreements only
Rationale: Clear governance structures enhance credibility,
facilitate decision-making, and reduce friction during
ownership transitions.
9. Which professional is primarily responsible for ensuring
the legal transfer of ownership during a sale?
A. Accountant
B. Business attorney
C. Exit planning advisor
D. Marketing consultant
Rationale: While advisors support the process, legal transfer
and compliance fall under the attorney’s responsibilities.
10. Scenario: A business owner wants to sell within the
next 12 months but has significant unresolved debt. What is
the most prudent step?
A. Ignore debt and proceed with sale
B. Wait indefinitely until market conditions improve
C. Develop a debt repayment or restructuring plan to
improve buyer confidence
D. Increase dividends to owners immediately
CEPA (CERTIFIED EXIT PLANNING
ADVISOR) NEWEST 2026 PREP EXAM |150
QUESTIONS AND CORRECT DETAILED
ANSWERS |RATED A+|NEW AND REVISED
1. A business owner is considering selling their company to a
strategic buyer. Which of the following is most important
to ensure maximum value in the transaction?
A. Retaining all employees for five years post-sale
B. Ensuring the company’s financial statements are
accurate and well-documented
C. Limiting the company’s marketing expenses in the last
year
D. Avoiding discussions about the company’s customer
base
Rationale: Accurate and well-documented financial statements
provide credibility to buyers and support a higher valuation.
Documentation transparency is critical for deal confidence.
2. In the context of exit planning, which component is least
relevant when determining a company’s readiness for sale?
A. Owner’s personal retirement goals
B. Current customer concentration
C. Profit margins and EBITDA
D. Color scheme of the company logo
,2|Page
Rationale: While branding is important, the logo color scheme
has minimal impact on a company’s sale readiness compared
to operational, financial, and strategic factors.
3. Which method is commonly used to value a privately held
business based on projected future cash flows?
A. Book value method
B. Asset liquidation method
C. Discounted cash flow (DCF) method
D. Market capitalization
Rationale: The DCF method projects future cash flows and
discounts them to present value, widely used for businesses
with stable earnings potential.
4. During a succession planning consultation, a client
expresses a desire to transition leadership to a family
member. What is the primary risk the advisor should
assess?
A. Emotional attachment causing overpayment
B. Capability and preparedness of the successor to
manage the business
C. Timing of the client’s retirement
D. Current market conditions
Rationale: Family succession carries significant risk if the
successor lacks necessary skills, which can affect business
continuity and value.
5. When preparing a business for sale, which financial metric
is most indicative of operational performance?
A. Total assets
,3|Page
B. EBITDA (Earnings Before Interest, Taxes,
Depreciation, and Amortization)
C. Number of employees
D. Owner’s net worth
Rationale: EBITDA measures core operational profitability
without distortions from financing or accounting methods,
making it key for valuation.
6. A client wants to minimize taxes during a business exit.
Which strategy is legally appropriate?
A. Hiding income from the IRS
B. Structuring the sale as an installment sale to defer
capital gains
C. Transferring assets to a foreign trust without disclosure
D. Ignoring state tax planning
Rationale: Installment sales are a recognized tax deferral
strategy. Illegal actions, like hiding income, are not
permissible.
7. Scenario: A 10-year-old manufacturing company has a
highly concentrated customer base (50% revenue from one
client). What is the biggest concern for potential buyers?
A. Employee turnover
B. Revenue risk due to customer concentration
C. Location of the facility
D. Company branding
Rationale: Dependency on one customer increases revenue
risk and can significantly impact perceived value and deal
structure.
, 4|Page
8. Which governance structure is most likely to support a
smooth ownership transition?
A. Sole proprietorship with informal decision-making
B. Family-owned business with no board
C. Private company with a formal advisory board and
documented policies
D. Partnership with verbal agreements only
Rationale: Clear governance structures enhance credibility,
facilitate decision-making, and reduce friction during
ownership transitions.
9. Which professional is primarily responsible for ensuring
the legal transfer of ownership during a sale?
A. Accountant
B. Business attorney
C. Exit planning advisor
D. Marketing consultant
Rationale: While advisors support the process, legal transfer
and compliance fall under the attorney’s responsibilities.
10. Scenario: A business owner wants to sell within the
next 12 months but has significant unresolved debt. What is
the most prudent step?
A. Ignore debt and proceed with sale
B. Wait indefinitely until market conditions improve
C. Develop a debt repayment or restructuring plan to
improve buyer confidence
D. Increase dividends to owners immediately
