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CEPA Exam Prep and CE (Latest Update) Questions
and Answers (GRADED A) 100 OUT OF 100
What percentage of privately held businesses that are offered for sale each year ultimately do not sell? A) 20% B) 40% C) 50% D) 80% D) 80% According to the Family Firm Institute, what percentage of family transitions survive into the second generation? A) 20% B) 30% C) 50% D) 70% B) 30% According to EPI's first national State of Owner Readiness Survey, what percentage of business owners have done no exit planning at all? A) 99% B) 40% C) 83% D) 49% D) 49%
Which of the following is not one of the five Ds? A) Distress B) Decide C) Divorce D) Death B) Decide Business owners are leaving dollars on the table because they are not focusing on what? A) Family unity B) Sales and income C) Enterprise value D) Creating an Exit Plan C) Enterprise value The Advisor of the Future needs to get owners and advisors to make several paradigm shifts for exit planning and value acceleration to work to the benefit of owners and their families. What is the first paradigm shift that needs to be made? A) Focus on enterprise value B) Adopt a process and work from a common framework C) Exit planning is good business strategy D) All of the above C) Exit planning is good business strategy The Value Acceleration Methodology™ is based on a management philosophy called what?
What is the total timeframe it typically takes to move a business owner through the full Value Acceleration Methodology process? A) Six months to one year B) Minimum of one year C) One to three years D) 3.5 years or more D) 3.5 years or more Personal liability insurance is a supplementary insurance that is not imperative for business owners to own since most homeowners and car insurance policies are comprehensive and cover similar liabilities. A) True B) False B) False Wealth management includes various components of investment management and comprehensive planning such as: A) Portfolio management B) Retirement planning C) Risk management D) Estate planning E) All of the above E) All of the above Which of the following is an example of lacking portfolio diversification?:
A) An appropriate three to six month cash reserve B) Too much US Large Cap or Private Company Stock C) High expense ratios D) Exposure to Emerging Markets B) Too much US Large Cap or Private Company Stock For a business owner to minimize estate tax liabilities and ensure specificity for control and protections of assets before and after death, they should have: A) Will B) Power of attorney for financial transactions C) Revocable living trust D) All of the above D) All of the above A retirement cash flow plan, which details the amount of, additions to and uses of investment assets, is most accurate when the following is used in the analysis: A) A static rate of return B) Statistical modeling C) Historical S&P500 rate of return D) The historical average rate of return on the client's existing portfolio B) Statistical modeling If estate is less than $5 million ($10 million for a married couple), do I still need estate planning? A) Yes
A) True B) False A) True In 2016 charitable gifts exceeded what dollar amount? A) $400 million B) $350 million C) $350 billion D) $500 billion C) $350 billion What percent of entrepreneurs donate money to charities? A) 50% B) 27% C) 90% D) 70% C) 90% What types of assets can be donated? A) Cash B) Artwork C) C-Corps D) Whole Life Insurance policy E) All of the above E) All of the above
What are the two most highly valued gifts made to foundations/trusts/charitable organizations? A) Mineral rights and farmland B) Marketable securities and cash C) Cash and insurance policies D) Business or business stock and real estate D) Business or business stock and real estate What are the benefits for the business owner and family for integrating charitable contributions? A) Wanting to transfer values and purpose, not just assets B) Creating intergenerational common ground to collaborate, make joint decisions, gain confidence, develop/fulfill potential C) Developing an emotional and functional bridge between wealth, purpose, and society D) All of the above D) All of the above Why should you include value growth in your exit planning practice? A) Reduced or eliminated value gaps in owner-viewed value versus actual market value B) New revenue stream C) Higher success rates of exit plans D) Longer-term pipeline E) All of the above E) All of the above Of the 250,000 US companies with $5M to $100M in revenue set to transition by 2030, how many will actually sell for desired value?
C) Building a roadmap to a successful transition or exit D) None of the above B) Periodic assessment of a business enterprise and development of prioritized initiatives to strengthen the business In the value growth process, the advisor should encourage their business owner client to focus primarily on: A) Internal and external qualitative factors B) Internal quantitative factors C) Cutting costs D) Increasing sales A) Internal and external qualitative factors In what gate would you utilize a business valuation? A) Gate 3 B) Gate 1 C) Gate 2 D) Triggering Event Gate B) Gate 1 Which of the following tools can you use for deliverables in the Discovery phase?
A) Business valuation B) Exit readiness assessment C) Business attractiveness score D) All of the above D) All of the above What is a common exit readiness issue? A) No personal goals and objectives B) Shareholders/family members aren't on the same page C) Credibility of financial information D) Customer concentration E) All of the above E) All of the above What would be considered a mid-range business attractiveness score? A) 45% B) 50% C) 57% D) 82% C) 57% In Gate 2, what deliverables could you use? A) Master Plan, validation, five business action items B) Prioritized action plan workshop, Master Plan, verify & assemble proof C) Business valuation, business assessment, exit readiness D) Exit options analysis, Master Plan, business valuation
C) FMV is based on individual investment requirements and expectations. D) FMV is a price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between 'actual' market participants at the measurement date. B) FMV is a price at which a hypothetical willing buyer would pay a hypothetical willing seller. Creating a business valuation is the same process or formula for every business. A) True B) False B) False In the income approach to business valuation, which method is predicated on a specific future look at economic benefits? A) Future asset method B) Capitalized earnings method C) Discounted cash flow method
D) Economic method C) Discounted cash flow method The three schools of business valuation include: A) Investment banking, formal FMV, and smallest companies rule of thumb B) Investment banking, formal FMV, and enterprise value C) FMV, enterprise value, and standard value D) DCF, FMV, and EV A) Investment banking, formal FMV, and smallest companies rule of thumb How does creating a vision help focus a business owner? A) Expresses personal values B) Drives inspiration C) Directs focus and movement forward D) All of the above D) All of the above Which is not a characteristic of a SMART goal? A) Specific
A) Owner B) Political C) Family D) Management B) Political Creating action plans is associated with which activity of Relentless Execution? A) Vision B) Alignment C) Accountability D) All of the above B) Alignment Which activity do you need to complete to create personal and business action plans? A) Establish personal and business priorities B) Determine and committing business resources C) Define the personal financial deliverable or outcome expected D) All of the above D) All of the above Which action below should be the first type of action to be completed when prioritizing business actions? A) Create a contingency plan B) Develop the business strategy C) Improving shop floor efficiency D) Taking action to improve the culture within the company
A) Create a contingency plan When is an Opportunity Assessment completed? A) Before the scoreboard and team communication protocols are developed B) After the personal vision is established and 90 - day personal actions are selected C) After the business vision is established and before the 90 - day business actions are selected D) Both a and c E) Both a and b E) Both a and b What is a benefit of a Start-Stop workshop? A) A start-stop workshop is useful to determine inside versus outside realty B) A start-stop workshop can help you understand informal politics and leadership in the company C) A start-stop workshop determines what things you do well from a customer standpoint D) All of the above D) All of the above Which activity is an action that would usually be completed in Delivering action plans? A) Hosting a team accountability workshop B) Meeting with a priority champion to discuss progress C) Meeting with the owner to establish his or her personal vision D) All of the above E) Both a and b E) Both a and b
A) An annual road race that stretches from Las Vegas to Los Angeles every spring. B) A continual loop of prioritizing, executing, measuring, reconnecting, and recalibrating every 90 days. C) A process that focuses on selection of one-year initiatives; 90 - day projects; and long-term goals. D) A process that determines needs versus wants; buy-sell agreement; and strategy. B) A continual loop of prioritizing, executing, measuring, reconnecting, and recalibrating every 90 days. Of the following, what is most important for a team to be successful? A) Set team meeting schedule B) Team hierarchy C) Trust D) Team manager C) Trust 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) True Which of the following is not a good method for building trust among team members? A) Share common experiences B) Call out members when you assume a negative conclusion C) Become familiar with how each member prefers to communicate and make decisions D) Get to know one another socially B) Call out members when you assume a negative conclusion
What is a corrosive element within a team? A) Absence of trust B) Conflict avoidance C) Ambiguity D) Lack of accountability E) All of the above E) All of the above As the quarterback of the team, if some of the team members appear to have lost focus or aren't as committed to the team and business owner, you should: A) Set and publish clear goals B) Call those team members out at next meeting C) Create results-based rewards D) Start leaving them out of team updates or communications E) Both a and c E) Both a and c Based on the 2013 EPI State of Owner Readiness Survey, how many business owners were not familiar with all their transition options? A) 1/3rd B) About half C) Nearly 2/3rds D) 99%
