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What survey indicated that 99% of business owners at least in some way agreed that "having a transition strategy is important for my future and the future of my business?" State of Owner Readiness It's important to not just tell an owner the right answer, but to ask them the right question. What are examples of the "right question" to ask a business owner client? What is the strength of your intangible capital? What is your biggest pain point and biggest desire? What deal structure are you looking for when selling? Complete this sentence: A successful exit strategy balances the " Legs of the Stool." Three What is the cause of "sellers' cold feet" during the sale of a business? Lack of personal planning What is the first stage in the "Five Stages of Value Maturity?" Identify When ranking a business's intangible capitals, what is the main purpose of using the common sense scoring of 1-6?
It forces you to not choose "average" Which style of business is more likely to generate better income and sell at a premium? Value Creator The four intangible capitals (The 4 Cs) include Human, Structural, Social, and capitals. Customer An independent personal, financial, and business assessment correlated to business range of value is referred to as: The Triggering Event What are questions owners should be asking themselves every 90 days? Do you want to keep growing or do you want to shift focus to exiting? Is your business ready to transition? Which exit options or hybrid options should we consider? What is the second stage in the "Five Stages of Value Maturity?" Protect Value Acceleration is grounded in: Action
Life insurance, health insurance, and product liability insurance all fall under which section of the financial planning process? Risk Management What best describes the components of integrated wealth management for individuals? Retirement planning, risk management, estate planning, portfolio management The distance between your client's current net worth and their financial goal for post-business retirement life is referred to as the: Wealth Gap What are areas of wealth management that can be controlled by the business owner? Cash Flow Risk Management Investments What are examples of questions that financial planning can answer for a business owner? How much money do I need to sell my business for? What rate of return do I need on my investments? What is the current volatility of the stock market? A provides for the stability and continuity of a closely held business and is a crucial part of a business owner's overall succession and estate plan. buy-sell agreement
What are examples of information that is typically found on an owner's balance sheet? Cash Reserve's Structure Asset Protection Interest Deductibility If the client's goal is to have $15 million for post-business retirement life, but their current net worth (without the business asset) is only $4 million, what would be their Wealth Gap? $11 Million A gift is one in which the person who received the gift has the unrestricted right to the immediate possession and use of it. Present interest gift Four true statements about estate and gift tax: A descendant's unused federal estate tax exemption may be used by the surviving spouse Not all states have an estate tax The most efficient use of the federal estate/gift exemption is during life A gift received by a person is not taxable income The main goal of minimizing wealth tax is to: Maximize the client's portion of earnings and minimize the IRS's portion
When should a client use an Intentionally Defective Grantor Trust? (IDGT) When they have high-basis assets and are looking to transfer those assets outside their estate What is a reason as to why an organization may say "no" to some direct gifts? It doesn't further their mission If a business owner dies, their assets often go through three "gates." Family, the IRS, and. Charity What is the primary objective for most Irrevocable Trusts of Family Limited Partnerships? Remove the business (or other asset) and future appreciation out of the estate A typical estate plan helps plan for a business owner's. Disability Which of the following are examples of a typical estate planning conversation that should be had with a business owner? Creditor protection Disability trustee planning Preserving the deceased spouse's coupon What are the first two major deliverables within Gate 1 of the Value Acceleration Methodology™? A Business Valuation
Personal, Financial, Business Assessment In what gate would you utilize a business valuation? Gate 1 What are common exit readiness issues? No personal goals and objectives Shareholders/family members aren't on the same page Credibility of financial information Year-over-year growth in sales and profit would benefit a company's: Attractiveness A business attractiveness score of 67% is considered: Above average There are two numbers in every business. The tax number and the number. real Strong customer loyalty, staff longevity, and organized financials are all examples of. Business attractiveness strengths
In the income approach to business valuation, which method is predicated on a specific future look at economic benefits? Discounted cash flow method What are the two most common types of transactions during a business sale? Asset Sale and Stock Sale Which Standard of Value can lead to unrealistic seller expectations? Emotional Value There are three broad approaches to determining value. The income approach, the market approach, and the approach. Asset approach A buyer may consider purchasing a company in order to enter a new market or obtain new intellectual property. Strategic buyer The complexity of Value Acceleration should be during the Discovery Gate. Low is the value to a particular investor based on individual investment requirements and expectations. Investment Value
What are some categories to evaluate and compare to other companies in the marketplace? Market growth Equipment condition Products and sales What is the timeframe most private companies can increase their value and should begin their value growth? Three to five years What is NOT considered a strategy for increasing enterprise value? Conduct a Triggering Event Which stage of the business transition journey would a business owner fall into if they were to begin reviewing their options but are not ready to commit to advisory services? Exploring What are examples of Value Domains? Culture Sales and Marketing Risk Value Acceleration must deliver 2 out of these 3:
In which gate of the Value Acceleration Methodology should you create a prioritized action plan? Discover What are the three key success areas (3 Legs) a business owner's goals and objectives should focus on? Business, Financial, and Personal When is a good time to establish goals and objectives with a business owner within the Value Acceleration Methodology™? After discovering and discussing themes from the Triggering Event with the business owner Goals should be S.M.A.R.T. Specific, Measurable, Aspirational, Realistic, and. Time-based When considering the three key success areas for an owner's goals and objectives, which of the below would be considered a "Financial" theme? Spending needs vs. wants What does S.T.E.P stand for? Spiritual, Things, Experiences, People Complete the following quote: " is the great unaddressed issue in the business world today. Its absence is the single biggest obstacle to success." Execution
What are the four words that should be used to test an owner's vision? Belief, passion, opportunity, focus When creating an action plan, you should aim to set no more than five business and five personal actions to complete in. 90 - Day Sprints Creating action plans is associated with which activity of Relentless Execution? Alignment What activities do you need to complete to create personal and business action plans? Establish personal and business priorities Determine and commit business resources Define the personal financial deliverable or outcome expected What are the benefits of a Start-Stop workshop? useful to determine inside versus outside reality can help you understand informal politics and leadership in the company determines what things you do well from a customer standpoint When sorting projects, what categories do de-risking projects typically fall into? Low value, low cost
Loans Protecting value is actually the first step to. Building value When conducting a series of post-Triggering Event workshops, which workshop would an owner share their vision with their management team or family? Strategic Framework I When conducting a series of post-Triggering Event workshops, which workshop would you discuss communication protocols and conflict resolution? Rhythm Which activity is an action that would usually be completed in Delivering action plans? A monthly 1:1 workshop A monthly team accountability workshop Hosting a team accountability workshop Meeting with a priority champion to discuss progress What is the best definition of a 90 - day sprint? A continual loop of prioritizing, executing, measuring, reconnecting, and recalibrating every 90 days The "Wow" Curve charts a business owner's over time.
enthusiasm What is the best definition of relentless execution? A specific set of behaviors and techniques that companies need to master in order to have a competitive advantage. What are examples of a workshops that are used to reinforce action? Monthly team accountability workshop Quarterly renewal workshop Annual retreat workshop What is an example of a deliverable presented at the Triggering Event workshop? Business valuation What is an example of why simply getting a project done isn't always good enough? The project cost twice as much as was budgeted A client's 3 - 5 year inspirational vision should be revisited: every 90 days What is considered a con of the intergenerational transfer exit option? lower sales price
What would be considered a pro of Employee Stock Ownership Plans (ESOPs)? Employees are rewarded for their contributions to the company Which exit option most often presents a deal structure that favors the buyer? Sell to a financial third party What is a benefit of hybrid exit options? Mitigates equity risk What are factors for a private equity group considering an investment? Stage of development Management NOT Stock price Company size Complete the following equation used by private equity groups when calculating how to value a company: x Multiple = Valuation EBITDA How does a private equity group value a business? a. EBITDA x multiple b. How the company makes money c. The company's growth opportunities d. Type of business
If a business had no accounting systems or staff and no management team depth, that business would likely sell for: Less than a 5.0x multiple Complete the following equation on how private equity groups select investments: Firm's Charter + = Investment Criteria Firm's Partners If a business owner was to sell less than 50% of their company to a private equity group, this would be considered a. Minority recap What are transaction types that a private equity firm would participate in? Founder/Owner seeking liquidity for estate planning purposes Majority investment in an early-stage business Private transaction of publicly traded company After investing in a business, what is the typical timeframe before a private equity group exits that business themselves? 3 to 7 years Which of the following are risk factors for a private equity group when evaluating a business? Supplies
