Exam (elaborations)
CEPA - Exit Options And M&A: Questions/Solutions
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CEPA - Exit Options And M&A: Questions/Solutions
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CEPA - Exit Options And M&A: Questions/SolutionsInside Sale Options Right Ans - Intergenerational, to Partners, To
Managers, To EE's (ESOP)
Outside Sale Options Right Ans - Third Party, Recapitalization, Orderly
Liquidation
Advantages to 3rd Party Sale Right Ans - Highest Price, More Cash, Walk
Away Faster, Bus Refresh& new Energy
Disadvantages 3rd PartySale Right Ans - Distraction, Privacy, Longer
Process, Emotions, Complex
Advantages to Recapitalization Right Ans - Partial Exit Possible, Owner
diversification, Provides Capital for Growth, 2nd bite of Apple
Disadvantages to Recapitalization Right Ans - May not be Clean break, Loss
of control, Culture Shift
Most Common PE Transaction Types Right Ans - Buyout, Family
Succession, Recap's, Corp Divesture, Growth Capital
The 3 legs that PE firms look at Right Ans - Company, Management and
Deal
SWOT analysis Right Ans - strengths, weaknesses, opportunities, threats
Most Common M&A Basic Transaction Options? Right Ans - Outright Sale,
Majority Recap, Minority Recap and Debt Recap
Some of Top Seller Mistakes Right Ans - Not being represented, not
providing accurate info, Bad earnest, Waiting for next years growth, limiting
buyer pool
M&A Process Right Ans - Strategy and Planning, Research and Analysis,
Materials Prep, Marketing and Bid Generation, Negotiation and Due Diligence,
Closing and Documentation
, Controlled Auction Right Ans - Competitive process
Negotiated Sale Right Ans - Deal with Individualizing Buyer, Better for
Buyer b/c less completion, usually smaller Transactions
Sellers prefer what Type of Sale Right Ans - Stock - B/c Lower taxes, Less
Liability
Buyers Prefer prefer what Type of Sale Right Ans - Asset - Step up, B/c can
re-depreciate equip, Can decide on Assets they want
Two main types of Buyers Right Ans - Financial and Strategic
Strategic Buyers are usually who Right Ans - Synergies (Competitor,
Supplier, etc) - Pay Prem (Layoffs, Culture issues)
Financial Buyers are usually who Right Ans - PE, Family Ofc, HNW (More
complex)
Intergenerational Transfer Advantages Right Ans - Continuity, Legacy,
Lower Cost, More Control
Intergenerational Transfer disadvantages Right Ans - Family Dynamics,
Illiquid Buyers, Lower Sale price
Success rates of transferring to 2 and 3 generations Right Ans - 30% and
12%
Invest. Banker Role Right Ans - Negotiate transaction for business,
formalize process, maintain confidentiality, generate buyers, help with owner
emotions
Middle Market Range Right Ans - $5M to $1B
Advantages of Strategic Buyer Right Ans - Usually Pay premium for control,
quickest way to exit
Disadvantages of Strategic buyer Right Ans - Confidentiality, Layoffs and
Culture shocks
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