1. Which of the following express the capability of a 22.
Which of the following is a critical issue to manage in
company to generate operating profit? EV/EBIT seed financing? - Having a full knowledge of the industry 2. Which is the requirement for AMC? chọn 2% 23. What is an AMC? - A financial institution managing a 3. Why is company valuation important within PEI? → closed-end fund Depending on the value of the VBC the PEI will choose either to buy 24. Which of the following can happen in the fundraising existing or newly issued shares. phase of a closed-end fund? - Collection can come to an 4. What is replacement financing? - Financing in the mature end before 18 months, the maximum allowed by law. age o a company and the role o the PE investor is to replace 25. What is a VCF? - An Anglo-Saxon instrument investing in an existing shareholder any kind of PE 5. The main difference between VCF in the US and UK? → 26. Which of the following concerning SBICs is true? - no difference SBICs involve a public admin that must hold 50% of its equity. 6. Consider the DCF model. Which among the following 27. How do banks usually participate in PE? - They invest effects on equity value is correct? - The higher the WACC in closed-end funds and so that they can participate in PE is, the lower the equity value is. activities. 7. When is it better to use only the multiples method, 28. What is participation exemption? - A mechanism in rather than using it together with the DCF model? - Very which there is a lower level of taxation on capital gain when rarely, when possible you should use them together some conditions occur/ A fiscal benefit granted to PEIs 8. In the managerial process, the closing activity occurs 29. What is true about private debt funds? - In this case the or… -venture capital funds, as well as for closed-end funds. same vehicles usually investing in private equity decide to 9. What is the main difference between the VCM and the invest in private debts rather than in PE. DCF model? - The VCM aims at finding the price of the 30. Whom are the fiscal incentives to startup considered shares bought by the PE, whereas the DCF aims at finding the relevant to? - The venture-backed company equity value 31. Suppose there is a fund with the following features: 10. What is meant by board services: one of the actions Fund Global IRR: 350%; Hurdle Rate: 8%; Fund Carried taken by the PE to create value in the "managing and interest: 106%; Final Amount: 1,929 monitoring?" Find the remunerations for the managers 454.39 11. According to the European Format, who can invest in 1) committed capital: FINAL VALUE/(1+GLOBAL IRR) = PE? - Banks, closed-end funds, investment firms 1929/(1+350%) = 428,67 11. When does vulture financing generally take place? - 2) Remunerations =106% * 428,67 = 454,39 When a company enters its decline phase or files or 32. How long does it take to make all shareholders bankruptcy subscribe to the total amount of the fund? - 1.5 years in a 12. Why is protection not always granted during a PE European fund deal? - The deal is the outcome of a negotiation process/ 33. What occurs in the investing phase? - Managers have There is no authority regulating the PE deals. to deal with the valuation of potential investments 13. Why is it difficult to find a potential buyer or the 34. When talking about fundraising in the managerial participation the PE owns? -The liquidity of the stake is very process, what is the “proposal?” - A business idea leading low/ The price is not defined by the market, establishing a high to the creation of the vehicle that will invest in PE difficulty in its determination. 35. Which among the following statements about the “job 14. Why should a company choose PE over a mortgage or selling” is FALSE? - Regardless of the country in which the loan? - Besides the provision of financial aid, the PEI legal entity is based, “job selling” is always followed by the becomes an active owner of the company./ The fact that the closing phase PE is also a shareholder makes them really interested in 36. What is meant by “successful closing?” - When the PEI enhancing the company’s value can collect all the money necessary to start the PE activity. 15. Is the price of PER share higher or lower than the one 37. Rank the following steps occurring in the decision- o a public company? - There is no specific rule: The price is making phase from the most to the least expensive and the result of negotiation. demanding for the PEI.- Decision to invest, rating 16. What is the twofold nature of PE? - PE is a source of assignment, screening financing and investment 38. What is the main goal of the screening step in the 17. What is the certification benefit? - A PEI invests a lot of investing phase?- To find the potential venture in which the time in the screening phase to scout a VBC. When a company PEI will invest is selected that means that it has growth potential./ When a 39. Which among the following statements about the PEI invests in a company the latter is a trustworthy company negotiation step in the investing phase is true? - The 18. What is the main difference between Restructuring actors involved have to calculate the number of shares the PE and Distressed Financing? - Restructuring occurs when the firm will own. company is still alive, whereas Distressed financing occurs 40. Select the right circumstance when it is better to make when the company is dead a direct investment rather than an indirect one for the PEI 19. What is the right kind of financing in the development when it has to decide on a vehicle to invest in the deal- phase? - Family and friends making phase: -There is a very high commitment from the 20. When does the development phase occur? - When the investors with respect to the VBC. company does not exist yet 41. What is true about the write-off in the existing phase? - 21. Why is the put option used in startup financing as a It may occur when the VBC defaults. risk mitigation tool by the PE investors? - In order to sell the shares the investor bought back to the entrepreneur 42. Which of the following is a critical issue to manage in 65. In the managerial process, during the fundraising seed financing? -Giving strong support to manage strategic phrase, the debt raising activity… - occurs only for funds decisions. with specific features. 43. What is true about Vulture Financing? - It’s the 66. In which phase does the PEI decide the destination of separation into two different deals deriving from two different the money collected over the managerial process? - ways of regulation. Decision-making 44. What is the “poison pill”? - The PEI buying a valuable 67. What is meant by “managing” as a part of the asset mandatorily together with other less valuable assets managerial process? - The PEI has to make sure the 45. What is the financial benefit for a company when company generates value and they have to take actions to financed by a PE? -The positive effect PE has on the cost of create it. capital. 68. What is trade sale? - It is the sale of the stake of VCB to 46. What is the big difference between PIPE and the other another corporation and entrepreneur. PE activities? -PIPE deals with a company whose shares are 69. What is the enterprise value? - If some conditions occur, listed on a stock exchange. the enterprise value is equal to the sum of the cash flow 47. Why is the PE market very crowded when a company generated by the VBC at the time of the valuation and the needs money to finance its internal growth? - Because it is terminal value. not a complicated activity for a PE. 70. Which among following multiples better expresses the 48. Why is seed financing very risky? - Not every idea can capability of the company to generate gross margin? - generate a marketable output. EV/EBITDA 49. What is the knowledge effect? - Hard and soft 71. How are cash flows called within the DCF model? - knowledge that can be transferred to a company by a PEI Free Cash Flow 50. What is the biggest advantage of crowdfunding? - 72. Using the DCF model: Say company has: total assets = Those who need capital can launch an offer on the internet 120; equity =40; Beta unlevered = 0,75; tax burden = 20%. and see whether they are able to collect the amount needed. Find Beta: Beta = 0,75*[1+(1-0,2)*(80/40)] = 1,95 51. What are some of the risks on the investors’ side for 73. Compute the Equity Value given which one should take actions to protect value? - Wrong Enterprise Value = 150; SA = 56; TV = 25 industrial management decisions Equity Value = EV + SA = 150+56 = 206 52. Which of the following is correct? - After the end of the 74. Why can not a PE use the DCF model at time N? - closed-end fund, the maximum extra-time allowed is three There is no business plan. years. 75. When is the VCM used? - When it’s difficult to determine 53. What is an LLP? - A legal entity working like an AMC in the percentage of the investment hold by the equity investors Europe created by the GPs in order to protect themselves 76. Use the VCM to find the right % of shares the PE 54. What is a trust? - A vehicle used to invest in PE in which should have: Value of investment = 3,800,000; IRR =40%; the management company is played by a trustee Holding period = 4 years; Net Income (Year N) = 2,600,000; 55. What does "being fully liable '' mean in the PE ratio = 13 management of a VCF? - The GPs are responsible or the 1) FV of the investment = 3,800,000 (1+40%)^4 = 14,598,000 liabilities of the VCF 2) Terminal Value = 2,600,000 x 13 = 33,800,000 56. Which of the following is a characteristic of VC? - PEI 3) % shares = FV/Terminal Value = 43,19% has a hands-on approach. 77. What is the biggest drawback of the DCF? - You need 57. Which of the following statements describes the to rely on a sound business plan mechanism of a PE investment? - The PEI injects cash in 78. What two moments from the investing phase? - the VBC and gets equity Decision-making and deal-making 58. Which of the following is a feature of seed financing? - 79. What is the biggest trade off when calculating equity The managerial involvement is very low. The investor has to value? - The PEI wants the equity value to be as low as develop his or her ideas. possible in the beginning of the investment while the value has 59. What is one thing that determines the approval or to be as large as possible at the end of the investment. denial the establishment of an AMC - Minimum requirements to operate 60. How does a VCF work? - GPs, like the AMC… 61. What is true about remuneration in a SBIC? - Both group of shareholders receive management fees 62. Which among the following statements concerning taxation and the incentives to startup is correct? - The mark-down mechanism entrails a reduction in the tax rate without any particular conditions 63. Which of the following statements about the managerial process is true? - Investing, managing & monitoring, and existing may potentially start at the same time 64. What are the typical steps of the fundraising activity of the managerial process? - Creation of the business idea, selling jobs, debt raising and closing.