ASSESSMENT QUESTIONS: POST 3 & CASE STUDY 3 The Bean Counter and David’s $31M Transformation
MULTIPLE CHOICE QUESTIONS
1. According to the post, who determines the price for businesses selling for millions? A) The business owner based on their expertise B) Industry associations and trade groups C) Financial professionals hired by wealthy purchasers D) Government regulatory agencies
2. What is the post’s main argument about “the bean counter”? A) Bean counters should be avoided when selling B) Bean counters don’t understand real business value C) The bean counter is your customer—give them what they want D) Bean counters can be educated about your industry
3. What was David Martinez’s area of expertise? A) Software development B) Industrial automation for food processing plants C) Medical diagnostics D) Restaurant operations
4. How old was Amanda Chen, the financial analyst assigned to value David’s business? A) 24 years old B) 27 years old C) 32 years old D) 35 years old
5. What was Amanda’s preliminary valuation of AutomationPro Systems? A) $2.8 million B) $8.4 million C) $18.6 million D) $40 million
6. What multiple did Amanda’s preliminary valuation represent? A) 1.2x EBITDA B) 2.3x EBITDA C) 4.5x EBITDA D) 7.8x EBITDA
7. How many clients did TechFlow Automation (the comparable company) have? A) 14 companies B) 67 companies C) 134 companies D) 180 companies
8. How long was David’s sabbatical that proved operational independence? A) 4 weeks B) 8 weeks C) 12 weeks D) 16 weeks
9. What was David’s final sale price after the 22-month transformation? A) $18.2 million B) $24.6 million C) $36.2 million D) $44.8 million
10. What was the value created by David’s transformation? A) $12.4 million B) $18.8 million C) $27.8 million D) $35.6 million
EXPLANATION QUESTIONS
Answer each question in 3-5 sentences, demonstrating your understanding of the concepts.
1. Explain why the post argues that business owners should accept rather than fight the fact that financial professionals determine business value. What happens when owners resist this reality?
2. What does the statement “Premium purchasers are buying a corporate business system that converts revenue to income, not widgets or digits” mean? Why is this distinction critical?
3. Describe the four pillars that financial professionals analyze when valuing businesses. Why does the post emphasize that industry expertise is NOT on this list?
4. Explain the critical difference between a “consulting practice” and a “valuable business” according to Amanda Chen. Use David’s initial situation to illustrate.
5. What are the three questions buyers ask when a business owner pitches “obvious expansion opportunities”? Why do these questions devastate the “potential” argument?
6. Compare David’s AutomationPro Systems to TechFlow Automation across the four pillars of risk. What specific differences justified TechFlow’s 7.8x EBITDA multiple vs. David’s 2.3x?
7. Describe David’s transformation in Phase 1 (Systematize Expertise). What specific actions made his expertise transferable rather than personal?
8. How did David prove operational independence, and why was this proof critical to his valuation? What happened during his sabbatical?
9. The case study shows that David worked fewer hours in his final 18 months than any previous year while creating $27.8M in value. Explain this apparent paradox.
10. Explain the irony described at the end of the case study: 28 years building expertise worth $8.4M vs. 22 months systematizing it for $36.2M. What lesson does this teach about value creation?
SOLUTIONS
