CBB Cheat Sheet 2026

The 30 highest-yield CBB facts, distilled from real exam questions. Print it, save it as a PDF, or study it here — free, no sign-up.

1. What is the broker's primary role during negotiations between buyer and seller? → To facilitate communication and help both parties reach a mutually acceptable agreement
2. In which asset class under IRS Form 8594 would goodwill and going-concern value be allocated? → Class VII – Goodwill and going concern value
3. In a stock sale, who typically assumes the historical liabilities of the business? → The buyer assumes the liabilities of the entity as-is
4. A 'holdback' or 'earnout' provision in a purchase agreement is designed to: → Link a portion of the purchase price to the business's future performance
5. When should a business broker recommend the seller obtain a legal review of the purchase agreement? → Before the seller signs any binding agreement
6. The Gordon Growth Model is primarily used to value a business by: → Capitalizing a stabilized cash flow stream with a growth assumption
7. Under the IBBA Code of Ethics, which action is explicitly prohibited when marketing a business for sale? → Making materially false or misleading statements about the business
8. Which financial records are most critical for a buyer to review during due diligence? → Three to five years of tax returns and P&L statements
9. What is an SBA 7(a) loan most commonly used for in business acquisitions? → Funding the purchase of existing businesses, including goodwill and working capital
10. When marketing a business with below-market owner compensation, a broker should present this to buyers as: → A discretionary add-back that increases effective EBITDA
11. A business broker applying the excess earnings method would first need to identify: → A reasonable owner's compensation
12. When a buyer uses a combination of bank financing and seller financing, this structure is often called a: → Layered or blended financing structure
13. When representing a seller, a business broker's fiduciary duty includes all of the following EXCEPT: → Negotiating the lowest possible price for the buyer
14. What is the purpose of an earn-out clause in deal structuring? → It adjusts final payment based on business performance
15. What financial metric is most important for determining cash flow available to a buyer? → Seller’s Discretionary Earnings (SDE)
16. What is the purpose of a non-disclosure agreement (NDA) in business brokerage? → To protect business confidentiality
17. In the context of business valuation, 'working capital' is defined as: → Current assets minus current liabilities
18. A business broker receives a referral fee from a lender for connecting a buyer with financing. What is the ethical requirement? → The broker must disclose the referral fee arrangement to all parties in writing
19. When calculating Seller's Discretionary Earnings (SDE), which item should be ADDED BACK to net income? → Owner's health insurance premiums paid by the business
20. Under IRS rules, when a business is sold as an asset sale, which form must buyer and seller file to report the allocation of purchase price among asset classes? → Form 8594
21. Which legal doctrine can make a buyer liable for a seller's debts even in an asset sale if the transaction is structured to defraud creditors? → Successor liability under fraudulent transfer law
22. What minimum equity injection do SBA lenders typically require from a buyer in a business acquisition? → 10% of the purchase price
23. Which document is most useful when analyzing a business’s financial history? → Tax returns
24. In exit planning, a 'Quality of Earnings' (QoE) analysis is primarily used to: → Verify the accuracy and sustainability of the business's reported earnings
25. Which party typically holds funds in escrow at closing in a business sale? → A neutral third-party escrow company or attorney
26. Which factor is MOST likely to reduce a business's marketability when preparing it for sale? → The owner personally managing all key customer and supplier relationships
27. When normalizing financial statements, which of the following is typically NOT added back to compute SDE? → Cost of goods sold for inventory sold
28. What does 'working capital' measure in business operations? → Current assets minus current liabilities, reflecting short-term operational liquidity
29. Which financial metric represents earnings before interest, taxes, depreciation, and amortization? → EBITDA
30. A business broker advises a client to improve EBITDA multiple before sale. Which strategy is MOST effective? → Building diversified customer relationships and securing recurring revenue contracts