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M&A Interview Tips

Essential interview preparation in M&A (Analyst 2 – Associate 1)

  • This is essential reading as it will form the back bone of the interview process and these areas will make the
  • difference between being successful or not.M&A Interview Tips

Please research them paying special attention to:

Section 1 - About them:

  • 1. Background of team (find them on LinkedIn etc.)
  • 2. Specific deals they have worked on and the complexities of the deals
  • 3. General background on the business
  • 4. Understanding of who the main competitors are as a general and also on deals

Section 2 - About you:

  • 1. How you would go to market with both buy-side and sell-side opportunities
  • 2. Know your deals inside out including your role on the deals as you will be asked to talk about them in detail
  • 3. Know your sector and have a clear understanding of the wider events that shape it now and in the future
  • 4. Polish up on your modelling/valuation experience and be prepared to answer ques- tions on modelling concepts
  • 5. Think clearly and consistently about all of your motives for moving positions, etc.
  • 6. Above all have three clear reasons about why you want to work for them

Section 3 - Technical Questions (you will be asked some of these questions):

  • 1. Must be able to assess the key measures of profitability and financial strength of companies in the sector
  • 2. Must be able to assess the earnings quality of companies
  • 3. Must know the Macroeconomic trends affecting earnings and returns in the sector
  • 4. Good knowledge of asset and enterprise-level valuation techniques and analytical tools
  • 5. Must be able to analyse the financial statements of companies in the sector 
  • 6. An understanding of the effects of regulation and rate cases on a company’s financial outlook 
  • 7. Knowledge of capital-raising instruments and the impact of capital management strategies under various market scenarios 
  • 8. The impact of regulatory forces and how these will shape the sector 
  • 9. Must have a through knowledge of the technical aspects of deals that has worked on 
  • 10. Must be able to deliver the answers in a structured way (see section 5) which shows a structured thinker 
Section 4 - Some Specific Technical Questions:

Investment Banking / Corporate Finance / Private Equity 

  • 1. What makes a good LBO candidate? 
  • 2. What are some exit strategies for an LBO? 
  • 3. A client needs help evaluating whether to make an acquisition or not. What criteria would you use to help him make a decision? 
  • 4. What are the different sources of synergies in M&A? 
  • 5. What tactics do companies use to fight a hostile take-over bid? 7. Describe the M&A Process? 
  • 8. Walk me though the primary methods of valuing a company and the pros and cons of each: 
  •  • Discounted Cash Flow 
  •  • Comparable Companies 
  •  • Precedent Transactions 
  •  • Leveraged Buyout
  • 9. How do you calculate Unlevered Free Cash Flow? 
  • 10. What is goodwill? 
  • 11. What is minority interest? 
  • 12. What is the difference between LIFO and FIFO Inventory Valuation? 
  • 13. If prices are increasing, would you use FIFO or LIFO as a CFO?
  • 14. If you could choose between two of the three primary financial statements for valuation purposes, which would you choose? 
  • 15. How would you describe the concept of terminal value to a lay person? How do you calculate a company’s terminal value? 
  • 16. Company A wants to buy Company B for $600 million, the max they think it is worth. However, Company B wants $630 million.
  • Company A could use stock v. cash for the additional $30 million. Under what circumstances might Com pany A agree to the additional $30 million? 
  • 17. If I gave you $100 a year for 10 years or $900 today which one will you choose? 
  • 18. How did the recent subprime crisis result in major write-downs for investment banks?

Section 5 - Structured Answers (STAR approach): 

Answer questions in this structured format and perform better in the interview.

Situation or Task                    Describe the situation that you were in or the task that you needed to accomplish. You must describe a specific event or situation, not a generalised description of what you have done in the past. Be sure to give enough detail for the interviewer to understand.
Action you took Describe the action you took and be sure to keep the focus on you. Even if you are discussing a group project or effort, describe what you did -- not the efforts of the team. Don’t tell what you might do, tell what you did.
Results you achieved                                                                                                What happened? How did the event end? What did you accomplish? What did you learn?

Section 6 - The HR Interview within M&A: 

  • Expect HR to be involved in the interview process at some point. The HR interview will be completely different from
  • the technical and industry knowledge based interviews. 
  • Many of them employ behavioural based questions. When they do use the STAR approach above. Be sure not to memorise
  • answers; the key to interviewing success is simply being prepared for the questions and having a mental outline to follow in responding to each question. 

Here is a list of sample behavioural-based interview questions: 

  •  • Describe a situation in which you were able to use persuasion to successfully convince someone to see things your way. 
  •  • Describe a time when you were faced with a stressful situation that demon strated your coping skills.
  • • Give me a specific example of a time when you used good judgment and logic in solving a problem. 
  •  • Give me an example of a time when you set a goal and were able to meet or achieve it. 
  •  • Tell me about a time when you had to use your presentation skills to influence someone’s opinion. 
  •  • Give me a specific example of a time when you had to conform to a policy with which you did not agree. 
  •  • Please discuss an important written document you were required to complete. 
  •  • Tell me about a time when you had to go above and beyond the call of duty in order to get a job done. 
  •  • Tell me about a time when you had too many things to do and you were re quired to prioritize your tasks. 
  •  • Give me an example of a time when you had to make a split second decision. 
  •  • What is your typical way of dealing with conflict? Give me an example. 
  •  • Tell me about a time you were able to successfully deal with another person even when that individual may not have personally liked you (or vice versa). 
  •  • Tell me about a difficult decision you’ve made in the last year. 
  •  • Give me an example of a time when something you tried to accomplish and failed. 
  •  • Give me an example of when you showed initiative and took the lead. 
  •  • Give me an example of a time when you motivated others. 
  •  • Tell me about a time when you delegated a project effectively. 
  •  • Give me an example of a time when you used your fact-finding skills to solve a problem. 
  •  • Tell me about a time when you missed an obvious solution to a problem. 
  •  • Describe a time when you anticipated potential problems and developed pre ventive measures.
  •  • Tell me about a time when you were forced to make an unpopular decision. 
  •  • Describe a time when you set your sights too high (or too low).

Section 7 – General Investment Banking Questions: 

  •  • Why investment banking? Why M&A? Why work for a Boutique/Bulge Brack et/Mid-Market?
  • • So, what brings you to interview with XYZ Bank?
  • • What do you know about XYZ Bank? Our culture? What appeals to you about the firm and the culture?
  • • Why did you choose to interview with us?
  • • Why are you interested in the industry? Why are you interested in this field of work?
  • • Why our firm relative to the competition? What differentiates us?
  • • Do you want to work in an industry or product group?
  • • If you were not offered a position in investment banking, what other jobs would you consider?
  • • Who have you met from our firm?
  • • Who else are you interviewing with? (think about what the perception will be with what you answer. Consistency is important)
  • • How did you learn about our organisation?
  • • Where do you see yourself in five years?
  • • How do you see the future of investment banking? What action do you think our industry leaders should take? School-related
  • • Why did you select your college or business school?
  • • Why did you choose your degree?
  • • At what point in your career did you think an MBA was necessary?
  • • What courses have you liked most? Least? Why? What was your best and worst subject in school?

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