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.
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?
