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How to Pass an M&A Interview

Kison Patel
CEO and Founder of DealRoom
Kison Patel

Kison Patel is the Founder and CEO of DealRoom, a Chicago-based diligence management software that uses Agile principles to innovate and modernize the finance industry. As a former M&A advisor with over a decade of experience, Kison developed DealRoom after seeing first hand a number of deep-seated, industry-wide structural issues and inefficiencies.

CEO and Founder of DealRoom

As most DealRoom articles allude to, thorough preparation is the key to successful M&A.

Almost all deals which end up destroying value could have been prevented by more preparation at the pre-deal phase. This is the same spirit that should be taken with M&A interviews.

M&A jobs are typically highly oversubscribed, so the chances of you landing a position without any preparation are minimal.

In this article, DealRoom looks at time-proven ways of passing an M&A interview. From the outset, we should state that we do not intend for the article to be a Human Resources masterclass. We don’t talk about crisp white shirts and firm handshakes.

Rather, our focus is on the questions that are asked, and the knowledge that you should possess to land a job in a coveted M&A-related role.

The M&A Interview Questions

  • Technical Questions
  • Valuation Questions
  • Due Diligence Questions
  • Company Questions

Essential Interview Preparation in M&A

Assuming you’re not a freshly minted college graduate with no corporate experience, you will be asked to discuss some of the deals you’ve worked on in some capacity.

In particular, be prepared to provide detail on your contribution to every part of the process, and the value that you added.

Like any ‘fit’ style questions, think about aspects of the deal that challenged you, obstacles you had to overcome, and what you learned from the deals.

Sample questions include:

  • Why do you think that deal made sense before the transaction?
  • Do you think the valuation was reasonable and why?
  • Which valuation methods did you use?
  • Has the deal been a subsequent success?
  • How much due diligence did you conduct?

Why not check out: How to become an M&A analyst?

1. Technical Questions

Regardless of your experience level, there will be technical questions in the M&A interview.

While some people think that coming from a background unrelated to finance spares them this round of questions, the reality is that it may in fact mean that they’re grilled on technical aspects even more than the others.

There is a broad scope for questions here, including just about everything that could come up in an M&A transaction.

Sample questions include:

  • How would you value our company?
  • How would you arrive at a cost of capital for a private company?
  • How would you assess in advance if a deal is accretive or dilutive?
  • How would you conduct an LBO?
  • How would you define and calculate goodwill?

2. Valuation Questions

It’s unlikely if an M&A interview has ever been conducted without at least a couple of questions on valuations. This area is the bread and butter of most M&A work, so if you’re short on time, it’s the area you should focus most of your attention on.

By extension, this is the area that’s most likely to rule you out of a position if you don’t exhibit good acumen. Consequently, we’ve dedicated more questions to this section than the others.

Sample questions include:

  • How do you arrive at FCF to the firm?
  • What valuation methods do you use when valuing companies?
  • Have you ever used real options valuation?
  • What are some examples of industry-specific multiples?
  • Have you ever achieved a highly inaccurate valuation and what did you learn from it?
  • How would you value a company’s intellectual property assets?
  • How would you value a distressed asset?
  • What value do you attach to management in a company’s valuation?
  • What are the weaknesses of the DCF method and how do you overcome them?
  • How do you arrive at a cost of capital that you’re satisfied with?
Useful resources:
Avoiding Valuation Surprises and Accounting for M&A Transactions
Navigating Intangible Asset Valuation

3. Due Diligence Questions

Due Diligence is the area that catches out a lot of candidates for M&A roles. This area offers candidates an opportunity to gain an edge over competitors that have overlooked an important part of any due diligence process.

DealRoom helps hundreds of companies across just about every industry with their M&A due diligence process, and our advice is that it’s something that they’re paying a lot of attention to, so you should too.

Sample questions include:

  • Tell us about your experience in due diligence.
  • What issues are you looking out for in due diligence?
  • If you’re given a set of financial accounts for the past five years, what’s the first thing you’re looking for in financial due diligence?
  • Is there ever a time that you were able to uncover something material in a due diligence process and what was it?
  • What skills can you bring to due diligence?
Useful resources:
Making Your Diligence Process More Efficient
How to Build a Highly Efficient Due Diligence Process
How to Approach Diligence

4. Know the Company

Finally, when we say ‘know the company’, we mean be familiar with its strategy, its recent transactions, deals that were a success, and those that weren’t. Know its competitors and know why you’re applying for a job in this company rather than the other one.

But this ultimately is about knowing what questions you should ask. When they ask, ‘any questions?’ don’t lose the opportunity to show your insight.

Sample questions for you to ask include:

  • What have you learned from your least successful deals?
  • How many targets do you typically consider before making an acquisition (if applicable)
  • Is there anything different about how you calculate your cost of capital?
  • How many deals are in your pipeline currently?

Conclusion

Despite the quantitative nature of the field, M&A hires can come from a range of different backgrounds. What they tend to have in common is an attention to detail.

The best place to begin showing that attention to detail is the interview stage.

By treating the M&A interview almost like an M&A process itself, you maximize your chances of fainting a job at an investment bank, be it boutique or blue chip.

To get more knowledge about M&A you need to get as much information from the real M&A practitioners as possible. That's why we have created M&A Science. We recommend to start listening to free podcast series and subscribe to the Academy to keep up with evolving industry of M&A.

M&A Science Academy

As most DealRoom articles allude to, thorough preparation is the key to successful M&A.

Almost all deals which end up destroying value could have been prevented by more preparation at the pre-deal phase. This is the same spirit that should be taken with M&A interviews.

M&A jobs are typically highly oversubscribed, so the chances of you landing a position without any preparation are minimal.

In this article, DealRoom looks at time-proven ways of passing an M&A interview. From the outset, we should state that we do not intend for the article to be a Human Resources masterclass. We don’t talk about crisp white shirts and firm handshakes.

Rather, our focus is on the questions that are asked, and the knowledge that you should possess to land a job in a coveted M&A-related role.

The M&A Interview Questions

  • Technical Questions
  • Valuation Questions
  • Due Diligence Questions
  • Company Questions

Essential Interview Preparation in M&A

Assuming you’re not a freshly minted college graduate with no corporate experience, you will be asked to discuss some of the deals you’ve worked on in some capacity.

In particular, be prepared to provide detail on your contribution to every part of the process, and the value that you added.

Like any ‘fit’ style questions, think about aspects of the deal that challenged you, obstacles you had to overcome, and what you learned from the deals.

Sample questions include:

  • Why do you think that deal made sense before the transaction?
  • Do you think the valuation was reasonable and why?
  • Which valuation methods did you use?
  • Has the deal been a subsequent success?
  • How much due diligence did you conduct?

Why not check out: How to become an M&A analyst?

1. Technical Questions

Regardless of your experience level, there will be technical questions in the M&A interview.

While some people think that coming from a background unrelated to finance spares them this round of questions, the reality is that it may in fact mean that they’re grilled on technical aspects even more than the others.

There is a broad scope for questions here, including just about everything that could come up in an M&A transaction.

Sample questions include:

  • How would you value our company?
  • How would you arrive at a cost of capital for a private company?
  • How would you assess in advance if a deal is accretive or dilutive?
  • How would you conduct an LBO?
  • How would you define and calculate goodwill?

2. Valuation Questions

It’s unlikely if an M&A interview has ever been conducted without at least a couple of questions on valuations. This area is the bread and butter of most M&A work, so if you’re short on time, it’s the area you should focus most of your attention on.

By extension, this is the area that’s most likely to rule you out of a position if you don’t exhibit good acumen. Consequently, we’ve dedicated more questions to this section than the others.

Sample questions include:

  • How do you arrive at FCF to the firm?
  • What valuation methods do you use when valuing companies?
  • Have you ever used real options valuation?
  • What are some examples of industry-specific multiples?
  • Have you ever achieved a highly inaccurate valuation and what did you learn from it?
  • How would you value a company’s intellectual property assets?
  • How would you value a distressed asset?
  • What value do you attach to management in a company’s valuation?
  • What are the weaknesses of the DCF method and how do you overcome them?
  • How do you arrive at a cost of capital that you’re satisfied with?
Useful resources:
Avoiding Valuation Surprises and Accounting for M&A Transactions
Navigating Intangible Asset Valuation

3. Due Diligence Questions

Due Diligence is the area that catches out a lot of candidates for M&A roles. This area offers candidates an opportunity to gain an edge over competitors that have overlooked an important part of any due diligence process.

DealRoom helps hundreds of companies across just about every industry with their M&A due diligence process, and our advice is that it’s something that they’re paying a lot of attention to, so you should too.

Sample questions include:

  • Tell us about your experience in due diligence.
  • What issues are you looking out for in due diligence?
  • If you’re given a set of financial accounts for the past five years, what’s the first thing you’re looking for in financial due diligence?
  • Is there ever a time that you were able to uncover something material in a due diligence process and what was it?
  • What skills can you bring to due diligence?
Useful resources:
Making Your Diligence Process More Efficient
How to Build a Highly Efficient Due Diligence Process
How to Approach Diligence

4. Know the Company

Finally, when we say ‘know the company’, we mean be familiar with its strategy, its recent transactions, deals that were a success, and those that weren’t. Know its competitors and know why you’re applying for a job in this company rather than the other one.

But this ultimately is about knowing what questions you should ask. When they ask, ‘any questions?’ don’t lose the opportunity to show your insight.

Sample questions for you to ask include:

  • What have you learned from your least successful deals?
  • How many targets do you typically consider before making an acquisition (if applicable)
  • Is there anything different about how you calculate your cost of capital?
  • How many deals are in your pipeline currently?

Conclusion

Despite the quantitative nature of the field, M&A hires can come from a range of different backgrounds. What they tend to have in common is an attention to detail.

The best place to begin showing that attention to detail is the interview stage.

By treating the M&A interview almost like an M&A process itself, you maximize your chances of fainting a job at an investment bank, be it boutique or blue chip.

To get more knowledge about M&A you need to get as much information from the real M&A practitioners as possible. That's why we have created M&A Science. We recommend to start listening to free podcast series and subscribe to the Academy to keep up with evolving industry of M&A.

M&A Science Academy

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