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27/12/2020 16 : 57 M&A Interview Questions - Beginner to Advanced Questions | Wall Street Oasis Page 1 sur 27 1 2 next last Home ! Forums ! Investment Banking Forum Apr 03, 2018 M&A Interview Questions - Beginner To Advanced Questions TorontoMonkey1328 IB Rank: Neanderthal | 3,186 I have a set of M&A (mergers and acquisitions) interview questions I like to ask. Interview Questions For Mergers And Acquisitions In my career, I've only had two analyst / associate candidates answer all four levels correctly without coaching. Most people can get Level 1 and sometimes 2. Fewer get Level 3 or 4 even with coaching. Thought process is more important than answer. Company A acquires Company B. Assume all numbers below are inclusive of premium and synergies. Beginner Interview Questions - Basic Accretion / Dilution Question: Company A has PE (private equity) (private equity) of 10 and company B has PE (private equity) (private equity) of 8. In an equity-swap deal, is the transaction Accretive or dilutive? Answer: " Accretive for A. Say A is 8 shares of $10 (earnings $8), B is 10 shares of $8 (earnings $10). A issues 8 more shares, now has 16 shares of $10 with earnings of $18. P/E has gone from $10 to 8.8/8.9 Mid-Level Interviewing - Earnings Yield This is to break the people who read the Vault guide and quote the "cheaper earnings" # $ % SEE ALL & START DISCUSSION Popular Content Wall Street moving to Miami wo ... +97 OFF by 1st Year Analyst in In What to do over winter break? +34 OFF by Intern in Hedge Fund Fat Shaming: Mean or Effective? +33 OFF by 1st Year Analyst in In Diversity +16 IB by ClashofClans Anything wrong with a 4.0 GPA? +16 IB by Prospective Monkey in Stimulus Checks Are Stupid +16 OFF by IkeSalisbury is there hope for me +14 OFF by 2nd Year Associate in Just How Screwed am I? +13 IB by Intern in Investment B Will TSLA stock plummet? +11 OFF by iercurenc "You're an analyst, not an Invest ... +9 IB by AngelOfMusic See Highest Ranked Comments Total Avg Compensation December 2020 Investment Banking $709 Director/MD (19) $337 Vice President (53) Newest Week Month All Time Courses Services Reports Resources SIGN IN JOIN US ALL DISCUSSIONS ' ( ) * + | IB PE HF RE CO TR AM ER CF ALL JOB EVT BSCH OFF FASH Search , John
27/12/2020 16 : 57 M&A Interview Questions - Beginner to Advanced Questions | Wall Street Oasis Page 2 sur 27 answer / shortcut Strong>Question: Company A uses debt which has an after tax cost of debt of 5% to acquire B. Is the deal still (Accretive / dilutive) like in Level 1 question? More or less? What after tax cost of debt would make the deal approximately break even from an accretion perspective? Answer: " Accretive for A. You're borrowing $80 at 5%, or a cost of $4 to add earnings of $10. It would break even at 12.5% (1/(P/E of B)). Difficult Interview Questions - Merger Of Equals (MOE) This question requires a framework. If you blurt out a number: A. I bet I know what answer you're going to blurt out and it's wrong and B. you need to show me you put more thought into it regardless: Right number with no backup is the wrong number. Question: Assume the companies are the same size (read: same market cap) and other reasonable simplifying assumptions. Without doing any math, what are some reasonable boundaries for the PE (private equity) (private equity) ratio of the PF entity? How Accretive is the deal in Level 1 as a %? Is your PF PE (private equity) (private equity) ratio within the bounds you expected? Answer: " It should be between 8 and 10. As per your answer to Level 1, it is slightly lower than 9. Basically, if B is negligible (ie doesn't move the needle), you would expect the PE (private equity) (private equity) not to move (be closer to 10). If the transaction is huge, the PF entity would be closer to the target so closer to 8. Close to 9 is not a bad guess, especially if they are the same size. This is a good lead in for the Level 4 question. Common Mistake: The first mistake I get is people averaging PEs (private equity funds) (private equity funds) which is NOT right. Try to find the right framework to get to the actual % accretion (Part B of this question). Once you have that, figure out the PF PE (private equity) (private equity) and see where you land. You can learn more about Merger of Equals below: The Anatomy of a Merger of Equals SEE ALL $227 Associates (278) $164 3rd+ Year Analyst (41) $152 2nd Year Analyst (156) $138 Intern/Summer Associate (144) $130 1st Year Analyst (606) $81 Intern/Summer Analyst (578) Access IB Report Career Resources Investment Banking Inter ... Private Equity Interview ... Hedge Fund Interview Qu ... Consulting Case Interview ... Financial Modeling Training Resume Reviews by Profe ... Mock Interviews with Pros Company Specific Research Leaderboard Ratio Silver Banana Banana Points John
27/12/2020 16 : 57 M&A Interview Questions - Beginner to Advanced Questions | Wall Street Oasis Page 3 sur 27 High Level Interview Questions - Full Merger Math If you have the framework for Level 3, chances are you can probably get this one too Question: Assume company A is twice the size of company B (read: market cap A = market cap B x 2). Without doing any math is the deal more Accretive or less Accretive? What are the PE (private equity) (private equity) bounds in this case? Now do the math and tell me exactly how Accretive it is. Does your answer make sense? Answer: " It will be less Accretive because the company that's making it Accretive has a lower weight. Say A has earnings of $16 and is $16 shares of 10; they have to issue 8 more shares to make the purchase and now have a market cap of $240 and earnings of $26; $234 would be P/E of 9 but it's higher, so ~9.25 Preparing for Investment Banking Interviews? The WSO (Wall Street Oasis) (Wall Street Oasis) investment banking interview course is designed by countless professionals with real world experience, tailored to people aspiring to break into the industry. This guide will help you learn how to answer these questions and many, many more. INVESTMENT BANKING INTERVIEW COURSE HERE Mod Note (Andy) - This one was originally posted 8/16/2015 . # interview technicals Log In or Register to post comments 17 SEE ALL 1 98.5 2 98.3 3 98.3 4 97.9 5 97.9 6 97.6 7 97.5 8 97.5 9 97.5 10 97.5 Upcoming Events Dec 05 Podcast: E144: Kate ... 9:12 EST Online Dec 19 Podcast: E145: Ross R ... 9:12 EST Online Dec 02 Podcast: E146: Amira ... 9:12 EST Online Dec 16 Podcast: E147: Eric Ra ... 9:12 EST Online Dec 02 Podcast: E148: Joel Sc ... 9:12 EST Online LonLonMilk Jamoldo # Secyh62 # CompBanker # redever # frgna # NuckFuts # bolo up # Edifice # Addinator # John
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