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Merry Christmas guys...

For all you that have gone through PE interviews (or give PE interviews), what is generally expected when discussing deals? What is appropriate to list on your resume for deals that have been done?

For example, I have worked on two IPOs, a FO, and two M&As. One of the M&As and one of the IPOs were the same deal (dual-track), and the company ended up going public, but it was in a dual-track process from beginning to final bids (two final bidders) before the co went public... It was a cool experience but pretty much torture for about six months... But I was on it from start to finish and did a bunch of modeling (merger, DCF, LBO in addition to the IPO valuation). Is this acceptable to put down?

My other M&A deal was a buyside deal with a PE firm. We got engaged when the PE firm entered into exclusivity, and the definitive agreement was signed less than 40 days later. Didn't do a whole lot on this deal, but I did run an LBO with a few different scenarios and ran a DCF for the target.

So that sort of strays away from the purpose of this post, but are those two deals good to list, and what should I expect to discuss in an interview? Thanks a lot guys.

Comments (8)

  • CompBanker's picture

    Suppose I can help you. In terms of what to put on your resume, almost every IB resume I've seen included a "transaction experience" section. In the section, usually its 1 sentence per deal, and sometimes analysts will include their specific roles, and some will just list the deal. If the deal is closed or announced, list who the seller / buyer were, and which one you represented. If the deal value was announced, I'd suggest putting that in as well. It's also nice to provide a 5 or so word description of the company. Note that it is acceptable to put "Company A" or "Buyer A" if the transaction is pending or not announced. So, any example may look like the following:

    Acted as the analyst on the sale of Acquired Company, a global manufacturer of widgets for the telecomm industry, to Buyer, for $x.x billion.

    If you were unlucky enough to work on a transaction that died, I've seen people list the deal but put "Busted Process" in parenthesis after the sentence. Note that there really is no set format as long as the reader can more or less understand what the deal was.

    As for your question about what you are expected to discuss during the deal, ANYTHING is free game. You will not be expected to share confidential information, but by now you should be capable of "talking around" confidential info to still get your point across. I'd say there are really two areas you should make sure you know cold for each of your transactions, which include: (A) Deal Dynamics & Your Role, and (B) Industry / Company Dynamics.

    Deal Dynamics & Your Role: Obviously we're going to want to know what specific tasks you worked on for the deal. You may be asked if there were any key models you built, including high level assumptions you may have made. These might include "Why did you project the top line growth you did? -- what are typical margins for this type of company? -- etc." Don't spend a ton of time memorizing your models though, these types of questions are rare. One area that is likely to be probed is your level of client interaction. I often ask individuals: "If I called up the CEO right now, would he know who you are?" If the answer is no -- you lose major points (note, this is more common for MM IB shops and less so for BBs). In addition to your role, you want to be able to articulate high level knowledge of the deal. This may include things like: "Why did Company A ultimately acquire your client?" -- "Why would it not be a good fit for Company B?" -- "Why might a PE shop be attracted to this investmenT?" etc.

    Industry / Company Dynamics: This should be easy to articulate if you played a role in writing the offering memorandum. Basically, you may be asked to articulate what made the company a good investment. Be ready to discuss key characteristics of the company, including things such as: "Low CapEx/WC requirements, recurring revenue stream, dominant market share, etc. etc." In addition to all the company specific questions, they may branch out and speak to the industry. I remember getting asked: "Name an industry that you think would make for a good investment. What about this industry is attractive? What keeps you up at night?"

    Honestly, most of my PE interviews did not dive too deep into my closed transactions. Most of them would give me a fresh scenario (typically relating to one of their recent investments) and ask me to think through that.

    The best advice I can give you, besides from "know your deals cold," is to make sure you have an opinion on things. If someone says: "What multiple would you pay for Company A," the last thing you want to do is shrug and say you don't have enough information. Tell the interviewer what information you would need to properly analyze the situation, and then give a recommendation based on the limited data that you have.

    Hope this is helpful -- let me know if there is a component of it you would like more detail around.

    CompBanker

  • femtastic's picture

    great post compbanker, if i had some points i'd credit you a silver banana!

    !@#$%^&*()

  • jimbrowngoU's picture

    Thank you for the great advice CB, as usual. It's much appreciated.

  • CompBanker's picture

    Glad I could help. There does not seem to be a strong presence of PE professionals willing to share their experiences on this board. Everyone is probably busy stressing out over their MBA apps (as I should be) -- and unfortunately I can't put "WSO Contributor" on my resume. Would certainly improve my community service section!

    CompBanker

  • jimbrowngoU's picture

    Looking to dig a little deeper into this topic...

    One specific deal I am having difficulty describing is a dual-track deal I worked on when I first started. To date, it's the best M&A experience I have had, but it ended in the client choosing the equity offering side of the dual track (IPO vs. sell-side M&A). It was a full-blown dual-track, and I was on the deal from the start... I drafted all the marketing materials, modeled multiple scenarios (had to re-build the company's model from scratch to make it presentable because the client had an awful model) including detailed merger models and multiple-case LBO models, was part of due diligence calls, etc. As mentioned, this was a full dual-track process right through final bids, when the client decided to fully pursue the public markets. The deal was for a security software client and the deal would have been somewhere between $180 - 200 million (good size MM deal).

    How would I go about putting this on my resume/is this a deal I can use as part of a discussion? The only thing I did not see in this deal from an M&A perspective was the actual execution. Thanks guys.

  • anonymous_analyst's picture

    It certainly sounds like something a PE fund would be interested in hearing - when it comes to the resume you should probably frame it something like this - particularly if the deal was executed

    - Raised $XXX MM public equity / debt financing on behalf of XYZ Corp
    x Performed financial and business due diligence, collaborated with management in construction of financial model
    x Drafted marketing materials for financing option as well as managed dual-track M&A sell-side process
    x Some discussion about the types of analysis performed for the M&A (e.g. returns, ability to pay, what have you)

    When actually discussing a deal, you would definitely want to take the more narrative approach. You should definitely have an opinion as to which option the company should have taken, and be able to have a discussion around that. Since you did do a lot of the analytics, the firm would want to poke around your knowledge of the company, deal rationale, and LBO returns for a hypothetical deal.

  • jimbrowngoU's picture

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