Internship Interview - Mergers and Acquisitions
Anonymous interview candidate in Madrid
Interviewed:
October
2019
Date Submitted:
Jul 14, 2020
Outcome
No Offer
Interview Source
Applied Online
Length of Process
1-2 months
Application
1 on 1 Interview
Interview
Applied online and make it to the first roud of interviews. I was interview by analysts and associates.
Interview Questions
The interviewed was fully conducted in Spanish. Only got one behavioral question in English.
The first interview started with a presentation and some basic stuff (why IB, why AZ Capital...). Later on, 3 brainteaser. The last one was very difficult and I wasn´t able to answer it correctly. Besides, it was forbidden to use the pencil and paper to solve the brainteasers. Then, I got questions about valuation methods (precedent transactions VS multiples), Why PE normally buy cheaper than industrials...? Also had to solve a short case in which I had to find the EV/EBITDA multiple. Only got Equity value and had to ask about more data. Once I got the EV/EBITDA right was asked about negative synergy costs. How it would affect the multiple? Does it make sense? Why?
Lastly, some time to ask questions to the interviewer.
Second interview was conducted by two associates. It began with ten minutes of fit questions. They tested my knowledge of the deals in which they have been recently involved and also asked me some metrics/figures. Later, I was required to use paper and pen again. They asked me to link the three statement with the following question: A company buys equipment in year 0 ( 50% with debt and 50% with cash). How does it impact the 3 statements. I began to build my Cash-Flow from the Net Income and was also required to build it starting from the EBIT too. Getting back to the question, the equipment acquired follows a linear annual depreciation of a 10% and the company pays-off a 5% of the principal and a 5% in interests in year 1 (remember that 50% of the equipment has been financed through a loan). Again, what´s the impact on the 3 statements?
Later on, back to valuation methods. Walk me through a DCF. Why we discount with the WACC and not with the Cost of Equity. They also linked that question with the levered vs unlevered FCF. Also asked me about the differences between gordon growth model vs multiples. Which is the correct number that we should assign to G? When is appropriate to use a multiple exit instead of the Gordon Growth Rate? Does it make sense to assign a G bigger than the GDP growth rate of the country where the company that you are valuing is based?
Final question was: Why do we add non controlling interests to the Enterprise Value? Thay also asked me about the impact of minorities on Enterprise Value?
The first interview started with a presentation and some basic stuff (why IB, why AZ Capital...). Later on, 3 brainteaser. The last one was very difficult and I wasn´t able to answer it correctly. Besides, it was forbidden to use the pencil and paper to solve the brainteasers. Then, I got questions about valuation methods (precedent transactions VS multiples), Why PE normally buy cheaper than industrials...? Also had to solve a short case in which I had to find the EV/EBITDA multiple. Only got Equity value and had to ask about more data. Once I got the EV/EBITDA right was asked about negative synergy costs. How it would affect the multiple? Does it make sense? Why?
Lastly, some time to ask questions to the interviewer.
Second interview was conducted by two associates. It began with ten minutes of fit questions. They tested my knowledge of the deals in which they have been recently involved and also asked me some metrics/figures. Later, I was required to use paper and pen again. They asked me to link the three statement with the following question: A company buys equipment in year 0 ( 50% with debt and 50% with cash). How does it impact the 3 statements. I began to build my Cash-Flow from the Net Income and was also required to build it starting from the EBIT too. Getting back to the question, the equipment acquired follows a linear annual depreciation of a 10% and the company pays-off a 5% of the principal and a 5% in interests in year 1 (remember that 50% of the equipment has been financed through a loan). Again, what´s the impact on the 3 statements?
Later on, back to valuation methods. Walk me through a DCF. Why we discount with the WACC and not with the Cost of Equity. They also linked that question with the levered vs unlevered FCF. Also asked me about the differences between gordon growth model vs multiples. Which is the correct number that we should assign to G? When is appropriate to use a multiple exit instead of the Gordon Growth Rate? Does it make sense to assign a G bigger than the GDP growth rate of the country where the company that you are valuing is based?
Final question was: Why do we add non controlling interests to the Enterprise Value? Thay also asked me about the impact of minorities on Enterprise Value?
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