M&A Interview Preparation, are these topics considered advanced and therefore, given my background, unlikely?
Hi guys, you have been helping me a lot and I really do appreciate. I have lots of M&A Interviews lining up (europe) and already covered a lot of topics I'd say. There are some I did not do yet since they appeared to be pretty advanced and I wanna know whether you also consider them very advanced.
- Accretion/Dilution Analysis
- LBO (did a paper case already which went fine, but wouldn't say that I know more than the basics about LBO)
- Group Accounting (equity investments and consolidation in general)
- M&A Process - I have an overall look on the whole process, but nothing in detail
My Background: Business Major Undergraduate, 2x Big 4 Internship No M&A experience so far.
Had all 4 during my processes in Europe. Especially consolidation.
Thanks for your response, I am interviewing in europe as well. Do you have a similar background like me or are you more advanced?
I was in my first year of Master's looking for a 6-month offcycle for my gap year. I didn't have any relevant experience. You need to know group accounting to understand how a basic merger works. A question I got several times was "what's the impact of a merger on your 3 financial statements?".
Given your background, depending where you interview and for what position, questions on these topics will come up but to varying degrees of depth. Should you know what accretion and dilution are? Yes. Should you know a rule of thumb to determine if an all cash/ no debt deal is Accretive or dilutive? Yes. Can someone reasonably expect you to do a paper/ computer based accretion/ dilution analysis? No. Should you know what an LBO is and what the levers are? Yes. Sources and uses? Yes. What makes an attractive LBO target? Yes. Beyond that, e.g. different debt structures, pitfalls, etc., I would say no. Group accounting, especially what NewCo accounts would look like at a high level, e.g. what happens to target debt/ cash, equity? Yes. Beyond that, no. Simple steps of an M&A process can be expected, but personally I find it to be a pointless questions for someone without M&A experience. A good interviewer will find a better way to test your ability to memorise randomn textbook knowledge.
Great response, you helped me a lot thank you!
Don't want to try and hijack your post. While you are totally correct with everything, I have seen instances where these topics came up in very advanced forms, and I did not have prior M&A experience either.
I had to do a paper based accretion/dilution with a mix of debt and stock (no shortcuts possible) and had to write out the whole thing on a piece of paper during a Morgan Stanley superday. Also had to do paper LBOs in various interviews across several banks. This was all for summer analyst recruiting. OP, if you have any questions about it, feel free to PM me.
Once again, sorry for trying to downplay your post Escobar Houdini...
Thanks were you caught by surprised or were you well prepared for these to come?
Fair enough! As I said, depending on where you're interviewing and for what kind of position, these will vary. This was more what I would expect from someone with OP's background. While an your accretion/ dilution analysis questions seem a bit over the top for SA recruiting, I'm sure the good people over at MS know what they're doing. A paper-based LBO could also be expected if a case study interview is scheduled, e.g. during a superday. You shouldn't be expected to come up with an IRR (it is useful to know rules of thumb here, however) and everything else is very basic maths.
How solid were you on technicals overall? I went through the SA recruiting process and never did a paper anything and very little past the basic vault questions + a lot of LBO questions (had LBO experience on my resume).
From what I've encountered, the people who were shaky on the basics got asked more technical questions than those who were rock solid on the basics and ended up getting more fit questions.
Escobar Houdini's answer is correct.
One thing that is important to understand, however, is that your lack of M&A experience probably will not and really should never result in you receiving easier interview questions. Sure, no one will grill you on your transaction experience (you have none), but in my experience, having spent two years in IB and interviewed dozens of candidates, you will still be asked the same accounting and valuation questions. Think about it from the point of view of the interviewer. There are so many applicants that the process, at least at the beginning, is entirely about elimination. If I can ask you an LBO question and you cannot answer it, you have made my job very easy. Once you understand the concepts behind these technicals, they really will come second nature. Good luck.
Thank you, I'll prepare the topics as good as I can. A question I always had was whether the analysts and associates got interview guidelines which they have to follow or whether they are free to test what ever they want. Also in 1 on 1 Interviews (I'll have 5 of them in a row), do the interviewers know what questions were asked already or could it totally happen that I'll answer the same questions?
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