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I interviewed for a general offer and then went through a group placement once I received the offer, so I never got asked any tech-specific interview questions. Common tech specific topics that you could get asked, though, would be questions about LTV/CAC ratios, net retention rates, churn, when to value on revenue v. EBITDA, growth rates, difference between booking and billings / how deferred revenue plays into this, annual recurring revenue (ARR), and things of that nature. Many of those metrics are pretty SaaS specific but can be helpful for much of tech.
Here are a couple of useful links for many of these metrics:
https://a16z.com/2015/08/21/16-metrics/ https://a16z.com/2015/09/23/16-more-metrics/
Could you shed some light on valuing a SAAS company? Where could I find metrics/tweaks that are specific to this that deviate from a typical DCF/Comps?
Valuing a SaaS company doesn't deviate too much from valuing a company with a different business model, though there are certainly some intricacies (as with any type of company) and some metrics that are important to look at in tandem with valuation.
In our group, we hardly ever use DCFs to value a company since there are just too many assumptions that go into it / not many buyers see it as a credible valuation metric. Comps are usually our go-to valuation metric - usually public comps first and then acquisition comps. One difference is that many SaaS companies are valued on revenue multiples instead of EBITDA since they are many times not profitable / mature enough for EBITDA. Revenue growth (particularly ARR growth) is also heavily taken into consideration by buyers and investors - there is typically a correlation between growth rate and valuation multiple.
Some other SaaS specific metrics investors look at are: LTV/CAC ratios, net retention rates, churn, bookings, and billings. Here are a couple of useful links for many of these metrics:
https://a16z.com/2015/08/21/16-metrics/
https://a16z.com/2015/09/23/16-more-metrics/
When I was asked this, I mainly talked about my interest in tech and talked about certain deals / trends that had been happening in the space to show that I was following what was going on. I think showing interest and a curiosity to learn is huge when asking about sector interests.
Also, on a more personal level, I also talked about how much I liked the culture of the tech IB group I was looking to join. Working with people you like in IB is huge.
Thanks to OP for doing this Q&A!
1) Breakdown of the kind of work your group does (M&A / ECM / etc)
2) What's most important in a DD for tech deal? What are some common deal-breakers in a tech M&A?
3) What type of modelling work most common at tech groups?
1) Breakdown depends on what the deal is, what stage it is in, and how high profile the deal is. In high profile / larger deals, typically the tech group will do all the positioning (comps, compacqs, industry trends, company story) and the product groups will focus more on the M&A, IPO, etc. processes themselves. We work very closely in these situations. For smaller deals, sometimes we won't have a product team, so we will cover positioning and process specific work.
2) Common DD for tech is DD around customers, company model projections, churn rate, LTV/CAC ratios, code / technology reviews, Net Promotor Scores, TAM assessment, cultural fit, ongoing legal battles, and things of those nature. Deal breakers could be any of these things but often times it's because of a disagreement on price or major red flags like legal battles.
3) Common modeling work includes operating models, paydown / LBO models, DCFs, and merger models. These are what we spend most of our time on when modeling.
Hope this is helpful!