Walk Me Through the Sell-Side M&A Process (Interview Question)

You're getting too detailed and including too many steps. You're also creating a new problem: since your answer is so detailed and reads more like a grocery list than an answer, the interviewer will now focus entirely on whether or not you missed a step, as opposed to holistically evaluating your response. I would with the following broad steps:

1. Winning the mandate - This phase includes creating the pitch, the actual pitch, the signing of the engagement letter, and any preliminary calls with management to learn more about the company.

2. Marketing - This phase includes receiving initial documents from management, setting up a data room, creating the marketing materials (teaser and CIM), and sending out the teaser together with the NDA. If the potential buyer signs the NDA, you send them the CIM. You will also set up your valuation model at this point.

3. IOI - The potential buyers may come back to you with follow-up questions and request a call, possibly with management. The amount of information apart from the CIM given to potential buyers is usually very limited at this stage. Potential buyers will then submit their IOIs.

4. LOI - This step usually starts with selecting a select few potential buyers who submitted an IOI to attend management presentations. There may be site visits involved here too. At this point, you will have set up a formal data room that is being populated with a base level of information. Almost all potential buyers will have specific follow-up requests and might even request additional calls with management. Potential buyers now submit an LOI.

5 Final due diligence and closing - You now select one potential buyer with whom to move into exclusivity. This potential buyer will send you a detailed due diligence list to be answered. Third party advisers usually get involved at this point to run their own diligence process (e.g. quality of earnings, environmental assessments, benefits analysis, insurance analysis, etc.). One party will start drafting a purchase agreement, and then your client's counsel and the potential buyer's counsel will trade edits. You then finalize the diligence process and sign the purchase agreement.

I have obviously missed some details, but that's not the point of this interview question. The interviewer sees your lack of M&A experience and is trying to determine whether or not you are serious about moving into M&A and have done the appropriate research. I am happy to go into more detail if you're curious about any step.