Real M&A interview questions

Hi all

Just had a M&A interview, how would you answer the following questions
1. How do you count a property value with no cash flow generation in your EV
2. In a M&A, what are some of unusual items you need to manipulate in your EV calculations
3. Give me some investment highlights that you would put on your Teaser/OM/MP
4. what kind of tax rate you use in FCF calculation? I answer effective tax rate, the interviewer called me wrong.

What do you think of the difficulty of these questions?

 
Best Response
  1. cost approach/liquidation value
  2. To calculate EV you need to NOPAT which excludes all income from discontinued operations/minority interests. EV also excludes all interest bearing liabilities.
  3. Forecasted effective rate.

Question 2 is framed a bit oddly and question 3 doesn't interest me.

“Elections are a futures market for stolen property”
 

I'll pick up on #3 for eusuric. Investment highlights are, as stated, investment highlights. You somewhat put on your salesman hat here and talk about the selling points of the opportunity. If you are in a sell-side role and your client has low employee turnover in a high turnover industry, that might be a selling point. Record sales and other financial metrics might be selling points. The market area might be a selling point. These are high-level highlights to pique the reader's interest before they dig further into the opportunity.

 

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