Toughest Technical Interview Question? -- How do you structure an M&A/IPO deal?

Assuming you aren't misquoting the original question, I would first ask the interviewer if you could ask a few questions for clarification.

The exchange could go something like this:

Interviewer: How do you structure an M&A/IPO deal?

You: That's a tough question, as they are very different transactions. Do you want me to cover my thoughts on both, or did you have a sample transaction you wanted to discuss?

Interviewer: I don't really care, I'm just seeing if you know the difference and what both types of transactions generally look like.

You: In that case, I think IPOs are mechanisms for owners of private companies to raise capital from the public equity markets and provide liquidity to existing shareholders. In the case of a merger, I think there are few true 'mergers', and that most transactions are really acquisitions. It's my understanding that mergers are defined as occurring between two companies of roughly similar size, where the preponderance of both firms remain even after operational synergies are realized a couple years after the transaction. I think acquisitions are very broad, and can occur between a number of different counter-parties who have different reasons for doing deals. A financial sponsor usually structures a deal differently than a corporation, for instance. They may need to sell a portfolio company due to legal restrictions on the fund's lifespan. Or maybe they want an early exit to juice their IRR because they get compensated off that metric, and they'd like to start squirreling away some money into their carry pool. For companies, maybe they're cash rich, and don't know what to do with their money. Maybe they have little cash, but think debt is cheap, and that now is the right time to buy something before the market turns. Maybe they're buying something opportunistically, or maybe the founder is being profligate with the firm's money. There are too many scenarios to consider to talk intelligently about deal structure, without understanding deal rationale.

Interviewer: I guess I meant to ask if you knew the difference between a share purchase agreement and an asset purchase agreement, but thanks for rambling incessantly without clarifying.