5 questions reported in Pentwater interviews, organised by the group that asks them. Every question carries a model answer and graded feedback on your own attempt.
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Deal break risk, spread maths, regulatory timelines and downside to unaffected. 5 questions
A basic arithmetic and risk-framing question in event-driven interviews.
A target trades at $96 after receiving a $100 all-cash offer expected to close in four months. Calculate the gross spread and simple annualised return. What does that number omit?
A core diligence discussion for merger-arbitrage teams covering concentrated industries.
How would you assess antitrust risk in a proposed merger between two direct competitors?
The construction question that follows the cash-deal merger arb question.
Acquirer A is buying Target B in an all-stock deal at a 0.5x exchange ratio. A trades at $80, B at $38. Construct the trade, calculate the spread, and explain what you're exposed to.
A merger-arbitrage follow-up designed to test whether a candidate understands when an exchange-ratio hedge stops being static.
Target B will be acquired for a fixed $60 of Acquirer A stock, subject to a collar. If A trades between $80 and $100 during the pricing period, B receives 0.667 A shares. Below $80, B receives 0.75…
A merger-arbitrage interview on legal optionality after a low-premium acquisition announcement.
A cash merger trades below the announced price and an investor proposes buying shares to pursue appraisal rights. How would you assess whether the legal route improves the risk-adjusted return?
Write your answer, get it graded on technical accuracy, completeness and communication, and see exactly which mechanic you missed.
Company tags reflect where a question type is commonly reported in interviews. They are not sourced from, endorsed by, or affiliated with Pentwater.