Investment Banking
24 m&a questions of the kind asked in investment banking interviews. Each carries a model answer, the concepts a complete response must hit, and graded feedback on your own attempt.
Asset management M&A is driven by scale and distribution. This tests understanding of industry dynamics.
What are the key considerations when acquiring an asset manager? How do you value a business that's essentially people and reputation?
Foundational for both merger and LBO models; expect it as a build-it-now exercise.
Construct the sources and uses for an acquisition of a company with $500m equity purchase price, $150m of existing debt to be refinanced, $40m of cash on its balance sheet, and $25m of fees. The buyer funds it with $400m…
Tests whether you can think like an advisor rather than a modeler.
An acquirer can fund a deal with cash, new debt, or stock. Compare the three from both the buyer's and the seller's perspective, and explain what signal each sends to the market.
The analysis that determines the ownership split in a stock-for-stock merger.
Two companies are merging in an all-stock deal with no premium. How do you determine the ownership split, and what is contribution analysis?
Asked to test commercial judgement, not modeling ability.
Distinguish cost from revenue synergies. Which do you trust more and why? How should synergies affect the price a buyer is willing to pay?
Core technical for any M&A or coverage group interview.
Walk me through building a merger model from start to finish.
A practical purchase price question that also reveals incentive dynamics.
A target has significant outstanding employee options and RSUs. What happens to them in an acquisition, and how does it affect the purchase price?
A judgement question. The interviewer wants structured thinking and a view.
Studies consistently find most acquisitions fail to create value for the acquirer. Why? What separates the deals that work?
Tests whether you can reason about market reaction, not just mechanics.
On announcement of an acquisition, the target's stock typically rises and the acquirer's typically falls. Explain the mechanics behind both, including the role of merger arbitrage.
A FIG superday case tests whether you can connect a bank's securities mark to its ability to pay for an acquisition.
A bank has $100bn of risk-weighted assets and $11bn of CET1 capital, so its CET1 ratio is 11.0%. It holds $20bn of available-for-sale securities with a $2bn unrealised loss in accumulated other comprehensive income…
Bank M&A has unique considerations. This tests sector-specific deal knowledge.
What are the key considerations when valuing a bank acquisition? How does it differ from valuing a non-financial company acquisition?
The step candidates skip in the merger model walkthrough. And the one that has to balance.
Walk me through constructing the pro forma balance sheet at close in an acquisition. What are the adjustments, and how do you make it balance?
The structuring decision at the heart of every stock deal.
In an all-stock deal, explain the difference between a fixed exchange ratio and a fixed value deal. Who bears the risk in each, and what is a collar for?
Asked in M&A groups and activist defence practices.
A client receives an unsolicited hostile bid. What defensive measures are available, and how would you advise the board to think about them?
A corporate development case testing value, transition services, and execution risk in a divestiture process.
You are evaluating the acquisition of an industrial software division being carved out of a conglomerate. The seller's EBITDA excludes costs that will not disappear at close. Make the decisions as transition facts…
A corporate-development analyst must protect deal value and clean-team discipline when new customer information arrives before signing.
You are supporting the acquisition of a workflow-software company. A confidential customer call creates both valuation and antitrust-process issues. Work through the updates and send the CEO a recommendation before…
A technical differentiator. Most candidates cannot explain the DTL.
Walk me through purchase price allocation in an acquisition. Why does a deferred tax liability get created, and what effect does it have on goodwill?
The analysis that justifies. Or fails to justify. A control premium.
An acquirer expects $80m of annual run-rate cost synergies, phased over three years, with $120m of one-time costs to achieve. How much are the synergies worth, and how much of that should show up in the premium?
A branching corporate-development negotiation covering price, certainty and integration risk.
You lead corporate development for a strategic buyer. Two weeks before signing, the target misses earnings and its largest customer delays renewal. Choose the response at each negotiation turn and prepare a CEO…
Process mechanics that come up in any conversation about deal timing.
Explain the difference between a one-step merger and a two-step tender offer. When would you recommend each?
The purchase accounting quirk that distorts every software acquisition's first year.
A software company with $200m of deferred revenue is acquired. Why does the acquirer's reported revenue come in below expectations in year one?
Energy M&A often involves asset swaps rather than corporate transactions. This tests sector-specific deal mechanics.
Two large E&P companies propose swapping assets in different basins to consolidate positions. How do you value the swap and ensure it's fair to both parties?
Consumer M&A has unique strategic drivers. This tests understanding of sector consolidation.
What are the primary strategic reasons for M&A in consumer and retail, and how do they differ across subsectors?
Healthcare M&A has unique strategic drivers. This tests understanding of sector dynamics.
What are the primary strategic reasons for M&A in healthcare, and how do they differ across subsectors (pharma, medtech, services)?
Write your answer, get it graded on technical accuracy, completeness and communication, and see exactly which mechanic you missed.
Firm names indicate where a question type is commonly reported in interviews. They are not sourced from, endorsed by, or affiliated with the firms named.