M&A Interview Questions

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Investment Banking

Company A has P/E of 10x, higher than Company B. Interest rate on debt is 5%. If Company A acquires Company B (both 40% tax rate), should Company A use debt or stock for most accretion?
3 months ago1 answer
4 reasons a strategic can pay more for a target than a financial sponsor. How?
4 months ago1 answer
Buyer pays 100mm for the seller in all stock deal but market decides it's worth 50mm. What happens?
4 months ago1 answer
In an all-stock transaction, how do you know if the transaction is accretive or dilutive?
10 months ago1 answer
What would the impact be on M&A activity if the tax rate were to decrease to 20%?
8 months ago1 answer
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Exchange ratio formula for 100% stock deal. If buyer stock price is $50 and target offer price is $70, what is the exchange ratio?
3 months ago1 answer
Company A has revenue of 100mm, Company B has revenue of 100mm. When company A acquires company B, revenues become 300m, with no revenue synergies. How is this possible?
2 months ago1 answer
Let's say you have ParentCo, with 2 subs- CoffeeCo and DonutCo. You own 100% of CoffeeCo (EBITDA 100m, private). You own 80% of DonutCo (EBITDA 200m, trades at 5x). ParentCo has share price of $10, 100m shares, 500m debt, 200m cash. What multiple has the market implicitly assigned to CoffeeCo?
3 months ago1 answer
Calculate implied premium paid assuming unaffected share price of $50 and offer price is $67.50
9 months ago1 answer
Company A buys company B with 100% debt. Company B has P/E of 10x and Company A has P/E of 15x. What interest rate is required on the debt to make the deal dilutive? Assume a 40% tax rate.
10 months ago1 answer
Why is cash preferred to acquire companies?
9 months ago1 answer
Company has 10,000 shares at $20, 100 options at $10 exercise, 50 RSUs, 100 convertible bonds at $10 conversion price and $100 par value. Calculate diluted shares.
8 months ago1 answer
If the equity of a company is less than its worth or value, what must you include in an acquisition?
10 months ago1 answer
Firm A acquired remaining 70% of outstanding shares of Firm B for 600mm. Firm B has 120mm of debt and EBITDA of 80. What is the transaction multiple of EBITDA?
8 months ago1 answer
Why might a seller prefer a financial sponsor over a strategic buyer?
9 months ago1 answer
A deal is dilutive by 10 cents per share. The buyer has 100M shares and a 20% tax rate. What pretax synergies are needed to break even?
a year ago1 answer
Two companies each earning $15M of Net Income combine in an all-stock deal. Why might the combined company earn less than $30M?
2 months ago1 answer

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M&A Interview Questions

Company A has P/E of 10x, higher than Company B. Interest rate on debt is 5%. If Company A acquires Company B (both 40% tax rate), should Company A use debt or stock for most accretion?

4 reasons a strategic can pay more for a target than a financial sponsor. How?

Buyer pays 100mm for the seller in all stock deal but market decides it's worth 50mm. What happens?

In an all-stock transaction, how do you know if the transaction is accretive or dilutive?

What would the impact be on M&A activity if the tax rate were to decrease to 20%?

Exchange ratio formula for 100% stock deal. If buyer stock price is $50 and target offer price is $70, what is the exchange ratio?

Company A has revenue of 100mm, Company B has revenue of 100mm. When company A acquires company B, revenues become 300m, with no revenue synergies. How is this possible?

Let's say you have ParentCo, with 2 subs- CoffeeCo and DonutCo. You own 100% of CoffeeCo (EBITDA 100m, private). You own 80% of DonutCo (EBITDA 200m, trades at 5x). ParentCo has share price of $10, 100m shares, 500m debt, 200m cash. What multiple has the market implicitly assigned to CoffeeCo?

Calculate implied premium paid assuming unaffected share price of $50 and offer price is $67.50

Company A buys company B with 100% debt. Company B has P/E of 10x and Company A has P/E of 15x. What interest rate is required on the debt to make the deal dilutive? Assume a 40% tax rate.

Why is cash preferred to acquire companies?

Company has 10,000 shares at $20, 100 options at $10 exercise, 50 RSUs, 100 convertible bonds at $10 conversion price and $100 par value. Calculate diluted shares.

If the equity of a company is less than its worth or value, what must you include in an acquisition?

Firm A acquired remaining 70% of outstanding shares of Firm B for 600mm. Firm B has 120mm of debt and EBITDA of 80. What is the transaction multiple of EBITDA?

Why might a seller prefer a financial sponsor over a strategic buyer?

A deal is dilutive by 10 cents per share. The buyer has 100M shares and a 20% tax rate. What pretax synergies are needed to break even?

Two companies each earning $15M of Net Income combine in an all-stock deal. Why might the combined company earn less than $30M?

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