M&A stands for mergers and acquisitions. In the world of business, it is among the most important events in the lifecycle of an organization. Consulting firms love giving case interviews with M&A cases as they cover a broad range of what makes an organization successful or not successful.
Typical M&A consulting case interview
The most common type of M&A case features a company considering buying a peer company or competitor. These cases demand that you examine the facts of both companies to give a good response.
In order for a company to consider an acquisition, there should be benefits provided by this. These benefits could be in the form of:
- Improving revenue or using synergies to decrease costs (usually operational costs)
- Obtaining the assets of the other company, from physical infrastructure like warehouses to intellectual property like patents
Frameworks for M&A cases
In order to create a framework around solving the cases, it is important to understand the goal(s) of the company. While an acquisition could bring about many benefits, if they don’t help achieve the company’s goals, it would not be all that useful. These goals may not always be directly monetary, for example, a company might be interested in acquiring a company in another market in order to build up brand recognition they wouldn’t otherwise be able to achieve.
Once you have understood the goal, it is time to craft the framework. Things that need to be considered include:
- Market – Is the market of the company to be potentially acquired attractive?
- Company – Is the company itself attractive, is it a well run organization or have valuable assets?
- Financial – Are there revenue or cost synergies?
When you have build your framework and evaluated the company for the criteria, the next thing to consider is the risk associated with a potential acquisition and possible alternatives to the acquisition. These aspects should also be carefully evaluated.
The final action to take is to propose whether or not to make an acquisition. After having evaluated all the relevant options. You should present the recommendation in a way the goes back to the company’s goals and whether the acqusition would help further these or not.
About PrepareConsult:
PrepareConsult is a platform to practice the consulting case interview with AI and peers. PrepareConsult is founded by Milad Mohammadi and Sahhas Nathella.
Milad Mohammadi – 7+ years of experience in consulting and professional services with experience across North America and Europe.
Sahhas Nathella – 5+ years of experience in consulting and professional services with strong experience in complex digital transformations.
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