Lists

1.All cards12 cards

1. Walk me through the sell-side M&A process, including key documents (8 steps)

   • ☐The sell-side M&A process is a structured auction where the sell-side advisor markets the company, solicits bids, and delivers the seller the best price and certainty of closing
   • ☐Preparation includes working with lawyers to ready legal due diligence materials and drafting an anonymous teaser sent to screened buyerskey
   • ☐Buyers must sign an NDA before receiving the CIM, the confidential information memorandum containing detailed financials and business descriptionkey
   • ☐Initial bids are non-binding letters of intent, evaluated on both price and certainty of closingkey
   • ☐Shortlisted buyers attend management presentations, where the company's management presents the business directly to those buyers, and gain data room access for deeper diligencekey
   • ☐Final bids are more binding than initial LOIs and come with drafts of the purchase agreementkey
   • ☐During negotiations the seller picks a preferred bidder and hammers out reps and warranties and other legal terms of the purchase agreement
   • ☐Signing means both parties execute the definitive purchase agreement, which sets the binding terms of the deal
   • ☐Closing requires obtaining any required regulatory approvals, completing remaining closing conditions, and the buyer funding the transaction, at which point consideration is delivered to the seller

2. You’re representing a US coffee producer trying to sell your company. What buyers are you looking for (4 categories)?

   • ☐A sell-side buyer list for a US coffee producer is organized into four categories: strategic buyers, private equity, international buyers, and competitors
   • ☐Strategic buyers are companies in a different industry but positioned upstream or downstream of coffee, so there is a logical adjacencykey
   • ☐For a coffee producer, a strategic buyer could be a drinkware company or a beverage/drink company that wants coffee as a product extension
   • ☐A downstream consumer products player wants the brand and distributionkey
   • ☐Strategics pay for synergies, so they can often justify a higher price
   • ☐A direct overlap between the target and a competitor-buyer can raise antitrust issueskey
   • ☐Private equity buyers are typically already in the same consumer industry, seeking a coffee platform to build through bolt-ons and operational improvements rather than synergies
   • ☐International buyers want US market entry: acquiring an established producer gives them brand, customers, and distribution instantly instead of building from scratch
   • ☐Competitors buy to consolidate, gaining scale, market share, and cost synergies in a mature consumer category

3. What makes a company a good acquisition candidate for a strategic buyer (10 total)?

   • ☐A strategic buyer acquires for operating reasons — to strengthen its existing business — so a good candidate complements what the buyer already owns.
   • ☐Geographic expansion: the target's regional footprint lets the buyer enter markets it could not build organically, growing its total addressable market.
   • ☐Product expansion: the target's customer base or product line lets the buyer cross-sell offerings it does not currently sell to those customers.
   • ☐Acquiring a direct competitor increases the combined company's market share in the buyer's existing market.
   • ☐Buying a top-two player is especially valuable because leadership positions bring pricing power strategics pay a premium for.key
   • ☐Vertical integration — buying a supplier or distributor — captures the margin currently leaking to a third party and secures the supply chain or route to market.
   • ☐If the seller trades below intrinsic value, the buyer captures that gap as immediate value on day one, on top of synergies.
   • ☐Economies of scale: combining spreads fixed costs like overhead, procurement, and marketing over a larger revenue base, improving margins.
   • ☐Acqui-hiring, patents alone, ego, or defensive pre-emption are not good answers because they lack the measurable operating synergies a strategic buyer underwrites the deal on.

4. What are the key factors that impact the accretion/dilution of a transaction (4.5-6 factors)?

   • ☐Accretion/dilution measures the change in the acquirer's EPS from the deal — accretive if pro forma EPS rises, dilutive if it falls
   • ☐About five or six factors drive which way a deal lands — accretive or dilutive
   • ☐A higher purchase price means more financing is needed, which raises interest expense from debt or the share count from stock, and both drag on pro forma EPS
   • ☐Debt financing adds interest expense to the combined income statement, while stock financing adds new shares to the EPS denominator
   • ☐Ignoring synergies and fees, an all-stock deal is accretive when the acquirer's P/E is higher than the target's, because each new share issued brings in more target earnings than the earnings the acquirer's existing shares already carrykey
   • ☐Cost and revenue synergies are genuine additions to combined earnings, so the bigger the credible synergy number, the more the deal is pushed toward accretion
   • ☐One-time transaction fees — advisory, financing, integration, and restructuring costs — are expensed as incurred and reduce EPS, especially in the first year
   • ☐Dis-synergies — lost revenue from customer overlap or extra costs from running the combined business — directly reduce combined earnings
   • ☐Financing structure charges — like amortization of financing fees, or a higher cost of debt in a riskier, more levered structure — add expense on top of plain interest

5. What are the main types of dis-synergies?

   • ☐Dis-synergies are value-eroding losses or costs created specifically by combining two companies — costs neither business would incur on its own
   • ☐Customer attrition happens because clients fear pricing or product changes and competitors poach them during deal uncertaintykey
   • ☐Key employees — founders, senior salespeople, R&D leads — may leave over change-of-control or vesting issues, taking client relationships and knowledge with them
   • ☐Cultural clashes between incompatible ways of operating slow integration and drive further attrition
   • ☐Management distraction means leadership spends a year or more on integration instead of running the business, while competitors keep attacking
   • ☐Favorable supplier terms can be lost when vendors renegotiate discounts previously priced off the standalone relationship or fear volume shifts
   • ☐Overlapping products cannibalize sales — the combined entity's revenue gains are smaller than headline because new sales partly replace existing ones
   • ☐Integration expense is the hard cash cost — systems migration, severance, rebranding, facilities, advisors — often front-loaded enough to swamp early synergies
   • ☐Regulatory costs include antitrust remedies like divestitures plus approval delay, and all dis-synergies should be netted against synergies to judge whether the deal creates value

6. What should a company consider when decided whether to pursue M&A now or 6 months down the line (6-8)?

   • ☐The decision is whether deal conditions today are better than they are likely to be in six months, weighed across market, financing, regulatory, competitive, target, internal, and strategic factors
   • ☐Waiting risks paying a higher multiple for the same asset if market multiples expand
   • ☐Expected moves in interest rates change debt financing costs, which directly affect the cost of capital and the return hurdle the deal must clear
   • ☐Antitrust and industry regulatory risk shifts with the political climate, so a deal reviewed under a tightening regime can be delayed or blocked
   • ☐If other buyers are circling, waiting risks an auction, a higher price, or losing the target entirely
   • ☐A target on an upward trajectory will cost more in six months, while a deteriorating target may get cheaper - though waiting then adds its own execution risk
   • ☐If the acquirer lacks integration bandwidth - because of another live integration or stretched management - a well-priced deal can still destroy value
   • ☐Paying with stock makes the acquirer's share price the deal currency, so a strong stock favors acting now
   • ☐Strategic urgency is the tiebreaker: the more critical the deal to the growth thesis, the more sense it makes to move now even at a less-than-ideal price

7. Why would a company want to sell/divest a part of its business?

   • ☐A divestiture is the sale of part of a company's business — a division, segment, or subsidiary — to another buyer.
   • ☐A unit may be worth more sold than kept, because buyers can value it more highly than the market values it inside the parent — undoing a conglomerate discount.key
   • ☐Divesting simplifies the company's operations, reducing complexity in management structure, reporting, and day-to-day execution.
   • ☐The sale frees management's time and attention to concentrate on the core business where the company has its best competitive advantage.key
   • ☐Operationally, divesting means capital and resources are no longer spread across an unrelated non-core unit.
   • ☐The sale is a cash infusion that can fund growth, pay down debt, or return to shareholders without new debt or dilutive equity issuance.key
   • ☐Divestiture provides strategic flexibility, letting the company exit areas that no longer fit and reposition as markets or strategy shift.
   • ☐Shedding a failing or capital-intensive division removes a drag on profitability and improves the remaining company's margins.

8. Why might governments seek to deter/block inter-company M&A transactions (7)?

   • ☐Antitrust concern: eliminating a direct competitor reduces competitive pressure and lets the combined firm raise prices
   • ☐Horizontal deals in already-concentrated industries push concentration past regulatory thresholds and make oligopolistic coordination easier
   • ☐Foreign control of defense suppliers, critical infrastructure, or sensitive technology creates national security exposure, reviewed by bodies like CFIUS
   • ☐Consumer protection concern: the merged firm can raise prices, cut choice, or lower quality for end users who cannot negotiate around it
   • ☐Financial-sector consolidation can create institutions too big or interconnected to fail, whose distress spreads and forces public rescue
   • ☐Labor market concern: fewer competing employers gives monopsony power to suppress wages, and mergers typically mean redundant jobs are cut
   • ☐Acquiring another firm's customer data concentrates personal information, so privacy risk is treated as a competition issue

9. Why would 2 companies choose to enter into a joint venture (7 reasons)?

   • ☐A joint venture is a jointly controlled entity in which two companies contribute capital or expertise while remaining independent companies outside it
   • ☐Unlike a merger, each partner keeps its separate identity, balance sheet, and strategic autonomy, and can exit when the venture ends
   • ☐Partners share the downside of large, uncertain projects, so neither party carries the full loss if the venture fails
   • ☐One partner often brings technology or product while the other brings distribution or local operating know-how, creating a combination neither could achieve alonekey
   • ☐A company entering a foreign market partners with a local firm that already has distribution, customer relationships, and regulatory knowledge
   • ☐Pooling capital, facilities, and people lowers each partner's cash commitment and delivers scale neither could fund alone
   • ☐The venture lets partners test a new market, product, or business model on a small scale and expand or unwind based on resultskey
   • ☐In some countries foreign ownership restrictions mean a JV with a local partner is the only legal structure
   • ☐A JV can avoid antitrust scrutiny a full merger would face

10. What key sections would you include in a pitchbook to sellers?

    • ☐A sell-side pitchbook is a bank's marketing document that tells a prospective seller what the company is worth, who might buy it, and how the deal would work.
    • ☐The executive summary opens the deck with the deal thesis and headline recommendation so the reader gets the idea before the detail.
    • ☐The strategic rationale section explains why the transaction creates value — synergies, scale, or a timely exit.
    • ☐The target overview covers products, history, customers, and strategy so a reader unfamiliar with the business understands what is for sale.
    • ☐The industry analysis frames market size, growth, and competitive dynamics to show why now is the right time to transact.
    • ☐Valuation analysis uses DCF, trading comparables, and precedent transactions to establish a defensible value range.
    • ☐Accretion/dilution shows the pro forma EPS impact on the combined company, demonstrating buyer capacity to pay and helping the seller anticipate buyer behavior.
    • ☐Transaction structure sets out how the deal would be financed and executed, while risk factors flag what could derail it.
    • ☐When pitching a prospective client, add potential buyers with rationale, process and timing, and the bank's transaction and firm credentials.

11. Besides the IS and BS, what else would you ask for to evaluate an acquisition?

    • ☐Beyond the income statement and balance sheet, the first thing to ask for is the cash flow statement, because a deal is priced off cash generation and accrual earnings can differ from cash earnings
    • ☐Several years of historical performance are needed to see trends in revenue, margins, and cash flow rather than judging the business on a single yearkey
    • ☐Short bios on the management team matter because you are buying management's execution, and their track record signals whether projections are credible
    • ☐Deal terms include the asking price and type of financing, since a heavily debt-funded deal behaves very differently from an all-cash or all-equity deal
    • ☐The debt schedule must be checked for covenants, maturities, and change-of-control provisions, because a loan that accelerates on sale can force a costly refinancing at close
    • ☐Comparable transactions in the space benchmark whether the asking price is rich or cheap for the industry and size
    • ☐Management projections and the model's assumptions must be obtained so you can stress-test growth and margin assumptions rather than inherit them
    • ☐The customer and revenue breakdown reveals concentration risk — a business where one customer is 40% of revenue carries fundamentally different risk
    • ☐Industry and competitive landscape analysis, due diligence reports, tax structure, and off-balance-sheet obligations like leases, litigation, and pensions uncover hidden risks and liabilities that effectively raise the true price of the deal

12. What are the main ways to value a company? What are the key features?

    DCF LBO (LFCF, CoE Discount Rate, targetting an IRR for purchase price) Precedent Transactions Public Comps Sum of the Parts Liquidation Valuation (Equity -> doesn't discriminate between assets) Net Asset Value Adjusted Present Value Analysis (adjusting UFCF by Unlevered CoE and subtracting out projected interest payments) M&A Premiums Analysis Dividend Discount Model Embedded Valuation Model Future Share Price Analysis