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

   Not measured yet
   • 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 buyers●●●●○
   • Buyers must sign an NDA before receiving the CIM, the confidential information memorandum containing detailed financials and business description●●●●○
   • Initial bids are non-binding letters of intent, evaluated on both price and certainty of closing●●●●●
   • Shortlisted buyers attend management presentations, where the company's management presents the business directly to those buyers, and gain data room access for deeper diligence●●●●○
   • Final bids are more binding than initial LOIs and come with drafts of the purchase agreement●●●●●
   • 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)?

   Not measured yet
   • 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 adjacency●●●●○
   • 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 distribution●●●●○
   • 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 issues●●●●○
   • 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)?

   Not measured yet
   • 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.●●●●○
   • 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)?

   Not measured yet
   • 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 carry●●●●○
   • 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?

   Not measured yet
   • 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 uncertainty●●●●○
   • 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)?

   Not measured yet
   • 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?

   Not measured yet
   • 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.●●●●○
   • 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.●●●●○
   • 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.●●●●○
   • 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)?

   Not measured yet
   • 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)?

   Not measured yet
   • 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 alone●●●●○
   • 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 results●●●●○
   • 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?

    Not measured yet
    • 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?

    Not measured yet
    • 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 year●●●●○
    • 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?

    Not measured yet

    No key points on this card yet.