IB Interview Questions: M&A : Level 3 M&A Questions

-

1. What is the P/E of Cash and Debt?

The P/E of Cash and Debt reflects the inverted after-tax cost of Cash and Debt in an M&A deal.

2. Does an Asset or Stock deal typically create a Deferred Tax Liability?

A Stock Deal typically creates a Deferred Tax Liability because in a Stock Deal there isn’t a step-up in basis for Tax purposes, which creates a disconnect between GAAP and IRS Tax Expense.

3. Is Goodwill amortization tax-deductible in an Asset Sale? Stock Sale?

Goodwill amortization is tax-deductible in Asset Sale but not in a Stock Sale .

4. Do buyers generally prefer asset sales or stock sales? Why?

Buyers often prefer Asset Sale structures because the Asset sale structure creates a step-up in basis. The increase in basis creates to tax savings via increased Depreciation and Amortization expense over time, which arises from the Purchase Price Allocation process.


IB Interview Questions: M&A : Level 1 M&A Questions

IB Interview Questions: M&A : Level 2 M&A Questions

Comments

Post a Comment

Best Blogs

IB Interview Questions: M&A : Level 1 M&A Questions

-
Image
1. Why do companies merge? While are many reasons that companies merge the underlying driver of most M&A deals to expedite growth and/or generate cost savings to create value for the owners of the business. When people say that M&A is an ‘art’ and a ‘science’, what does that mean? The science refers to the mechanical valuation methods (Comps, DCF, etc.), but the art is in making a judgment call on valuation based on the outputs of the various valuation methodologies. 2. Who can pay more when buying a company: a Financial buyer or Strategic buyer? Why? Strategic (i.e. corporate) buyers can typically pay more than Financial (i.e. Private Equity) buyers because strategic buyers typically have overlapping operations that can be removed post-merger to generate cost savings (i.e. Synergies). 3. When are sponsors and corporate buyers on equal footing? When a Financial buyer already owns a competing asset, they can generate synergies (which justifies a higher price) and thus are on mor
Read more

Getting into Investment Banking: A Comprehensive Guide

-
Image
Introduction Breaking into investment banking (IB) is no small feat, whether you're pre-MBA or post-MBA, from a target or non-target school. While high GPAs and test scores are standard, they are often not enough to stand out. Here’s a strategic approach to help you embark on a successful investment banking career. 1. Network Extensively When your application lands at an investment bank, it’s usually reviewed by a small team of bankers responsible for recruiting from specific schools. Given the competitive nature of this field, networking is crucial. Why Networking Matters: Decision-making bankers are more likely to advocate for you if they know you. Especially vital for non-target school students. Engage with alumni and other connections at your target firms. How to Network: Start reaching out to analysts and associates a few months before core recruiting starts. Look for non-target alumni if you're from a non-target school; they often help each other out. Demonstrate Interest
Read more