20246 14:47 Investment Banking Interviews Deal Discussions: Prepare About Deals, sensors venivraien [rare naneen aueennr | Lear How To. Recent Posts Articles By Category YouTube courses ‘bout byBran DeChesare Comments (2) Can You Tell Me About a Recent Deal? CEOS eee lodging by our email and comment volume over the past few months theres one Interview question that ‘auses mote confusion than everything else combined Can you tllme about a recent dea” I soemestke avery simple question afterall you jst read upon a dal oni and then summarize what young right? Right? Wall nat gue ‘sue, background research must be port your answer to ths question but i's nat ust shout summarizing the news, ‘The real pin ofthis question isto test whether or nt you speak the same language as bankers, and ‘ether ornot you can extac the 80/20 of what's relevant about transactions: ‘Sure, you ean memorze technical questions and recta your story word forerd Sutcan you walk the walk when eames to speaking the rker Dialect ofthe English language? Ifyou ca, you poston yourself wl fr intemshp ane fultmeoffer. [Angi you car, you might want o start thinking about your"Pan options. Why Deal Discussions Matter ‘Acking you to discuss a recent deals an easy way o test whether or not you really understand how deals work {whether M&A, debtor equly POS), You can 8S your way trough “i questions and you can memerize responses to technical questions, but tts rnuch harder todo this for desl discussions and tl ound reasonably ineligent Wes the same reason why case studies are solely used inthe EMEA region, and ate naw common even inthe US, especialy for aera interviews: tyou cart walk the walk, willbe very obvious, a hitpssimergersandinquisiions.corvinvestment-banking-inlerviews-deal-discussions/ a002am 14:47 Investment Banking Interviews Deal Discussions: Prepare About Ds Inregions with assessment centers and competency questions, such as EMEA and pats of Asia-Pacific eal scussions are tkel 19 come up inthe form of written questions or case studies given a the ‘What Should You Do to Prepate? Picking a eal to research in the fist place isnt tery complicate focus o bigger transactions that have decent coverage in mainstream sources, and just do a search for recent dealin an Industry youre Interested in You could als sgn upto receive alerts when 2 deal happens inthe sector of your choosing i ths serves provided by Dealoge you ean even get information on debt/equty financing deals fom specie banks (examples below) © Goleman Sache (© Morgan Stanley © JPMorgan Devteche Bark © cw ‘Along time ago, you cou getinformation on deals more easily because the WSU used te pubis “eal rofles" ints Money Beat blog frample for Oracle and Acme), Unfortunately, hey no lenge publish these detalles profiles s0 you have o do more detective work Heres what you can do instead +1 Read mainstream press releases fom the usual sources ~ the WS) and FT, Fobes, Business Insider, ste. You can get alt of uattative information fom these, 2. TheNy Times Deal Book sometimes has useful ates on deal, especie for bigger / more Signcant anes. Her’ 2 great example for Apoll's buyout of Chuck E Cheese. 3 you caiti the key mules (EV / Revenue, EV /ESITDA, ec) in these soutees, ook up the company’ llnge inthe SEC database fr non-US companies, oul have fa look a the investor ‘eatons section ofthe sites) end search for anything that was issued around the time ofthe deal Ifyou can fin the Fainess Opinion (fran MBA deal thats ideal because the bank discloses co many of ‘the numbers and key multiples. Fat you can stil eseuate tem yourself based on what’ in company presentations sued around the ‘um ofthe deal announcement, For equity issuances, lok atthe $1 (or equivalent form in ther counties) and use the companys share price at issuance ~ whichis easy to frdin online sources. IRean be tougher to id information on det esuances unless you have access to Bloomberg or Capita 10, os generally a beteriea ta cite LBO / M&A / equity deals in interviews ‘you can tl takes time todo tis esearch Iereate new case studies every year, anit sil akes me atleast hou to find evrything requires for ‘even a base acussion ofan MEA LAO dea ‘So dont recommend going crazy with this and researching dozens of dea ~ prepare to dscuss 1 deal cormayee 2 deale at most. How Do You Actually Discuss a Dsl? ‘Now you've done the research, found enough press releases, and you have the basic rumbers equred for the cecueson, hitpssimergersandinquisiions.corvinvestment-banking-inlerviews-deal-discussions/ 21002am 14:47 Investment Banking Interviews Deal Discussions: Prepare About Ds Here the stuctre Irecommend using 1) Background information onthe buyer and seller (revenue profts/EBITDA mutples, businesses) or ust the compary asin an eguly/éet chacusion, 20 ecuity? rationale ~ Why dite buye/sller want todo? Why did the company want tissue debtor 3) Premium paid and 3 multiples, and anything ele vnusul euch as the deal structure (eg, ft was an asset deal rather than a stock one). Theres no premium In an equlty or debt deal, so there youTe just {focused on multiples and for debt deal, rei stats such as leverage and coverage ati. 4) Your opinion on wheter or ott wil be beneficial for both the buyer and walle (othe lasuing company) inthe short-term and longterm, Most doa siscussions mis point #4 completly, which is probably the most common mistake. Mary discussions also miss the background information and del rationale and sip stright ito the ruenbers ~ thar anther mistake because the interviewer wil have na Kea what you atking about, Toke Mot the Examples, Please _As with all iterviw questions, you shouldbe concise in your verbal ancwers to his question, but you can ‘ve mere detalles expansion Ifyou anewering in wring, Here, well go through 2 examples for he Twitter IPO and the Del lever buyout. ‘Yes, they both tech companies, bu they also both besed on real deal discussions Ive ciqued in lust ives me another chance to laugh at how ovechyped and insanely overvalued Twitter {Ang snes not laughing tte Fedor central banks ofthe recovery” his time arcund, Twitter wil sve 8 a close substute “one deathat intrest me recently was Twtes $1.8 bin PO, “Twite a mejr social mesia company everyone knows, had around $317 millon in revenue and ane loss of $80 millon in tlt ical year rie to PO, and cue lel year 2 ay, sales have Twitter decided to go publ because of the favorable markt envionment ans growing size — the company could aie funding at an attractive valuation that let insiders nd investor ep thai gang hile aso giving the frm enough funds to continue growing its business. Twitter pried at $26.00 per share, which valued it at around 12. forward revenue Tht was in-line with acebooks lip of 11. 6x and Linkers multiple of 12.2 athe time. Altough those multiples are ‘xtemely igh and unheard of for norrtech companies, the valuation wast completely cules sce the comps werein a simlarrange After the BO, however, Twitter's shares surge almost 73% inthe fst day and even went over $70.00 before falng back closer to $60.00 nthe ment afterward, In opinion th origina valation at $26.00 share was reasonable though sil very 2h compared to ‘other industries, and a good dea for both new and oe investors. ‘The valiation since the IPO, however has grown fr to high and it ikl that the pice wil detne once again, expecially If Titer misses revenu, earings, or ser grovth expectations tra a good example of "Great company, butt a great hvestment atts current pie stony” hitpssimergersandinquisiions.corvinvestment-banking-inlerviews-deal-discussions/ 3002am 14:47 Investment Banking Interviews Deal Discussions: Prepare About Ds ‘Commentary: The backatound information hee is very rie! because everyone knows Twitter, but we do atleast mention the industry revenue, and net income figures. The most important partis that we ete the multiples of peer companies and use those to show how the inal vation was not tha ridiculous ~but how it became overvalued afterward as sil retalinvestors hopped on board the tan unkrowingly headed into a large blackhole £V / EBITDA and P / Emuhiples donot apply since the compary was unprofitable so we cite revenue crltples instea (which i ite, another sign of an overvalued company) You could gt all tis information from 2 mainstream news atte, with no further Work requited: Bloomberg and Business Insider. “one dealthat interes me rocently was Sivor Lake's $24 bilion leveraged buyout of Dell anounced ‘ary ast year. ell ae a struggling hardware and software company that started ou galing PCs, but ‘expanded ite lptops server, software and sevice, As of the desl announcement it had around $57 bilon in evenue and EBITDA of $42 bilon, Prior te desl rumor leaking out it raded at 3.9x Y / EBITDA and 0.3K EV Revenue. The fea deal atonal was that Dell could nat tun eel around as a publ company, and eequred the buyout to get out ofthe publi eye wl transformed eel (te focus more on mobile, softwere, nd services). At the same time, iver Lake was looking fr bigger targets to acquiesce ithad so much ry powder back then, ‘They pada ~25% premium fr Dol which equated to 5.1xtaling EBITDA, Close to $13 ifn in funding came fom debt, $6 illon rom excess cas, $4 bilion from Michael Des rollover,andjust ver $1 bllon inequity rom Silver Lake. The leverage rato just over Sx, was fallyagpresive for this 1ype of company, but the excess cash funding and the fact that Michael Des ownership inereased from 15% to nearly 80% Inconsed shareholders, who were being excluded from the potential upside ofthe deal, My opinion ie thats une ob rat deal for anyone except Michael Del there's no reason the company had to go private to transform ts business becsuse companies ike IM ang HP cid that a6 Inthe shor-term, Dells shate ice probably woulasit have increased by a huge amount ~ 0 while people ko Ca eskn were corect thatthe offer could have been Bett they woul have necessary seen 3 ton of extra upside rom a onetime cash dividend anc holding Des sock. Finally fs dificult to see how Siver Lake wl get a sald IRRin any reasonable scenario unless the companys growth and margos increase substantial” ‘Commentary: OK.1"cheste"abton this one referencing al the work we've aesdy done for the Del 180 case study covered previously on this ste IR would be very eifiult 0 fn all this information rom press releases - but you can fd a suprising amount even the estimates are very rough Fora good example, se this Seoking Alps atl. The numbers arent rece and you wert necessary ‘get the pint onthe IRR fom tha, buts a move nthe right ection. For better sources, you shoul review the actual flings forthe dal and do the math yours ‘The mostimportan pints that we've expressed an opinion on the key issue: was a good desl for ‘everyone involved? and the ana nny view ino forthe reason stated above, What Noxt? Now youhave the instractons youreed find infomation on dese you have my recommended template, end you eve have afew sample eal dscussions to use es your references, hitpssimergersandinquisiions.corvinvestment-banking-inlerviews-deal-discussions/ ano20246 14:47 Investment Banking Interviews Deal Discussions: Prepare About Deals, [Now go research 1-2 recent deals that interested you and make sure you have enough information to {allow the structure outned above | fantasti deal discussion wont necessaily get you an offer but tembe discussion almost guarantees tat you wont get he offer, ‘Sonat preparing fortis questions soto ke buying Twit stock - maybe wil pay of, ard maybe wont ea total dsaster_ ‘ute not a chance you's want taken the curent os) market environment. ones Comment ‘About the Author partie ns tg weight ann. vaveing.ebsesslwatehng TV ens. 2 Break Into Investment Banking Free Exclusive Report: 7-page guide with the ation plan you need to break Into investment bankng- how totell you story, network, eat a wining fominate Your lterviews Comments ‘hake biagn atle.Jut qusion tet ewer PO cale-ow yu werk te lenard ali? opttlyace you coal Seog prec loses and omer del corm at hee of PO Reseanee semetras ae goad PO narrares/search el gn aneyou ‘utiwarnoncingtXcoua eee ung store! te om company fran ta a do eo ge ane 1244 1g ‘he wh ar ene ung 012 20192014 sematirg se aug hitpssimergersandinquisiions.corvinvestment-banking-inlerviews-deal-discussions/ sn20246 14:47 Investment Banking Interviews Deal Discussions: Prepare About Ds forcrtgieespineinteiakstons hea ued th ealigaesnrevspec} ‘ou dont ned at aot pln “and 39 612.124 satin ao Aa a isto soetens vs sca htoretraroers sorebooy Sire ort Farnese Opin erie calor be s0e gorse. 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