M&A Advisory Questions and Correct
Answers
What is buy side and sell side in M&A? ✅- Sell-Side M&A: When an investment bank
is an advisor to a potential seller
- Buy-Side M&A: Conversely, when an investment bank acts as an advisor to the buyer
(acquirer),
What is the M&A Due Diligence Process? ✅- Purpose - minimis risk and exposure to
an acquiring company, focusing on the targets true financial picture
- Involves analysing financial information, historic and projected financial results,
evaluating synergies and assessing operations to identify opportunities and areas of
concern
What is the difference between a merger and acquisition? ✅- Merger → In a merger,
the combination occurs between similarly sized companies
- Acquisition → On the other hand, an acquisition tends to imply that the target was of a
smaller size compared to the acquirer. Acquirer hopes to leverage the target's
established brand image and recognition
Walk me through a merger model? ✅1) Calculate total offer value = offer price per
share x fully diluted shares outstanding
2) Transaction structure must be determined (e.g. cash, stock, mixture)
3) Assumptions made regarding interst expenses, new share issues, anticipated
revenue and cost synergies, financing fees
4)
What is accretion and dilution in an M&A transaction? ✅Accretion - An accretive
transaction means the EPS of the merged company exceeds the original EPS of the
acquirer
Dilution - Vice versa
What are some potential reasons that a company might acquire another company?
✅1) Revenue and cost synergies
2) Cross selling opportunities
3) Assets owned
4) Talent driven acquisitions
5) Expanded Geographic reach
6) Enter New market to sell products/services
7) Revenue diversification
8) Horizontal and vertical integration
Answers
What is buy side and sell side in M&A? ✅- Sell-Side M&A: When an investment bank
is an advisor to a potential seller
- Buy-Side M&A: Conversely, when an investment bank acts as an advisor to the buyer
(acquirer),
What is the M&A Due Diligence Process? ✅- Purpose - minimis risk and exposure to
an acquiring company, focusing on the targets true financial picture
- Involves analysing financial information, historic and projected financial results,
evaluating synergies and assessing operations to identify opportunities and areas of
concern
What is the difference between a merger and acquisition? ✅- Merger → In a merger,
the combination occurs between similarly sized companies
- Acquisition → On the other hand, an acquisition tends to imply that the target was of a
smaller size compared to the acquirer. Acquirer hopes to leverage the target's
established brand image and recognition
Walk me through a merger model? ✅1) Calculate total offer value = offer price per
share x fully diluted shares outstanding
2) Transaction structure must be determined (e.g. cash, stock, mixture)
3) Assumptions made regarding interst expenses, new share issues, anticipated
revenue and cost synergies, financing fees
4)
What is accretion and dilution in an M&A transaction? ✅Accretion - An accretive
transaction means the EPS of the merged company exceeds the original EPS of the
acquirer
Dilution - Vice versa
What are some potential reasons that a company might acquire another company?
✅1) Revenue and cost synergies
2) Cross selling opportunities
3) Assets owned
4) Talent driven acquisitions
5) Expanded Geographic reach
6) Enter New market to sell products/services
7) Revenue diversification
8) Horizontal and vertical integration
