Mergers and acquisitions (M&A) is an exciting field that offers opportunities to work on complex deals and transactions. Competition is fierce for roles at top firms like Merge, making it crucial to showcase your skills and experience during the interview process.
To help you put your best foot forward, we’ve compiled a list of the 10 most common merge interview questions along with sample answers to help you craft winning responses.
1. Why are you interested in mergers and acquisitions?
This question gauges your motivation for pursuing an M&A role Interviewers want to understand that you have a genuine interest in the field
Tips for answering
- Demonstrate your understanding of key M&A concepts and strategies
- Discuss experiences that sparked your interest – relevant coursework, internships, research projects etc.
- Share characteristics of M&A that appeal to you – complexity, high stakes deals, cross-functional collaboration etc.
- Convey enthusiasm and highlight unique strengths you will bring to the role
Sample Answer:
“I’ve been fascinated by mergers and acquisitions since studying finance and strategy in my MBA program. Analyzing high-profile deals got me hooked on the complex diligence and valuation involved. My summer internship at an investment bank further reinforced my interest in M&A, as I loved supporting live transactions and seeing big deals come together.
The stakes involved and the multi-disciplinary nature of M&A really energize me. I’m interested in Merge because of your great reputation in healthcare services M I would help Merge’s deals with my skills in valuation modeling and strategic analysis. Being a part of such a dynamic team is something I’m really looking forward to. “.
2. Walk me through a DCF model you have built from scratch.
Being able to build discounted cash flow (DCF) models is a must-have skill in M&A. Expect technical questions testing your financial modeling proficiency.
Tips for answering:
- Demonstrate your step-by-step process for building a DCF model
- Highlight key inputs like revenue growth rates, operating margins, capex, discount rate etc.
- Discuss sensitivities you would run and how you’d analyze results
- Explain how you communicate insights to drive decision making
Sample Answer:
“Recently, I built a DCF model from scratch to analyze the potential acquisition of a medical device company. I started by forecasting revenue growth based on market size, industry trends, and the company’s existing market share.
Next, I made guesses about costs like COGS and SG. I also predicted capital expenditures, D I projected operating cash flows by subtracting capital expenditures.
For the discount rate, I estimated WACC based on comparable companies’ cost of equity and cost of debt. I discounted future cash flows to the present value and calculated a valuation range by varying growth rates and margin assumptions.
I would run sensitivities like changing discount rates and terminal growth rates to assess upside potential and downside risk. By highlighting key valuation drivers, my DCF model enabled senior leadership to determine a fair acquisition price that aligned with their strategic rationale.”
3. How would you go about valuing a potential acquisition target?
Valuation is the crux of any M&A deal. Interviewers will assess your valuation toolkit and ability to think critically.
Tips for answering:
- Demonstrate understanding of commonly used valuation methodologies – DCF, market multiples, precedent transactions etc.
- Discuss the pros and cons of each methodology and when to apply them
- Highlight the importance of incorporating qualitative factors like strategic rationale and synergies
- Emphasize need for an objective, data-driven valuation supported by different approaches
Sample Answer:
“To value an acquisition target, I would employ a range of quantitative and qualitative techniques:
- Discounted cash flow analysis to estimate standalone value based on projected future cash flows
- Comparable companies to benchmark valuation multiples like EV/EBITDA against peers
- Precedent transactions to assess valuation using recent M&A deals in the space
- Analyze strategic rationale and expected synergies to complement quantitative valuation
Each methodology has pros and cons. DCF best captures company-specific projections but relies on assumptions. Multiples offer simplicity but may not account for unique factors.
By triangulating multiple methods, we can develop a 360-degree perspective on valuation. This provides an objective basis for negotiation, while also factoring in strategic considerations and potential upside through synergies.”
4. How would you evaluate whether an acquisition is accretive or dilutive to earnings per share (EPS)?
Understanding accretion/dilution analysis is key for M&A. Interviewers look for financial modeling skills and strategic thinking.
Tips for answering:
- Explain how pre-acquisition EPS provides a baseline for comparison
- Discuss factors impacting EPS like financing structure, synergies, accounting treatment
- Demonstrate how to calculate pro forma post-acquisition EPS
- Highlight how you would communicate impact and advise management
Sample Answer:
“Evaluating accretion/dilution requires developing a pro forma P&L incorporating the target’s financials and transaction assumptions. Key steps would include:
- Establish pre-acquisition EPS as baseline for comparison
- Model capital structure changes like cash vs. stock, debt issuance
- Factor in accounting impacts – purchase vs. pooling of interest
- Project revenue, expense synergies and timing of realization
- Combine acquirer and target financials to calculate pro forma EPS
By comparing pro forma EPS to pre-acquisition EPS, we can determine if the deal is accretive or dilutive. I would also run sensitivities on synergy timing and magnitude. My analysis would enable presenting leadership with an objective view of the financial impact so they can make informed decisions on strategic fit.
For dilutive deals with compelling strategic rationale, I would advise on developing a value creation plan to capture more synergies and evaluate if restructuring the transaction could improve accretion.”
5. What role does due diligence play in the M&A process?
Assessing your understanding of due diligence is important given its critical role in transaction success.
Tips for answering:
- Articulate how due diligence helps identify risks and validate assumptions
- Discuss the various aspects covered – financial, tax, legal, operational etc.
- Provide examples of specific diligence activities like site visits, management meetings
- Highlight the importance of cross-functional coordination
Sample Answer:
“Due diligence is crucial for gathering critical information required to evaluate a deal, validate valuation, and develop integration plans. It typically involves:
-
Financial diligence – assessing quality of earnings, FINREC review, working capital norms etc. This is key for accurately projecting future cash flows.
-
Tax and legal diligence – evaluating corporate structure, outstanding litigation, IP ownership etc. to uncover red flags.
-
Operational diligence – reviewing supplier relationships, sales pipelines, culture to surface risks and identify synergies.
Activities can include site visits, management presentations, analysis of historical financials and projections. Coordinating closely across functions like tax, finance, strategy is vital for comprehensive diligence.
By thoroughly assessing risks and opportunities, we can determine fair valuation and craft value-creation strategies to drive a successful acquisition, making due diligence indispensable in M&A deals.”
6. How would you structure the financing for an acquisition deal? What factors would you consider?
M&A financing know-how and analytical thinking are assessed with this question.
Tips for answering:
- Discuss financing options – cash, stock, debt etc. and associated impacts
- Highlight factors like valuation, accretion/dilution, existing capital structure
- Demonstrate how you would model various scenarios to optimize financing mix
- Emphasize the importance of aligning financing with strategic objectives
Sample Answer:
“The optimal financing mix depends on several factors that must be assessed in conjunction:
- Valuation – lower valuations favor cash, higher valuations warrant stock financing
- Accretion/dilution – stock or debt minimizes dilution vs. cash
- Existing capital structure – limits on debt capacity constrain financing options
- Ownership – potential loss of control influences willingness to issue stock
I would build a model analyzing various scenarios changing the cash, stock and debt ratios. This would quantify impact on EPS, ownership stake, leverage etc. under different mixes.
There are always trade-offs to weigh – for example, cash preserves control but may be dilutive while debt offers tax shields but increases risk. I would work closely with management to structure financing that aligns with their strategic vision for the deal.”
7. Describe your experience managing a complex project with tight deadlines.
M&A deals often have tight timelines, requiring stellar project management skills. Interviewers want to understand your approach.
Tips for answering:
- Provide a specific example highlighting program management responsibilities
- Discuss how you planned the project – milestones, schedules, contingencies
- Share how you coordinated cross-functional
Toptal sourced essential questions that the best Git developers and engineers can answer. Driven from our community, we encourage experts to submit questions and offer feedback.
What is the difference between git pull and git fetch?
While git fetch downloads new data from a remote repository, it doesn’t add any of that data to your working files. All it does is provide a view of this data.
git pull downloads as well as merges the data from a remote repository into your local working files. It may also lead to merge conflicts if your local changes are not yet committed. Use the git stash command to hide your local changes. 2 .
How do you revert a commit that has already been pushed and made public?
One or more commits can be reverted through the use of git revert. In essence, this command makes a new commit with patches that undo the changes made in previous commits. You can use git revert to undo commits if the one you want to undo has already been made public or if you can’t change the repository history. Running the following command will revert the last two commits:
Alternatively, one can always checkout the state of a particular commit from the past, and commit it anew. 3 .
How do you squash last N commits into a single commit?
Squashing multiple commits into a single commit will overwrite history, and should be done with caution. However, this is useful when working in feature branches. Run the following command (with {N} changed to the number of commits you want to squash) to get rid of the last N changes to the current branch:
That’s it! The editor will open with a list of these N commit messages, one on each line. Each of these lines will begin with the word “pick”. Replacing “pick” with “squash” or “s” will tell Git to combine the commit with the commit before it. To merge all N commits into one, make all but the first one of the list of commits “squash.” If there are no conflicts, git rebase will let you make a new commit message for the new combined commit after you close the editor.
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How do you find a list of files that has changed in a particular commit?
Given the commit hash, this will list all the files that were changed or added in that commit. The -r flag makes the command list individual files, rather than collapsing them into root directory names only.
The output will also have some extra information, which can be easily turned off by adding a few flags:
In this case, –no-commit-id will hide the commit hashes from view, and –name-only will only show the file names without their paths. 5 .
How do you setup a script to run every time a repository receives new commits through push?
You need to define either a pre-receive, update, or post-receive hook to make a script run every time a repository gets new commits through push. This depends on when the script needs to be run.
Pre-receive hook in the destination repository is invoked when commits are pushed to it. Any script bound to this hook will be executed before any references are updated. This is a useful hook to run scripts that help enforce development policies.
The update hook works like the pre-receive hook, and it is also set off before any updates are made. However, the update hook is called once for every commit that has been pushed to the destination repository.
Finally, post-receive hook in the repository is invoked after the updates have been accepted into the destination repository. This is a great spot to set up simple deployment scripts, run continuous integration systems, send email alerts to repository administrators, and more.
Hooks are local to every Git repository and are not versioned. Scripts can either be created within the hooks directory inside the “. git” directory, or they can be made somewhere else, and then links to those scripts can be added to the directory. 6 .
What is git bisect? How can you use it to determine the source of a (regression) bug?
Git provides a rather efficient mechanism to find bad commits. With git bisect, the user doesn’t have to go through every commit to find the first one that fixed a problem. Instead, they can do a sort of binary search on the whole history of a repository.
By issuing the command git bisect start, the repository enters bisect mode. After this, all you have to do is identify a bad and a good commit:
Once this is done, Git will then have a range of commits that it needs to explore. At each step, it will check out a different commit from this range and ask you to mark it as good or bad. After that, the range will be cut in half, and the search will take a lot fewer steps than the number of commits in the range. The following command can be used to leave the bisect mode and start over once the first bad commit has been found or in case the mode needs to be ended:
What are the different ways you can refer to a commit?
In Git each commit is given a unique hash. In many situations, like when you use the git checkout {hash} command to try to checkout a certain state of the code, these hashes can be used to find the corresponding commits.
Additionally, Git also maintains a number of aliases to certain commits, known as refs. In addition, each tag you add to the repository acts as a reference, which is why you can use tags instead of commit hashes in some git commands. As the repository changes, Git also keeps track of a number of unique aliases, such as HEAD, FETCH_HEAD, MERGE_HEAD, and so on.
Git also allows commits to be referred as relative to one another. In this case, HEAD^1 means the commit parent to HEAD, HEAD^2 means the commit grandparent of HEAD, and so on. “^” can be used to choose one of the two parents of a merge commit if the commit has two. g. HEAD^2 can be used to follow the second parent.
And finally, refspecs. These are used to map local and remote branches together. But these can also be used to talk about commits that live on remote branches and can be managed and changed from a local Git environment. 8 .
What is git rebase, and how can it be used to fix issues in a feature branch before merging?
For simple explanations, git rebase lets you change where the branch’s first commit starts. For instance, if new commits were made to master after a feature branch was made, git rebase can be used to move the feature branch to the end of master. The command will basically play back the changes that were made in the feature branch at the very end of master. This lets any conflicts be worked out at the same time. If you’re careful, this will make it possible for the feature branch to be merged into master with little trouble, sometimes just by fast-forwarding. 9 .
How do you set up a Git repository so that code sanity checking tools run right before commits and stop them if the test fails?
This can be done with a simple script bound to the pre-commit hook of the repository. The pre-commit hook is run right before a commit is made, even before you have to type a commit message. This script lets you run other tools, like linters, and make sure the changes you’re committing to the repository are correct. For example, the following script:
… checks to see if any . The standard Go source code formatting tool gofmt needs to be run on a go file that is about to be tracked. By exiting with a non-zero status, the script effectively prevents the commit from being applied to the repository. 10 .
Someone on your team deleted a branch by accident and has already pushed the changes to the main Git repository. There are no other git repos, and none of your other teammates had a local copy. How would you recover this branch?.
The most recent change to this branch can be found in the reflog. You can then check it out as a separate branch. 11 .
How can you copy a commit made in one branch to another (e. g. a hot fix commit from released branch to current development branch)?.
You need to use the cherry-pick command. It provides the possibility to play back an existing commit to your current location/branch. So you need to switch to the target branch (e. g. git checkout development) and call git cherry-pick {hash of that commit}.
Even though the same changes are made, it will be a new commit with a new hash because the changes are made to a different place. 12 .
How do you cherry-pick a merge commit?
Cherry-pick uses a diff to find the difference between branches.
As a merge commit belongs to a different branch, it has two parents and two changesets.
Let’s say you want to merge commt ref 63ad84c. You need to use parent 1 as a base and specify -m:
What is a conflict in git and how can it be resolved?
Two or more commits that need to be merged have changes in the same place or line of code. This is called a conflict. Git will not be able to predict which change should take precedence. This is a git conflict.
To fix the conflict in git, make the necessary changes to the files and then add the fixed files by running git add. After that, to commit the repaired merge, run git commit. Git knows you are in the middle of a merge, so it sets the commit’s parents correctly.
There is more to interviewing than tricky technical questions, so these are intended merely as a guide. Not every good candidate for the job will be able to answer all of them, and answering all of them doesn’t mean they are a good candidate. At the end of the day, hiring remains an art, a science — and a lot of work.
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FAQ
How to prepare for a mergers and acquisitions interview?
What is a combined interview?
What is the interview question for acquisition?
What questions are asked during a mergers and acquisitions interview?
If you’re interested in a finance career, you may decide to pursue a role in mergers and acquisitions. During an interview for mergers and acquisitions, the hiring managers might ask questions about your experience and test your knowledge within the field. Knowing the common interview questions for this type of role can help you in the process.
What do Interviewers look for in a merger?
With this question, interviewers want to gauge your negotiation skills, problem-solving abilities, and your capacity to navigate complex business situations. They’re keen to understand how you’ve used these skills in the past to ensure a successful merger and how you might apply them in the future.
What do recruiters look for in mergers and acquisitions?
When you interview for a career in mergers and acquisitions, the recruiter will evaluate your knowledge of the investment and financial industries. Your responses may help you make an excellent first impression and promote yourself as a well-qualified prospect.
What skills do you need for a merger & acquisition?
This question is aimed at understanding your negotiation and problem-solving skills. Mergers and acquisitions often involve numerous stakeholders, each with their own interests and concerns. Resistance is common, and your ability to navigate these challenges is critical to the successful execution of the merger or acquisition.
