M&A

Hello, a clean structure I have seen work well for M&A cases is the following (this is also how you would approach an M&A project or DD in real life):

1. Strategic rationale: why this target? I.e. does it fill a real gap (access to a product, a market, a capability)? This is the qualitative fit and the reason the deal exists in the first place (what is typically referred to as "investment thesis")
2. Financial attractiveness: is the target worth more to you than what you pay for it? This is the single bucket that answers whether the deal makes sense, and it builds in three steps:
   a. First, value the target standalone, as if nothing changes (DCF or multiples)
   b. Then add synergies on top, split into revenue and cost, net of the cost to achieve them and risk-adjusted (you rarely capture 100%, so haircut them). This is where the value creation sits
   c. Standalone value plus synergies gives you the ceiling, the most you can pay and still create value. Compare your price against that, whether it is a fixed ask or what you bid in a competitive process
3. Risks and feasibility: what could stop you capturing the value in point 2? I.e. integration, regulatory, cultural, financing. This is the reality check on the upside you just sized

Hope it helps. Feel free to drop me a message if anything is unclear and good luck with the prep!

Hi,

A M&A case has always a similar framework and consists of the following questions to be answered.

1) Why does the company want to do the acquisition? What is the strategic rationale/advantage? (e.g., pricing power, cost reduction, value chain integration, critical asset integration, R&D integration ...)

2) How attractive is the market they are playing in? 

3) What is the financial impact? Standalone valuation + Synergies (revenue and cost)

4) Risks, barriers of acquisition (e.g., competition law approval, competition reaction ...)

As former consultant at Bain, I have mainly worked on M&A deals. Feel free to reach out if you have other questions or if you wish to practice a case together.

Kr,

Mattijs

Hi there, 

It sounds like you're reached the point where you can notice the limitations of traditional frameworks. And yet, you still ideally want to have one that you can deploy for M&A cases. 

In practice, what actually works well is exposing yourself to a variety of M&A cases and developing a flexible, first principles-based toolkit of areas that you can bring into your M&A frameworks. 

If you want to strengthen your structuring skills, reach out and I can walk you through the approach I take with my candidates.

Best,
Cristian

It sounds like you’re at the stage where you’ve done plenty of cases but want to take your structuring to the next level.

Rather than trying to memorise the “perfect” M&A framework, I’d focus on understanding the logic behind the decision and building your structure from first principles.

If you’d like, feel free to reach out. I’d be happy to walk you through the approach I use with my candidates.

Your instinct is right. If it feels wrong to split the target's value from synergies, that's because it is. Put the whole financial picture in one bucket.

Four buckets:

1. The target. Good business standalone? Market, growth, profitability, competitive position.
2. The deal (financials). Your one money bucket: target value + synergies − price and integration costs. Judge "is it worth it" in one place, with synergies next to value, not siloed.
3. Strategic fit. Does it serve our goals? Buy vs build vs partner, fit with our capabilities.
4. Risks. Integration, culture, regulatory, what could break this.

What is it, do the economics work, does it fit us, what could go wrong. MECE, and the money sits in one place.

For McKinsey, if they give you numbers, they're testing bucket 2, so be ready to quantify synergies vs price fast.