Type of cases in a somewhat hybrid role - preparation tips

Question

Hi there!

I've been invited for a last round case interview in a position in a large corporation. The position is as investmend manager and deals with a very broad spectra of finance and business related areas.

The key responsibilties of the role is listed as (among others):

Developing business cases, modelling investments, project due diligence, setting standards, developing best practices as well as preparing decision material for executive management.
Ultimately ensuring a holistic view on profit, cost, revenue, commercial and strategic fit from a company perspective

I can see that current employees in the role lists these as their responsibilties:

- Financial evaluation of investments and divestments
- Risk evaluations and hedging analusis
- Valuation and modelling on sell side and buy side M&A deals
- Developing best prctice business cases and modelling tools
- Invesment case development
- Strategic business case development for commercial and operational projects

I will get a case that is 30 min prep and 45 min Q&A. What would be resonable to assume would be the case type from the above listed, how could a potential framework for solving look like and how to prepare for this?

Thanks a lot in advance!

Answer 1

Hi,

I would prepare for the following:

Due-diligence of the target company
Synergies calculation of two merging companies

1. For DD you can use the following structure:

Market

Size
Growth rates
Profitability
Segments
Distribution channels

Competition

Market shares of competitors and their segments (see the next point)
Concentration / fragmentation (Fragmented market with lots of small players is less mature and easier to enter from a scratch. Concentrated market is hard to enter but has potential acquisition targets)
Unit economics of the players (Margins, relative cost position)
Key capabilities of the players (e.g. suppliers, assets, IP, etc)

Company

Financial analysis (Profits, Revenues, growth rates, etc)
Unit economics (Margins, costs) in current or target markets
Brand
Product mix
Key capabilities
Valuation

Feasibility of exit (If a PE fund):

Exit multiples
Exit time
Existence of buyers

2. For Synergies Calculation you can use the following structure:

Revenue synergies - here you calculate the synergies in price and quantity (depending on the case it may be new geographies, new products, new distribution channels, bigger share on shelves crosselling opportunities, etc.)
Cost synergies - typically you use a value chain structure tailored to the industry (e.g. supply-production-distribution-marketing-after sales support)
Risks - major risks that can decrease the synergies (tip: don't underestimate the merging companies culture factor)
Total synergies potential in $, adjusted by risk (probability of failure)

The cases will be much more detailed in financial part. Depending on the company you'll need to:

Find the relevant information in P&L and Balance sheet
Do the simplified valuation using NPV: calculate cash flows and make assumptions about growth rate and discount rate
Do the valuation using comps - you'll have to explain which comps you will use and why

Good luck!