Hi,
Based on the description, it may be closer to the PE / IB M&A interview that is much more technical and detailed in the financial part. Usually, they give you much more time to prepare and do the valuation on paper / excel. Depending on the company you'll need to:
- Find the relevant information in P&L, Balance sheet, CF statement
- 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
- Do the valuation of the synergies
- Play with different scenarios (e.g. how the stock-price will change if the deal terms leak into media, or how should the companies behave in a bidding process)
There are two types of frameworks you may use:
- Commercial due-diligence of the target company
- Synergies calculation of two merging companies
Note also that it can be a mix of both.
1. For Due Diligence 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
- Unit economics (Margins, costs) in current or target markets
- Brand
- Product mix
- Key capabilities
Feasibility of exit (in case of a PE company):
- Exit multiples
- Exit time
- Existence of buyers
- Risks
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)
- Financial synergies - working capital, capital structure, tax
- 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)
Good luck!