How detailed should the initial structure be for broader cases like M&A, PE, Market Entry?

Question

For broad cases like PE invetment, M&A, Market Entry etc. what level of details should be included in the initial structure shown to the interviewer. Let's say it's PE invetment case should I include all the buckets (PE characteritics, market structure , target company, valuation, way to improve operations, profitability, revenue, multiple etc.) with 5-6 points under each bucket? My worry is such broad structure looks generic and rehearsed with lack of clarity of purpose plus it takes almost 7-8 min to walk through it, on the other hand if I try to use some customization there is a probability that I might miss out on most crucial part of the case.

Thanks

Answer 1

Hi!

You are right - such a laundry list of buckets to look into feels (and actually is!) completely arbitrary.

A structure to approach a case should be rooted in the actual question that you need to address. From there, you should define the criterion to answer this question, and build a corresponding value driver tree with branches and sub branches. All the elements that you have listed above (market structure, target company operations/capabilities, synergy levers, etc.) should be mapped to the different sub branches of your value driver tree. This is true, regardless of whether you are looking at a PE/M&A scenario, or market entry, or capacity expansion, or new product launch, etc. etc.

The crucial point is that, thereby, you create a rigorous thinking frame which organizes all relevant elements into a structure by which you can link the analysis of every element back to the core question you need to answer by means of logic.

Unfortunately, no case books are revealing this to candidates, creating the illusion to candidates that "learning frameworks" is an acceptable approach towards cases.

Cheers, Sidi

Answer 2

Hi,

4 buckets with 3-5 bullet points are enough. For example for the private equity case:

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:

Exit multiples
Exit time
Existence of buyers

Best!