Hi, does anyone have any advise the case study interview in KPMG in Transaction Services?

case study KPMG Transaction Services
New answer on Nov 29, 2019
1 Answer
2.7 k Views
marina asked on Nov 28, 2019

Overview of answers

Upvotes
  • Upvotes
  • Date ascending
  • Date descending
Best answer
Vlad
Expert
Content Creator
replied on Nov 29, 2019
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

Corporate finance interviews are different from consulting and are usually much more technical and detailed in financial part. Usually, they give you much more time to prepare and do the model on paper. 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:

  1. Commercial due-diligence of the target company
  2. 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:

  1. 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.)
  2. Cost synergies - typically you use a value chain structure tailored to the industry (e.g. supply-production-distribution-marketing-after sales support)
  3. Financial synergies - working capital, capital structure, tax
  4. Risks - major risks that can decrease the synergies (tip: don't underestimate the merging companies culture factor)
  5. Total synergies potential in $, adjusted by risk (probability of failure)

Good luck!

Was this answer helpful?
Vlad gave the best answer

Vlad

Content Creator
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School
425
Meetings
11,754
Q&A Upvotes
127
Awards
4.9
185 Reviews