Hi,
You need to ask in the clarifying questions:
- What are the reasons for the deal and what are the client's objectives
- Ask if there are any synergies
For consulting interviews, 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
- Revenues and growth rates
- Profit
- Unit economics (Margins, costs) in current or target markets
- Brand
- Product mix
- Key capabilities
Feasibility of exit (in case of a PE company):
- Exit valuation
- 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!