here is a rough high-level description of how I coach my coachees on M&A cases:
1. Clarify the underlying reasons objectives of the potential acquisition.
Reasons could be:
- General strategic reasons? (like consolidation pressure, access to new markets, diversification, preventing competitor moves,...)
- Tax advantages?
- Synergies (Revenue / Cost / Financial)
The objective will most likely be economic value creation.
2. If economic value creation is indeed the objective, you can build your framework on the following structure.
Condition for the acquisition to make economic sense:
[ (A) Initial value of the target] - [ (B) Excpected price for the acquisition] + [ (C) Value increase after acquisition] >> 0
- (A) is essentially an analysis of current profits projected over the target investment horizon (to be clarified with interviewer)
- (B) is, well, the price
- (C) encompasses expected profit increase due to better management, Synergies, but also the negative effects of integration costs and financing costs (if appliccable)
So you can build a framework consisting of these 3 blocks, and further enrich it with a 4th lens, i.e., risks and barriers (cultural, legal).
So there is an array of different analyses that need to be conducted for an exhaustive assessment. Within the frame of a case interview, informed hypothesizing and/or interviewer guidance will determine the focus areas.