Investment Banking Interview Questions

Tell me about a recent M&A deal that you followed

By January 29, 2022No Comments

The investment banking interview question we’re going to go over today is “Tell me about a recent M&A deal that you followed.” Here’s what you can say.

Interview Answer

“A recent M&A deal that I followed is Microsoft’s acquisition of Activision Blizzard for $69 billion in an all-cash transaction. Microsoft is paying $95 per share, which is about a 45% premium. I followed this deal because I’m very interested in technology, especially about the metaverse. 

Strategically, I think it makes a lot of sense. Microsoft is very strong in software but it lacks a gaming portfolio. Activision has some really big games, like “Warcraft” and “Call of Duty”. This will provide Microsoft with the building blocks it needs to build metaverse.

From a valuation perspective, I also think it’s very astute. Microsoft acquired Activision when it’s trading near a 52-week low. Even with the 45% premium, the transaction is only about 15x one-year forward EBITDA, which is actually a bit low compared to some of the other technology transactions.

So overall I thought this was a very smart deal for Microsoft.”

Additional Tip

That’s how you can structure your answer to this question: “Tell me about a recent M&A deal that you followed”. Here’s a very important tip. For this question, picking the right deal is as important as is how you structure your answer. Ideally, you should pick a deal done by the bank you’re interviewing with. And for those of you who are interviewing with a particular industry group, the deal you pick should be in that industry.

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