M And A Deal Walkthrough Drill
This conversation was generated using Cook'd AI's career assistant and reviewed by Fallon Han from our editorial team for accuracy.
I want to walk through an M&A transaction and get evaluated on my deal intuition. I'm a third-year undergrad in South Korea targeting M&A advisory at a boutique bank. Can we do a realistic case where I explain the process, buyer logic, and negotiation tradeoffs?
Absolutely. Let's use a mid-market sell-side case: a Korean industrial parts company is being sold by its founder. I want you to walk me through the process from mandate to close, then explain why a strategic buyer might pay more than a sponsor. Start with the first 3 steps after the bank is mandated.
First, I'd align with the seller on the objective and timeline, then prepare the teaser and CIM, and build a buyer list. After that, I'd launch outreach under NDA and manage the initial indications of interest.
Good structure, but tighten the deal logic. What matters at that stage is not just documents, but control of the process. Why would the seller choose a limited auction instead of a broad auction, and what risk does that create for pricing?
A limited auction can keep the process confidential and reduce distraction for management. It also helps focus on the most credible buyers, especially if the company is sensitive to customer or employee reaction. The risk is fewer bidders, so the seller may lose some competitive tension and end up with a lower price.
Better. Now assume two buyers remain: a strategic buyer with overlapping suppliers and a private equity sponsor. The sponsor offers a cleaner structure but a lower headline price. Explain the strategic buyer's rationale for paying a premium and what tradeoffs the seller should consider beyond price.
The strategic buyer can pay more because it may realize synergies from procurement, sales cross-selling, or shared overhead. So its true value is higher if the synergies are real and defensible. But the seller should consider certainty of close, financing risk, regulatory risk, and how much earn-out or indemnity exposure each buyer wants.
Strong. One correction: don't treat synergies as automatic value to the seller unless they are actually captured in the price. In negotiation, the seller tries to force the buyer to share some of that value upfront. Now go one level deeper: if the strategic buyer pushes for a lower cash at close and a larger earn-out, how would you evaluate whether that is a good outcome for the seller?
I would test how much of the purchase price is deferred and what conditions trigger payment. If the earn-out depends on aggressive targets, it may shift too much risk to the seller. A better outcome is more cash at close, limited post-close adjustments, and an earn-out only if the metrics are objective and controllable.
Good answer. Final evaluation: your process flow is solid, and you understand why different buyers value the target differently. Your biggest gap is precision on negotiation mechanics. In an interview, say clearly that the seller balances price, certainty, timing, and downside protection, not just headline valuation. Score: 7.8 out of 10. Strengths: structured thinking, clean buyer logic. Improve: quantify tradeoffs and use tighter deal language.