Sample interview questions: How do you assess the financial risks associated with a potential acquisition?
Sample answer:
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Analyze Financial Statements:
- Compare the income statements, balance sheets, and cash flow statements of both companies.
- Evaluate profitability, liquidity, and solvency ratios to identify potential financial risks.
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Review Industry Trends and Market Analysis:
- Study industry trends and competitive dynamics to assess the long-term viability of the acquired business.
- Evaluate the impact of regulatory changes, technological advancements, and economic conditions.
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Estimate Synergies and Costs:
- Evaluate the potential synergies and cost savings that can be achieved through the acquisition.
- Estimate one-time integration costs, such as restructuring expenses and employee severance packages.
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Assess Debt and Financing Considerations:
- Analyze the debt structure and financing terms of both companies to identify any financial risks or opportunities.
- Consider the impact of increased leverage on the combined entity’s creditworthiness and cost of capital.
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Source: https://hireabo.com/job/1_2_26/Mergers%20and%20Acquisitions%20%28M%26A%29%20Analyst