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    Interview Preparation Series - Session 5

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    daniel

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    Interview Preparation Series - Session 5

    Uploaded by

    daniel
    122 views34 pages

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    20190509 - Interview Preparation Series - Session 5

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    Copyright:

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    122 views34 pages

    Interview Preparation Series - Session 5

    Uploaded by

    daniel

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    You are on page 1of 34

    Session 5: M&A / Pricing

    Strategies
    5/9/19

    Paul (some slides courtesy of previous ADC interview prep years)

    Please enjoy some snacks!


    Topics today
    1. Recap: Why Consulting? Mind mapping and firm fit (5-10 min)
    2. Mergers & Acquisitions (10-15 min)
    3. Pricing Strategies (10-15 min)
    4. Cases (60-90 min)
    What is consulting?
    A great opportunity to...

    1. Leverage analytical skills / problem solving


    2. Have a positive impact on consumers (indirectly)
    3. Develop business and interpersonal skills that last a lifetime (Real life MBA)
    4. Work with complicated problems and create innovative solutions
    13 firms that recruit at Stanford (this represents most, but not all)
    Mind Mapping and “Genuine-ness”
    Famous example of M&A failure:
    Daimler-Chrysler culture clash - auto manufact.
    Daimler - German Chrysler - American

    ❏ Precision ❏ Efficiency
    ❏ Reliability ❏ Process innovation
    ❏ Quality performance ❏ Affordability
    ❏ Formal & structured mgmt. ❏ Relaxed & flexible atmosphere
    ❏ Strong hierarchy ❏ Teamwork & cross-functionality
    ❏ Extensive decision process encouraged

    Result: Different mgmt ideals → Daimler imposed values onto


    Chrysler → Daimler failed to share process & parts w/Chrysler as
    originally planned → brain drain, failure to compete in US market
    How to determine profitability of an M&A:
    Pre- vs post-merger
    ❏ Pre-merger ❏ Post-merger
    ❏ Calculate expected revenue ❏ Factor in expected synergies
    ❏ Company A (client) ❏ Company A + B
    ❏ Company B (target)* ❏ Subtract costs of cannibalization
    ❏ Subtract costs ❏ Company A + B
    ❏ Company A
    ❏ Company B

    * Target companies (B) are generally valued based on annual revenue


    initially, which may be extended over many years depending on scope of
    projections. Revenue growth rate may also be a critical factor to evaluate.
    Then, Company A may offer to buy B for some value < B’s valuation
    M&A case today

    “Great Burger”

    ❏ McKinsey style (interviewer-led)


    Pricing
    Basics of Pricing

    ❏ Demand & Supply


    ❏ Note: this is pricing for a product
    → separate from evaluating the
    price of a company for an M&A
    ❏ Competition
    ❏ Costs
    High Price Elasticity

    Low Price Elasticity

    Courtesy of Robert Schenk


    These two are also
    referred to as
    price-based costing,
    but avoid this term -
    too jargony for an Should not focus
    interview on this strategy
    alone, since it
    ignores customer
    and competition
    Pricing case today

    “HitNot Tires”

    ❏ Interviewee-led
    Giving a Case
    To train well you need partners who know the case well and can give quality feedback.

    The following are points to keep in mind before giving a case:

    ○ Read through all figures and calculations


    ■ Make sure you know what information can be given/how
    ○ Know the trigger for each step, including when to go into the math
    ○ Math is usually simple, but make sure you understand it so you can help troubleshoot if
    something goes wrong
    ○ Feedback is Key, don’t be afraid of brainstorming if the main points are not discussed
    ■ Ask “What else” to keep the discussion going, or
    ■ “What about Area X”
    Giving a Case

    ○ For interviewee led (BCG style case) let the interviewee drive case/decide where to
    go next instead of immediately correcting mistakes
    ○ Cases are conversations, but if interviewee spends too long on the wrong track,
    interviewer should cut case short or nudge them in right direction, remember the
    case should be less than 30 min
    ○ Feedback at end of case should be specific (i.e. do X, Y, and Z to improve)
    How to get more “business-savvy” for cases
    As much as cases are about logic, they are easier to navigate if you understand business jargon

    ○ Read the News


    ■ FierceBiotech
    ■ Endpoints
    ■ The Economist
    ■ The Wall Street Journal …
    ○ Listen to Podcasts
    ■ Motley Fool
    ■ Freakonomics
    ■ Planet Money
    ■ Numbers Geek
    ■ McKinsey podcasts
    ■ Market Place ...
    Checklist
    Keep this main points in mind to have great case results

    ❏ Have clear, organized notes


    ❏ Focus on the main question
    ❏ Always have a hypothesis in mind, and communicate it / update it
    throughout the case
    ❏ Talk, clarify, question -> The interview is a conversation
    Other events/resources
    ADC Resources -> Through our website you can access Case/Math/Framework books

    Case partner matching spreadsheet goo.gl/KoMLiQ


    UPDATED*** Syllabus for Case Interview Prep
    Date Room

    ■ Intro 04/04 Alway M112

    ■ Profitability 04/11 Alway M106

    - Nothing Scheduled 04/18 Alway M112

    ■ Market entry/growth strategies 04/25 Alway M112

    ■ Breaking the Fourth Wall: Interactive Case Practice 05/02 Alway M112

    ■ M&A / Pricing Strategies 05/09 Alway M112

    ■ New Product Launch / Competitive Response 05/16 Alway M112

    ■ Q&A panel with future and past consultants 05/23 Alway M112

    ■ Firm visit: Charles River Associates (CRA) 05/30 Alway M112

    ■ Breaking the Fourth Wall: Interactive Case Practice 06/06 Alway M112

    ■ Personal Experience Interview (PEI) 06/13 Alway M112

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