How to Answer “Pitch a company we should acquire and explain why.” in Investment Banking Interviews
In investment banking interview prep, few prompts reveal your judgment faster than: “Pitch a company we should acquire and explain why.” This pitch a company acquisition question is really asking whether you can think like a banker: choose a plausible buyer and target, form an investment thesis, put a sensible price box around it, and show you understand execution risks.
A strong answer sounds like a short deal screen: clear strategic logic, 3–4 quantified value creation levers, valuation framing (even with rough numbers), and a realistic path to get the deal done.
What Interviewers Look For in Investment Banking Technical Questions
This is one of the most practical investment banking technical questions because it blends strategy, valuation, and communication. Interviewers assess whether you can move from “good fit” language to a crisp M&A rationale with measurable drivers (growth, margin expansion, synergy capture, multiple re-rating).
They also probe your company valuation interview prep fundamentals without handing you a model. You’re expected to triangulate value using market anchors (trading comps, precedents) plus DCF intuition, and to articulate a willingness-to-pay ceiling tied to synergy value and return hurdles.
Finally, they test your deal judgment and advisor mindset: feasibility (financing, antitrust, integration complexity), what diligence would focus on, and whether you can explain risks and mitigants like a real M&A process rather than a theoretical pitch.
Pitch a Company Acquisition Question: A 4-Step M&A Framework
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Step 1: Pick a credible acquirer/target and state the “why now”
Open with buyer + target + one-line rationale: “Buyer X should acquire Target Y to achieve Z.” Choose names that make sense operationally (same customer base, adjacent capability, or clear gap the buyer has tried to build).
Add a timing catalyst so the pitch doesn’t feel random: a sector consolidation wave, a shift in distribution, a product transition, regulatory change, a valuation dislocation, or a competitive threat. You don’t need perfect numbers, but you do need a plausible narrative for why the deal is actionable now.
Close this step by defining the deal type (capability acquisition vs. horizontal consolidation) and the key constraint you’ll manage (e.g., antitrust, platform neutrality, leverage tolerance). This shows you understand M&A as execution, not just idea generation.
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Step 2: Build the investment thesis with 3–4 specific value creation levers
Lay out 3–4 value drivers and keep them concrete. Good buckets: (1) strategic fit (what capability the buyer gains), (2) revenue synergies (how the combined company sells more), (3) cost synergies (what overlaps come out), and (4) quality/multiple uplift (why the market should value the combined business more highly).
Use ranges rather than vague claims: “1–2% of combined revenue in run-rate synergies,” “200–300 bps margin upside,” or “faster penetration in enterprise accounts via the buyer’s distribution.” This is where strong M&A interview strategies show up—quantification, prioritisation, and a quick statement of how you’d validate the numbers in diligence.
Make at least one lever buyer-specific (e.g., a distribution channel, procurement scale, installed base) so it’s clear why this buyer is the natural owner.
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Step 3: Frame valuation, willingness-to-pay, and returns (without over-modelling)
Give a simple valuation triangulation using valuation models logic: (i) trading comps to anchor where similar companies trade, (ii) precedent transactions for control premiums, and (iii) DCF intuition as a reasonableness check on what growth/margins can support.
Then set a price box and a ceiling: “Standalone value supports A; synergies justify paying up to B; beyond that, returns don’t clear.” If you can, connect it to accretion/dilution drivers at a high level: buyer vs. target multiple, financing mix (cash/debt/equity), synergy timing, and one-off integration costs.
The key is discipline: you’re not trying to “win the deal” at any price—you’re showing you can advise a client on what is value creating versus headline-grabbing.
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Step 4: Show execution thinking: structure, integration plan, and key risks
Call out 2–3 risks that could kill the deal and a mitigation for each. Typical angles: antitrust/regulatory, customer churn (especially if the target is “neutral” across ecosystems), talent retention, tech/platform integration, and cultural mismatch.
Outline a light integration plan with a first-100-days focus: what stays independent, what gets integrated, and where synergies actually come from (G&A consolidation, go-to-market alignment, rationalising vendors). This moves your answer from theory to reality.
Finish like a banker: list your top diligence workstreams (customer concentration, retention/cohorts, unit economics, pipeline overlap, product roadmap) and state a clear walk-away condition (valuation gap, unfixable integration risk, regulatory block). This is how to structure an acquisition pitch answer in an interview setting.
Investment Banking Acquisition Pitch Example (Analyst-Level)
Microsoft should acquire Datadog to deepen Azure’s observability and operations stack, improve workload stickiness, and add a scaled, multi-product monitoring platform with strong developer adoption.
Rationale: Azure competes on developer experience and the ability to run workloads reliably at scale. Datadog sits in the “operate and troubleshoot” layer across infra monitoring, APM, logs, and security monitoring. Owning that layer would help Microsoft reduce churn risk, improve cloud expansion, and offer a more integrated enterprise proposition.
Value creation: I’d underwrite (1) revenue synergies from bundling Datadog into Azure enterprise agreements and consumption commitments, (2) improved retention/expansion on Azure by embedding better monitoring into the default workflow, and (3) targeted cost synergies in G&A and overlapping go-to-market while keeping product and engineering largely independent. Longer term, the combined business could deserve a quality uplift given more recurring software exposure and a broader platform spanning performance and security.
Valuation and price discipline: I’d triangulate valuation off high-quality infrastructure software comps and precedent deals, then set a willingness-to-pay ceiling based on synergy value and a required return over a 3–5 year horizon. If Datadog’s standalone multiple is rich, Microsoft should only pay a control premium that can be justified by realistic, time-phased synergies and retention benefits—otherwise the deal becomes value destructive.
Risks and mitigants: Key risks are preserving Datadog’s product velocity, maintaining credible multi-cloud neutrality for customers, and retaining talent. I’d mitigate by operating Datadog as a semi-independent unit with explicit commitments to multi-cloud support.
Next step: Diligence would focus on net revenue retention drivers, overlap with Azure Monitor, customer concentration, and the specific commercial mechanics of bundling without damaging Datadog’s brand.
- Opens with a buyer/target and a standalone two-line thesis that works as a snippet.
- Translates “strategic fit” into measurable levers (bundling, retention, cost takeout) rather than broad claims.
- Uses valuation triangulation and a willingness-to-pay ceiling to show price discipline.
- Calls out realistic deal risks (neutrality, integration, talent) and credible mitigants plus diligence priorities.
Common Mistakes Using M&A Interview Strategies
- Picking a target with no natural owner (unclear buyer logic) or a buyer that couldn’t realistically finance the deal.
- Staying purely strategic and never stating how you’d value it or what price becomes too high.
- Listing “synergies” without specifying the source (which cost lines, which channel, which product bundle) or how you’d validate them.
- Ignoring execution constraints like antitrust, platform conflicts, integration complexity, or shareholder optics.
- Overstuffing the pitch with facts and tickers instead of a clean structure and defensible assumptions.
- Treating accretion/dilution as magic: not mentioning purchase multiple vs. buyer multiple, financing mix, or synergy timing.
Follow-Ups on Valuation Models and Deal Feasibility
How would you estimate synergies quickly during an interview?
Use simple drivers: cost synergies as a % of overlapping opex (G&A/sales) and revenue synergies as a modest % uplift, phased in over 2–3 years with a risk haircut.
Which valuation methods matter most for an acquisition pitch?
Anchor on trading comps for the market baseline, precedents for control premiums, and DCF intuition as a cross-check—then set willingness-to-pay from synergy value and required returns.
How do you discuss accretion/dilution without a full model?
Compare buyer vs. target multiples, state a plausible financing mix, and flag the swing factors: synergy timing, integration costs, and whether the purchase multiple is above or below the buyer’s multiple.
What diligence questions would you prioritise for your pitch?
Customer concentration, net retention/cohort behaviour, unit economics, product roadmap dependencies, and where revenue synergies are truly incremental versus cannibalising existing sales.
What would make you walk away from this deal?
A valuation gap not bridged by realistic synergies, a regulatory block with no workable remedy, or diligence showing the core growth driver (retention or margins) is structurally weaker than assumed.
Company Valuation Interview Prep Drills for Faster Answers
- Build a repeatable 3-minute response for how to pitch a company for acquisition in investment banking: buyer/target → investment thesis → valuation & price → risks → diligence.
- Practise two deal types: (1) horizontal consolidation (cost synergy-led) and (2) capability acquisition (revenue/retention-led).
- Rehearse “numbers-only” once per pitch: comps anchor, a synergy range, and a clear willingness-to-pay ceiling.
- Pressure-test with one question: “What is the single biggest thing that could make this value destructive?” and tighten your mitigants.
- Use AceTheRound to run timed reps and get feedback on structure, clarity, and whether your valuation framing matches real M&A interview expectations.
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