What will my FDD case study involve?
FDD case study interview
It has become more and more common for firms to include a case study in the interview process for financial due diligence / transaction services roles. The reality is that these case studies can look very different from firm-to-firm and office-to-office. Examples include (non-exhaustive):
You will be provided with the P&L for a business over three years, together with a two page summary of its history, recent challenges/successes and other relevant background. You will then be asked to identify (1) any areas which should be reviewed in detail during an FDD process (e.g. recurring vs non-recurring revenue - you may be concerned that there is an exceptional level of non-recurring revenue in the most recent financial period which is distorting trends and profitability); and (2) any potential EBITDA normalisation adjustments.
You may be provided with a quality of earnings section for a dummy FDD report and asked to discuss the adjustments identified with the interviewers, providing your view on whether you believe the adjustments are appropriate.
You may be provided with customer revenue data over a historical period and asked to undertake analysis which you think will be helpful to your client from an FDD perspective (think about client concentration risk, breakdowns by client type, identifying which clients are driving growth, assessing the level of new client wins and client losses etc.).
You may be provided with an assortment of financial information with a couple of paragraphs on a business, summarising its activities and strategic focus. You will then be provided with some time to (1) calculate the KPIs you believe to be relevant for reviewing the business and its historical performance; and (2) present and comment on the development of these KPIs.
You may be provided with an investment case for a potential acquisition. The interviewers will then ask you to assess the key risks and opportunities, together with what you consider to be the value-drivers.
In some rare cases, I have seen where the interviewer is solely trying to assess the candidate’s excel ability and very basic accounting understanding, asking them to produce a P&L and balance sheet with basic supporting analysis from a set of monthly trial balances.
As is evident above, the case studies come in all different shapes and sizes.
Largely, the most common theme is that the interviewer is trying to assess your ability to analyse information, identify the issues / areas to review and whether you can exhibit the financial due diligence thought-process.
I always recommend that a candidate approaches the case study with the following mindset for every piece of information they take in “Does this have an impact on deal value?”
It won’t necessarily be the case that you will be able to identify everything, albeit being aware of the common areas of review in an FDD engagement and how certain things can impact deal value will put you in a great position.
All you need to know
The below information pack (60+ page document with accompanying example Excel databook) will benefit any individual looking into a potential move into the financial due diligence profession (often referred to as transaction services or transaction advisory services in the market). The information pack will prove useful for potential interview questions or even simply establishing a general understanding of the typical financial due diligence thought-process.
The pack will also be beneficial for any already successful FDD candidate who is looking to acquire a strong technical understanding in order to hit the ground running.
FDD Interview Preparation Pack and Example Excel Databook
Complete FDD (Transaction Services) interview preparation pack (60+ page document + example Excel databook). Insights into the FDD process and detailed technical examples covering all three key FDD workstreams: Quality of Earnings, Net Debt and Net Working Capital.
Candidate feedback on the interview preparation pack:
“I have passed my interview as a consultant in corporate finance. I was asked to prepare the "clean" EBITDA and Working capital. The information pack helped me a lot!” - H Yue, May 2023
“Informative and to the point, gave me the confidence I needed.” - Harkirat K, November 2022
I was able to secure 2 full time offers from my interviews for TAS roles while reviewing the course pack. Most of the recruiters / managers interviewed with were impressed that I had a baseline understanding of FDD coming from an audit background at a big 4" - Jose V, August 2022