In a typical first round of eight, the two or three candidates who sound "strategic" on an M&A prompt are usually the ones who lose the case. They list cost takeout, cross-sell, and scale until the slide looks busy. The interviewer is not scoring the list. The sheet rewards one comparison: does the present value of synergies this buyer can create clear the control premium embedded in the offer?
That is the thesis. Standalone value of the target is already in the price. Everything you say after that either fills the premium gap or is theater. By the end of this piece you will run that comparison with invented but consistent numbers, and you will know how public deals describe the same math when they bother to disclose it.
What the room is actually testing
Strategic M&A cases are buy-or-walk decisions for a corporate buyer, not PE paper LBOs. The interviewer wants to hear four moves in order, without double-counting:
- Anchor the target as a going concern without you.
- Isolate cash that exists only if this buyer and this target combine.
- Translate the offer into a premium over that standalone anchor.
- Ask whether synergy value covers the premium after tax, ramp, and integration risk.
If you open with "Porter" or "cultural fit," you have already spent the first three minutes on things that do not decide the recommendation. Fit and risk matter later as haircuts on the synergy number, not as a substitute for it.
How real deals talk about premiums and synergies
Prep folklore treats a "30 percent premium" as normal and a synergy slide as optional color. Public filings are more blunt.
| Deal (announcement) | Disclosed premium | Disclosed synergy target | Source type |
|---|---|---|---|
| Microsoft / Activision Blizzard (Jan 2022) | 45% to Jan 14 share price; $95/share, $68.7bn equity value | Strategic growth narrative; no single run-rate synergy figure in the launch release | Company press release |
| Capital One / Discover (Feb 2024) | 26.6% to Feb 16 close; all-stock | $2.7bn pre-tax annual synergies by 2027 ($1.5bn expense, $1.2bn network) | SEC Form 425 |
| Omnicom / Interpublic (Dec 2024) | ~21.6% to prior close (press); 0.344 OMC shares per IPG share | $750m annual cost synergies | Omnicom release |
| Nordstrom take-private (proxy) | ~42% to unaffected Mar 18, 2024 close; $24.25/share | Control transaction; synergy not the public frame | SEC proxy materials |
Two patterns matter for cases. First, premiums of roughly 20–45% are common in disclosed strategic deals; the case will often land you in that band without labeling it. Second, when companies publish synergy targets, they split cost from revenue-like items and put a year on the run rate — Capital One's $2.7bn is explicitly a 2027 figure, not day-one cash.
Academic evidence on who captures the value is equally useful in the room. In a sample of 12,023 U.S. acquisitions from 1980–2001, Moeller, Schlingemann, and Stulz find an equal-weighted announcement return of about +1.1% for acquirers, but large-dollar losses concentrated in big buyers (NBER Working Paper 9523). For the 1998–2001 wave alone, acquiring-firm shareholders lost about 12 cents per dollar spent on announcements, or roughly $240bn in aggregate (NBER Working Paper 10200). Markets often treat announced synergies as insufficient — or not credible — relative to the premium.
You do not recite papers in a case. You use the implication: overpaying relative to achievable synergy is the default failure mode, not a rare edge case.
The scoring heuristic I use
| Move | What earns the point | What loses it |
|---|---|---|
| Standalone | EBITDA, growth, maintenance capex, one-off cleanup named | Treating "keep their customers" as new value |
| Synergy | Line item, owner of the saving, year of run rate | "5% cross-sell" with no channel |
| Premium | Offer minus standalone enterprise value | Comparing offer only to a peer multiple with no bridge |
| Decision | Synergy NPV vs premium, then walk / bid / structure | Recommending "yes for scale" with a negative gap |
Ned's rule. If you cannot write "premium $X, synergy PV $Y, gap $X−$Y" on one line before you recommend, you are still brainstorming. I stop listening to synergy theater once that line is blank.
Worked example: Meridian Packaging buys Helix Closures
Prompt. Meridian Packaging (corrugated and rigid packaging, $2.4bn revenue, $288m EBITDA) can buy Helix Closures (specialty closures and dispensing, $420m revenue, $48m EBITDA) for $720m cash, about 15× Helix EBITDA. Meridian's CEO wants "adjacencies for CPG customers." You have about 25 minutes. Numbers below are invented for practice; the method maps to the disclosed deals above.
Step 1 — Standalone. Helix grows mid-single digits, needs $14m maintenance capex, and has no material one-offs. Unlevered free cash before tax is roughly $48m − $14m = $34m. At a cautious 10× on EBITDA for a non-control, no-synergy view, standalone enterprise value is about $480m. The $720m offer therefore embeds a $240m control premium (50% above that standalone anchor, or 5 turns of EBITDA). That premium is what synergies must earn back.
Step 2 — Cost synergies that require Meridian. Helix's corporate and shared services run $22m. Meridian's platform can absorb about 35% after year-one systems work: 0.35 × $22m = $7.7m. Resin and component purchasing on Helix's $95m materials spend: 2% if Meridian's contracts apply = $1.9m. Duplicate tooling vendors and freight lanes: $1.4m. Run-rate cost synergy = $11.0m, mostly in year 2; year 1 capture ~60% ($6.6m).
Step 3 — Revenue synergies that are not slogans. Meridian sells into 40 national CPG accounts; Helix is on 12 of them with closures. Incremental attach: if Meridian's sales force can place Helix SKUs in 8 more accounts at $1.2m contribution each after cannibalization, that is $9.6m contribution — but only if you name the call plan and a 24-month lag. Haircut to $4.0m run-rate by year 3 for case conservatism. Do not book Meridian's existing volume as synergy.
Step 4 — Capitalize and compare. Pretax run-rate by year 2–3: $11.0m cost + $4.0m revenue = $15.0m. Tax at 25% → after-tax $11.25m. Capitalize at 10× (same caution as standalone) → $112.5m. PV haircut for ramp and integration: take ~80% → synergy PV ≈ $90m.
| Bridge | $m |
|---|---|
| Standalone Helix | 480 |
| Synergy PV (after ramp) | 90 |
| Max value to Meridian | 570 |
| Offer | 720 |
| Value gap | −150 |
Recommendation. Do not pay $720m. A walk-away around $560–580m (~11.5–12×) clears the synergy PV with a small cushion. If the seller insists on 15×, structure an earnout keyed to the $11m overhead takeout so Meridian does not pay for savings it fails to deliver. Integration flags that can still kill a "math closed" deal: Helix's plant ERP is incompatible (conversion ~$25m and 18 months, not in the offer story), and two customer overlaps trigger customer-consent risk on contracts with change-of-control clauses.
The case is the −$150m line, not the adjacency story. Scale for its own sake is how you donate $150m to Helix shareholders.
Where candidates leak points
Paying twice for Helix's $48m EBITDA. That cash is inside the 15×. Counting "retain their revenue" as synergy double-counts standalone performance.
Equating run-rate with year-1 cash. Capital One's public plan puts full synergies in 2027, not at announcement. If your case needs an EHR or ERP conversion before overhead comes out, discount or phase it.
Treating a PE prompt as strategic M&A. If they ask for IRR, debt capacity, and exit multiple, switch to a PE diligence tree. Culture slides will not save you.
Treating market entry as a merger. "Should we enter Germany via acquisition?" is still market entry until attractiveness is established; then acquisition is a mode, not the whole case.
How to open in under thirty seconds
"I would value Helix standalone, add only synergies Meridian uniquely unlocks, compare that total to the $720m offer, and flag integration and customer consent as deal-breakers even if the math closed. On my bridge, standalone is about $480m and synergy PV about $90m, so we are $150m short of the ask."
Then put the three numbers on the page. If they push "but we need scale for national bids," force that claim onto the revenue-synergy line with a volume, a margin, and a year — or drop it. A 50-basis-point price lift on Meridian's $2.4bn from "being bigger" would be $12m pretax if true; it is rarely true in year 1, and sellers often already bake optimism into a 15×.
Practice this comparison today
Run one M&A structure drill and force the premium-versus-synergy line before you brainstorm. Grade yourself: if the page has no "$ premium / $ synergy PV / gap," rewrite it.
Start a structure drill or take a full voice case on /interview. Everything on CoachNed is open for seven days with no card; then $120 for a recruiting season or $49 a month. For the broader structure habit behind this tree, see the frameworks guide.
Frequently asked questions
What is the M&A framework in a consulting case interview?
It is not a named framework you must announce. It is a buy-or-walk tree: standalone value of the target, buyer-only synergies, price or premium versus that total, and integration or antitrust risk that can destroy the math. Saying "M&A framework" earns nothing; separating those four without double-counting does.
How do you calculate if an acquisition is worth it in a case?
Estimate standalone enterprise value, add the present value of incremental synergies after tax and ramp, then subtract the offer (or the premium over standalone). If synergy PV does not cover the premium, walk, cut the bid, or move value into an earnout. Public deals often disclose premiums of roughly 20–45% and multi-year synergy run rates when they disclose at all.
What is a typical acquisition premium?
There is no single "typical" number that firms guarantee. Recent disclosed strategic deals span roughly the low twenties to the mid-forties percent versus an unaffected or prior close — for example Capital One/Discover at 26.6%, Omnicom/IPG around 21.6% in press coverage of the exchange ratio, Microsoft/Activision at 45%, and Nordstrom's take-private proxy at about 42% to its unaffected price. In a case, compute the premium from the numbers given rather than assuming 30%.
Are revenue synergies ever credible in a case interview?
Yes, when you name the channel, the conversion or attach rate, the contribution margin, and the year they arrive. "Cross-sell 5%" without those four is usually scored as fluff. Cost synergies still need a line item and a person or vendor who loses spend.
How is a strategic M&A case different from a PE case?
Strategic M&A asks whether this corporate buyer creates value the target cannot create alone, after paying a control premium. PE cases center on entry multiple, leverage, cash generation, and exit. Do not spend a PE prompt on cultural fit if they asked for IRR.
Sources
- Microsoft to acquire Activision Blizzard (Microsoft Source, Jan 18, 2022) — $95/share, $68.7bn transaction value, strategic rationale. Checked 2026-09-24.
- Capital One to Acquire Discover (SEC Form 425, Feb 2024) — 26.6% premium; $2.7bn pre-tax synergies by 2027 split into expense and network. Checked 2026-09-24.
- Omnicom to Acquire Interpublic Group (Omnicom newsroom, Dec 9, 2024) — exchange ratio and $750m annual cost synergies. Checked 2026-09-24.
- Nordstrom merger proxy materials (SEC, ea0231675-05) — $24.25/share; ~42% premium to unaffected Mar 18, 2024 close. Checked 2026-09-24.
- Moeller, Schlingemann, and Stulz, NBER Working Paper 9523 — equal-weighted acquirer announcement return ~1.1%; large-firm dollar losses. Checked 2026-09-24.
- Moeller, Schlingemann, and Stulz, NBER Working Paper 10200 — ~12 cents lost per dollar spent on announcements, 1998–2001; ~$240bn aggregate. Checked 2026-09-24.
CoachNed is not affiliated with McKinsey, BCG, Bain, Deloitte, or any firm named above.