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- First Step to Final Offer 6/3/25
First Step to Final Offer 6/3/25
Brooks Gammill
June 03, 2025
Your weekly round-up of an M&A deal walkthrough, insightful market news summaries, technical quiz questions, and various internships, events, and diversity programs. A key resource to best prepare yourself for finance recruiting. If someone sent you the newsletter subscribe below!
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To see c/o 2027 opportunities, click here: Class of 2027 Application Tracker
TECHNICAL QUESTION OF THE WEEK:
You’re valuing a mid-sized manufacturing company. This company’s TEV / EBITDA multiple is 15x, and the median TEV / EBITDA for the comparable companies is 10x. What’s the most likely explanation? |
MARKET NEWS
McKinsey Integrates AI to Enhance Efficiency in Consulting Operations
McKinsey & Company is leveraging artificial intelligence to streamline consulting processes and improve productivity. The firm has introduced Lilli, an AI-powered chatbot that assists consultants by synthesizing information from McKinsey's extensive internal knowledge base. Over 70% of McKinsey's 45,000 employees now utilize Lilli, with each user engaging with the tool approximately 17 times per week. Consultants employ Lilli for tasks such as research, data analysis, and document summarization, leading to significant time savings. Additionally, McKinsey allows consultants to develop custom AI agents tailored to specific needs, further enhancing operational efficiency. The integration of AI tools like Lilli reflects McKinsey's commitment to innovation and maintaining a competitive edge in the consulting industry.
Source: MSN
Private Equity Adjusts Strategies Amidst Evolving Global Trade Dynamics
Private equity dealmaking has encountered significant obstacles as US President Donald Trump's tariff policies derail expectations for a recovery. Projections by Bain & Company show that the value of global buyout deals in Q2 2025 is expected to decline by 16% compared to Q1, with a notable 24% drop in April alone. Initially, private equity firms had hoped for a resurgence under Trump's second term, anticipating a business-friendly environment and regulatory easing. However, the unpredictability of trade and tax policies has made valuations difficult and limited transactions to only a few tariff-resistant sectors. The impact is also seen in exits, with the value of assets sold by buyout funds projected to fall by 9%. The ongoing challenges have led to a significant competition for "dry powder," and for the first time in a decade, no buyout fund raised over $5 billion in Q1 2025. Despite these hurdles, dealmaking continues in service-heavy sectors less impacted by trade barriers, but the broader environment remains tough as private equity firms navigate macroeconomic volatility and rising capital competition.
Source: PE Insights
M&A DEAL OVERVIEW
KKR Enhances Offer for Datagroup Amid Acquisition Pursuit
KKR has increased its acquisition offer for German IT services provider Datagroup SE to a conditional €58 per share, up from the initial €54, valuing the company at approximately €450 million. The revised terms stipulate €56.50 per share if KKR acquires at least 80% of outstanding shares, and €58 per share if it reaches 90%. The acceptance period for shareholders runs until June 6, 2025. Datagroup, employing around 3,700 individuals across Germany, anticipates annual revenues between €545 million and €565 million for the current year. Post-acquisition, Datagroup plans to delist from the stock exchange, with the transaction expected to close in the third quarter of 2025.
Source: Reuters
LAST WEEK TECHNICAL QUESTION OF THE WEEK ANSWER:
Correct Answer: B, Private companies have Equity Value based on their internal valuations, which Enterprise Value can be derived from. — What about private companies? How do the concepts of Equity Value and Enterprise Value work there?
Explanation: Private companies don't have publicly traded share prices, so their Equity Value is based on internal or externally-derived valuations, such as discounted cash flow analyses or comparable company benchmarks. Enterprise Value is then derived from this Equity Value by adjusting for net debt—adding debt and subtracting cash—to estimate the value of the entire business. Essentially, the concepts remain the same as for public companies, but rely on valuation methodologies instead of market-driven prices.