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- First Step to Final Offer 7/22/25
First Step to Final Offer 7/22/25
Brooks Gammill
July 22, 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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TECHNICAL QUESTION OF THE WEEK:
Company A has a P / E of 10x, a Debt Interest Rate of 8%, a Cash Interest Rate of 4%, and a Tax Rate of 25%. It wants to acquire Company B at a purchase P / E multiple of 16x using 1/3 Stock, 1/3 Debt, and 1/3 Cash.Will the deal be accretive, dilutive, or neither? |
MARKET NEWS
JPMorgan Launches Research Coverage of Private Companies with Focus on OpenAI
JPMorgan is expanding its research arm to include private companies, beginning with coverage of OpenAI. The move reflects growing investor interest in privately held firms, particularly in AI and software sectors. Unlike public company reports, the new research will not feature ratings or price targets but aims to offer structured insights to institutional clients. Analysts note challenges for OpenAI in maintaining a competitive edge, with profitability not expected until 2029. JPMorgan joins peers like UBS in recognizing the rising influence of private markets.
Source: Bloomberg
Hedge Funds See Biggest Inflows Since 2015 Amid Market Volatility
Hedge funds attracted $37.3 billion in new capital during the first half of 2025—their strongest inflows since 2015—as investors sought uncorrelated returns in a turbulent market shaped by new U.S. trade policies. Most of the inflows went to large funds managing over $5 billion in assets. While the average hedge fund posted a 3.88% return—below the S&P 500’s 5.5% gain—top performers like Bridgewater Associates, Rokos Capital, and Caxton Associates delivered double-digit returns. Total industry assets rose to $4.74 trillion by the end of June.
Source: Reuters
M&A DEAL OVERVIEW
Blackstone Exits Consortium Bid for TikTok’s U.S. Operations
Blackstone has withdrawn from a consortium aiming to acquire TikTok’s U.S. operations, according to a source familiar with the matter. The private equity giant was part of an investor group considering a deal following U.S. pressure on ByteDance to divest TikTok’s American business. The reasons for Blackstone’s exit weren’t disclosed, but the move comes amid mounting political scrutiny and uncertainty around any potential sale. The consortium continues to evaluate next steps as ByteDance faces a looming divestiture deadline.
Source: Reuters
LAST WEEK TECHNICAL QUESTION OF THE WEEK ANSWER:
Correct Answer: B, 25% — Assume that Company A has 10 shares outstanding at a share price of $25.00, and its Net Income is $10. It acquires Company B for a Purchase Equity Value of $150. Company B has a Net Income of $10 as well. Assume the same tax rates for both companies. How accretive is this deal?
Explanation: To determine how accretive the acquisition is, we calculate the Earnings Per Share (EPS) before and after the deal. Company A has 10 shares at $25 each, so its equity value is $250. To buy Company B for $150, it must issue new shares worth $150 ÷ $25 = 6 shares, bringing the total to 16 shares post-deal. Combined Net Income becomes $10 (A) + $10 (B) = $20. Post-deal EPS is $20 ÷ 16 = $1.25, while pre-deal EPS was $10 ÷ 10 = $1.00. The EPS increases by $0.25, or 25%, making the deal 25% accretive.