FDD interview example questions
Interviews and case study focus:
Interviews and case studies will vary depending on the seniority of the role and the previous experience of the candidate but there will be a common theme. This common theme is that they will test your understanding and thought-process for adjustment identification, treatment and calculation. For each of the three workstreams, particularly quality of earnings, a candidate needs to be able to articulate the rationale for an adjustment in a clear and concise manner (after all, this is exactly what will go in an FDD report).
This is outside of the almost certain ‘fit’ questions which will help the team understand if they’d like to work with you and/or go for a beer with you (which is important when the entire team may be in the blender on a difficult deal).
Questions you should be able to answer:
Why is it necessary to exclude exceptional items in quality of earnings analysis?
How should accrued professional fees solely pertaining to the potential transaction be treated in quality of earnings, net working capital and net debt analysis?
Please discuss the appropriate adjustment for an unused legal provision that was accrued in one year and reversed in the next.
Questions that would put you ahead of the competition should you know the answer:
Please discuss how a minority interest (i.e. where one of the target’s operating subsidiaries is not 100% owned by the target’s Group) should be reflected in the FDD report?
Please discuss how deferred consideration with payments due over the next 5 years from a previous transaction undertaken by the target should be reflected in the FDD report?
Please discuss how a DSO normalisation calculation would be undertaken and its important from a NWC perspective.
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