How Investment Banks Execute M&A Deals | Step by Step

How does a billion-dollar M&A deal actually happen? From winning the mandate to negotiating the final sale, what really goes on behind the scenes at investment banks like Goldman Sachs, Morgan Stanley and J.P. Morgan?

In this episode, Anthony Cheung and Stephen Barnett break down the entire mergers and acquisitions (M&A) process, drawing on Stephen's experience in investment banking to explain how deals are pitched, structured, negotiated and ultimately completed.

We explore how investment banks compete for lucrative advisory mandates, the difference between buy-side and sell-side transactions, and how companies are valued and marketed to potential buyers. Along the way, we unpack the jargon of M&A, from beauty parades and confidential information memorandums (CIMs) to due diligence, letters of intent and sale and purchase agreements.

Using Schneider Electric's $22.6 billion acquisition of PTC as a real-world example, we reveal the roles of bankers, lawyers and private equity firms throughout the dealmaking process, offering a practical guide for anyone looking to break into investment banking or better understand how major corporate transactions work.

00:00 Introduction to M&A Deals

06:26 How Banks Win M&A Mandates

12:59 Investment Banking Bake-Offs

15:29 Why Banks Share M&A Deals

20:23 How M&A Advisory Fees Work

23:24 Conflicts of Interest & Compliance

28:31 Preparing a Company for Sale

33:20 Teasers & Confidentiality Agreements

36:30 The Role Of Lawyers

38:25 Inside the M&A Data Room

40:35 Bidding Wars & Due Diligence

45:11 Choosing the Winning Bid

46:04 Final Negotiations & Closing

49:06 Deal Toys & Banking Traditions

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M&A Jargon Explained

M&A (Mergers & Acquisitions): The process of companies buying, selling or combining businesses.

Buy-Side Mandate: When an investment bank advises a company looking to make an acquisition.

Sell-Side Mandate: When an investment bank advises a company looking to sell.

Beauty Parade / Bake-Off: A competitive pitching process where investment banks compete to win an advisory mandate.

Teaser: A short, anonymous summary of a business being marketed for sale.

NDA (Non-Disclosure Agreement): A legal agreement protecting confidential information shared during a deal.

CIM (Confidential Information Memorandum): A detailed document outlining a company's operations, financials and growth prospects for potential buyers.

Data Room: A secure online platform containing confidential documents for prospective buyers.

IOI (Indication of Interest): An initial, typically non-binding expression of interest in acquiring a business.

Due Diligence: The detailed investigation of a company's finances, operations, legal obligations and risks before acquisition.

LOI (Letter of Intent): A document outlining a prospective buyer's proposed terms for an acquisition.

Pre-emptive Bid: An early offer designed to secure a deal before the competitive bidding process finishes.

Exclusivity Period: A period when the seller agrees to negotiate with one preferred buyer.

SPA (Sale and Purchase Agreement): The legally binding contract setting out the terms of an acquisition.

Deal Tombstone: A commemorative desk ornament celebrating a completed transaction.