Piper Sandler IB Interview Questions

Microsoft's roughly $69B all-cash acquisition of Activision Blizzard was compelling because it took advantage of a temporarily scandal-depressed trading price to acquire irreplaceable gaming IP, fill Microsoft's mobile gap, and strengthen Game Pass despite significant regulatory hurdles.

Use a longer-horizon DCF with revenue growth decelerating and margins converging toward the mature peer's steady-state levels, supplement it with forward revenue or EBITDA multiples rather than trailing ones, and, if using a future-price framework, estimate a future enterprise or equity value based on mature-peer economics and discount it back appropriately after bridging from EV to equity value.

EBITDA falls from $100 to negative $100, net income falls $150, and cash rises $50. The $200 of receivables (money customers owe you that you already booked as revenue) is written off as a bad debt expense inside operating costs, so it comes straight out of EBITDA. Pre-tax income drops $200. Tax at an assumed 25% rate gives back $50, so net income drops $150. On the cash flow statement you start at negative $150 and add back the $200 fall in receivables. That cash was never collected. None of it left the business, and operating cash flow lands at positive $50. The balance sheet then shows cash up $50 and receivables down $200: assets fall $150 against a $150 fall in retained earnings, the running total of profits kept in the company.

The Disney-Fox deal was strategically necessary but expensive — cost synergies roughly justified the premium, and it enabled Disney's streaming pivot, yet the Comcast bidding war and prolonged streaming losses mean near-term ROIC likely trails Disney's WACC.