Synergy Consulting Consultant Interview Questions, Process, and Tips

Q1. Could you tell us something about yourself?
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Q2. What are the subjects that you have studied in trimester 1?
Ans. 
I have studied subjects like Management Consulting, Business Strategy, and Data Analysis in trimester 1.
• Management Consulting

• Business Strategy

• Data Analysis
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Q3. What was your most favorite and least favorite subject? Why do you feel so?
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Q4. How has your experience been at IIM Lucknow? What do you feel about virtual setup?
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Q5. What drives you as a professional?
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Q6. Any questions for us?
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Q7. Tell us more about the work that you did at KPMG.
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Q8. Tell us about the most influential deal you worked upon there, what was your role and responsibility? What are your expectations from the internship and what do you know about Synergy?
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Your client wants to perform a corporate restructuring and operates in the automotive sector, how do you go about it? Focus more on valuation aspects.

(was a long interview of around 55 mins)
[Please note that I stands for Interviewer and C stands for Candidate]

C: Clarified about what he exactly meant by corporate restructuring, what was the type of restructuring, what were the types of transactions involved, what part of the value chain was the client operating in, why did the client want to restructure (these were some of the preliminary questions asked one by one).

I: The client was operating in auto-component manufacturing, the deal involved two transactions related to a de-merger and a merger (also discussed the potential reasons which could be there behind a restructuring).

C: Structured my approach in three parts starting from the preliminary company & industry analysis and benchmarking to business valuations to swap valuation & implementing the deal (information about financial metrics, financial statements, valuation model to choose from, swap ratio target, etc. were provided).

(While solving the case, also had a discussion side by side on every technical aspect, was asked about the types of techniques to value a business, discussed in detail about DCF analysis, swap ratio valuation, etc. and general awareness about auto-component
sector.)

I: (after the case) what are the different types of charging depreciation?

C: told (was grilled on the units of production method in detail) (then there was another small case on financial linkages connecting all three financial statements in which some transactions were given, and I had to prepare the three statements intertemporally.)

I: What is bottom-up beta? How do we calculate bottom-up beta for a monopoly firm having no comparable?

C: Talked about the historical trend method, future projection method, and business fundamentals method.

I: What is NPV, IRR, XIRR, MIRR? Could you give me the excel syntax?

C: Provided a detailed explanation of each.

Q1. Tell me about yourself.
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Q2. Why do you want to pursue consulting?
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Q3. Why do you want to pursue finance?
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Q4. Why do you want to join Synergy?
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Q5. Did you speak to any of your seniors who interned with us last year?
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Q6. What do you know about Synergy Consulting?
Ans. 
Synergy Consulting is a management consulting firm.
• Provides consulting services to various industries

• Offers expertise in strategy, operations, and technology

• Has a team of experienced consultants

• Works with clients to improve their business performance
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Q7. Why do you think you are a good fit for the role?
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Q1. What is Depreciation?
Ans. 
Depreciation is the decrease in value of an asset over time due to wear and tear, obsolescence or other factors.
• Depreciation is a non-cash expense that reduces the value of an asset on the balance sheet.

• It is calculated by dividing the cost of the asset by its useful life.

• Examples of assets that can be depreciated include buildings, vehicles, machinery, and equipment.

• Depreciation can be straight-line, accelerated, or b...read more
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Q2. What do you understand by Corporate Finance?
Ans. 
Corporate finance refers to the financial activities related to running a corporation.
• It involves managing financial resources to maximize shareholder value.

• It includes financial planning, budgeting, investment decisions, and capital structure management.

• Examples include mergers and acquisitions, initial public offerings, and debt financing.

• Corporate finance also deals with risk management and financial analysis.

• It is ...read more
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Q3. NPV vs IRR, which is better and why?
Ans. 
Both NPV and IRR are important metrics for evaluating investments, but they serve different purposes.
• NPV measures the present value of future cash flows, while IRR calculates the rate of return on an investment.

• NPV is better for comparing investments with different cash flow patterns, while IRR is better for evaluating investments with similar cash flow patterns.

• NPV assumes reinvestment at the cost of capital, while IR...read more
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Q4. What will be the Discount Rate used?
Ans. 
The discount rate used will depend on the risk associated with the project and the opportunity cost of capital.
• Discount rate is the rate of return used to determine the present value of future cash flows.

• It is based on the risk associated with the project and the opportunity cost of capital.

• Higher risk projects will have a higher discount rate, while lower risk projects will have a lower discount rate.

• Opportunity cost ...read more
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Q5. What is Beta? What is Levered and Unlevered Beta?
Ans. 
Beta is a measure of a stock's volatility in relation to the market. Levered beta includes debt while unlevered beta does not.
• Beta measures a stock's volatility in relation to the market

• Levered beta includes the effect of debt on a company's risk

• Unlevered beta is the beta of a company without considering its debt

• Beta is used in the Capital Asset Pricing Model (CAPM) to calculate expected returns
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Q6. How would you calculate the relevant Beta for a listed company?
Ans. 
To calculate relevant Beta for a listed company, use regression analysis to compare the company's stock returns to the market returns.
• Gather historical data on the company's stock returns and the market returns

• Use regression analysis to determine the slope of the line of best fit between the two sets of data

• The slope of the line represents the Beta value for the company

• Adjust the Beta value for any relevant factors suc...read more
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Q7. How would you do that for a Start-up?
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Q8. What will be the value of Beta for a niche firm with no comparable competitors?
Ans. 
Beta cannot be determined without comparable competitors.
• Beta measures the volatility of a stock compared to the market.

• Without comparable competitors, there is no benchmark to compare the firm's volatility.

• Therefore, the value of Beta cannot be determined for a niche firm with no comparable competitors.
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Q9. How would you value a company? What if the company does not pay out dividends?
Ans. 
Valuing a company without dividends involves using other methods such as discounted cash flow, market multiples, and asset-based valuation.
• Use discounted cash flow method to estimate the present value of future cash flows

• Use market multiples such as price-to-earnings ratio or price-to-sales ratio to compare the company to similar companies in the market

• Use asset-based valuation to estimate the value of the company's as...read more
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Q1. Introduce yourself.
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Q2. Why didn't you pursue a career in Cricket?
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Q3. You have interned in Treasury department. What is the difference between term loans and bonds?
Ans. 
Term loans are bank loans with fixed repayment schedule while bonds are debt securities with variable interest rates.
• Term loans are usually provided by banks while bonds are issued by corporations or governments.

• Term loans have a fixed repayment schedule while bonds have a variable interest rate.

• Term loans are usually secured by collateral while bonds may or may not be secured.

• Term loans are usually shorter in duration...read more
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Q4. What are the depreciation methods?
Ans. 
Depreciation methods are used to allocate the cost of an asset over its useful life.
• Straight-line method

• Double-declining balance method

• Units of production method

• Sum-of-the-years-digits method
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Q5. How to value a company?
Ans. 
Valuing a company involves analyzing its financial statements, market position, and future growth potential.
• Determine the company's earnings and cash flow

• Assess the company's assets and liabilities

• Analyze the company's market position and competition

• Evaluate the company's growth potential and future prospects

• Consider external factors such as economic conditions and industry trends

• Use valuation methods such as discounte...read more
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Q6. Difference between FCFFE and DDM?
Ans. 
FCFFE and DDM are two different methods used to value a company's stock.
• FCFFE stands for Free Cash Flow to Equity and is based on the cash flow available to equity shareholders.

• DDM stands for Dividend Discount Model and is based on the present value of future dividends.

• FCFFE is more appropriate for companies that reinvest their earnings, while DDM is more appropriate for companies that pay dividends.

• FCFFE takes into ac...read more
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Q7. What is R?
Ans. 
R is a programming language and software environment for statistical computing and graphics.
• R is widely used for data analysis and statistical modeling.

• It has a large library of built-in functions and packages for various statistical techniques.

• R can be used for data visualization and creating interactive graphics.

• It is open-source and free to use.

• R can be integrated with other programming languages like Python and SQL
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Q8. Explain WACC.
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WACC stands for Weighted Average Cost of Capital and is the average cost of all the capital used by a company.
• WACC is used to determine the minimum return a company must earn on its investments to satisfy its investors.

• It takes into account the cost of debt and equity financing, as well as the proportion of each used by the company.

• The formula for WACC is: (Cost of Equity x % Equity) + (Cost of Debt x % Debt) + (Cost o...read more
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Q9. What is ROE?
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ROE stands for Return on Equity, a financial ratio that measures the profitability of a company in relation to its shareholders' equity.
• ROE is calculated by dividing net income by shareholders' equity.

• It is a measure of how effectively a company is using its equity to generate profits.

• A higher ROE indicates better profitability and efficiency.

• ROE is often used by investors to evaluate the performance of a company.

• For e...read more
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Q10. Explain each factor in ROE. What is beta? What is the principle behind beta? What is levered beta and unlevered beta? How to convert levered into unlevered and why?
Ans. 
ROE factors: beta, principle behind beta, levered and unlevered beta, and conversion process.
• Beta measures the volatility of a stock compared to the market.

• The principle behind beta is that it helps investors determine the risk associated with a particular stock.

• Levered beta takes into account the company's debt, while unlevered beta does not.

• To convert levered beta into unlevered beta, you need to remove the impact of...read more
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