M&A and pricing case frameworks
The M&A case in four buckets and the pricing case in three anchors, each with a worked example computed by script, math before the recommendation, mistakes.
Updated October 28, 2026
| M&A: should we buy X? | Pricing: what should we charge? | |
|---|---|---|
| Buckets | Standalone value; synergies (cost, revenue); price and premium; integration risk | Cost floor; value ceiling; competitor anchor; then the structure of the price |
| First question | What is the strategic reason, and is the price already on the table? | New product or repricing, and is the goal margin, share or volume? |
| The math moment | Value to buyer = standalone + capitalized synergies - integration cost, against the price | Margin at each candidate price, and the volume you can afford to lose |
| Recommendation after | The headroom and the two risks that could eat it | A price, the reason, and what you would watch in the first quarter |
The M&A case: four buckets in order
- Standalone value. What is the target worth on its own: revenue, margin, growth, and a multiple the interviewer gives or you ask for.
- Synergies. Cost synergies (overlapping functions, procurement, footprint) are more believable than revenue synergies (cross-selling, pricing). Say which kind and how much per year.
- Price and premium. What the buyer pays over standalone, and whether the synergies cover it.
- Integration risk. One-time cost, culture, customer loss, the time it takes. This bucket is where judgment shows.
A worked M&A example
The interviewer says: the target is worth $1,000M standalone; the seller wants $1,200M; cost synergies of $30M a year and revenue synergies of $20M a year are expected; integration will cost $60M once; use a 10x multiple on annual synergies. Should the client buy?
Do the arithmetic first, out loud:
| Line | Arithmetic | Result |
|---|---|---|
| Premium asked | $1,200M / $1,000M - 1 | 20% |
| Synergies a year | $30M + $20M | $50M |
| Capitalized synergies | $50M x 10 | $500M |
| Value to the buyer | $1,000M + $500M - $60M | $1,440M |
| Headroom over the price | $1,440M - $1,200M | $240M |
Only now the recommendation: “Buy at $1,200M, because the value to the client is about $1,440M and the headroom is $240M. Two risks: $200M of that value is revenue synergies, which are the least reliable kind, and the $60M integration cost is a one-time estimate that usually grows. If revenue synergies come in at half, the headroom falls to $140M; that is the number to pressure-test before signing.”
The pricing case: three anchors and a structure
Three numbers bound every price. The cost floor: what it costs to make and deliver one unit, below which every sale loses money. The value ceiling: what the product is worth to the customer, measured by what it replaces or saves. The competitor anchor: what the nearest alternative charges, which is where the customer’s expectation sits. The price lives between floor and ceiling, pulled by the anchor. Then a second question: the structure of the price (per unit, tiered, subscription, bundle), which is a separate decision from the level.
A worked pricing example
Unit cost $40; the customer saves about $100 a year by using the product; the main competitor charges $70. The client is considering $80. Compute before you judge:
| Line | Arithmetic | Result |
|---|---|---|
| Margin at the competitor’s price | (70 - 40) / 70 | 43% |
| Margin at the candidate price | (80 - 40) / 80 | 50% |
| Volume you can afford to lose | contribution 30 / contribution 40 | keep at least 75% of the volume to match profit |
The last line is the one that decides it: at $80 the client earns $40 a unit instead of $30, so it can lose up to 25% of its volume and still make the same profit. Then the recommendation: “Price at $80, $10 above the competitor, because the customer’s value is $100 and the premium is covered if we keep three quarters of the volume; watch the share in the first quarter and set a tiered version at $70 for the price-sensitive segment if we lose more than that.”
What are the common mistakes?
- M&A: synergies first. They are the fun bucket; standalone value comes first because the price is anchored on it.
- M&A: revenue synergies counted at face value. Say they are the least reliable kind and haircut them in the risk line.
- M&A: no integration cost. It is one-time, it is real, and it is usually underestimated.
- Pricing: cost plus a margin. The floor is not the answer; the value and the anchor are.
- Pricing: level without structure. A tiered or subscription structure can hold the premium that a single price cannot.
- Both: the recommendation before the table. Compute, check, then recommend, with two risks attached.
Questions
How do you structure an M&A case interview?
Standalone value, synergies (cost before revenue), price and premium, integration risk, in that order. Value to the buyer is standalone plus capitalized synergies minus integration cost, compared with the price; recommend after that line.
How do you structure a pricing case?
Three anchors: the cost floor, the customer’s value ceiling, the competitor’s price. The level sits between floor and ceiling pulled by the anchor; the structure of the price is a second decision.
Are the worked numbers on this page checked?
Yes. Both examples are computed by a script in the site’s repository and the page prints its output; a test recomputes them.
How does Casepartner help on these cases?
It shows the four-bucket or three-anchor structure when the prompt lands, a math check when the numbers arrive, and never a recommendation before the math.