Project Calderwood — Buy-Side Target Screen
A 30-minute Buy-Side M&A / Target Review case study with a complete model answer
Modeled After
Morgan Stanley
Candidate operating benchmarking against an acquirer's stated criteria, with growth-adjusted multiples and an affordability read in place of a full valuation build
Structure and exhibit set are modeled after Morgan Stanley. The companies, the financials and every figure in this case are entirely our own.
The Situation
Calderwood Logistics Group (CWLG) is a listed European freight forwarder — an asset-light broker that buys capacity from airlines, shipping lines and hauliers and sells it on to shippers.
Calderwood Logistics Group N.V.
- Sector
- Transportation & Logistics — asset-light freight forwarding
- Size
- Geography
- Europe (79% of revenue), Americas, Asia-Pacific, Middle East & Africa
- Ownership
- Situation
The Prompt
You are on the M&A team advising Calderwood Logistics Group.
Supporting Materials
What you are handed at the start of the case, in the format a real process would use.
What You Have to Produce
The deliverables, in the order the committee will read them. The exercise runs 30 minutes.
PART 1
Convert the constraints into a screen
PART 2
Establish the affordability ceiling
PART 3
Screen the twelve and rank the survivors
PART 4
Set the consideration mix
PART 5
Test accretion without a model, and price the walk-away
Attempt It First
Blank modelling template
The answer model with every produced cell cleared — the shell you build your attempt in. Work it in Excel against the clock, then check yourself against the model answer below.
How to Approach It
The order a strong candidate works in, and why. This is the shape of the answer — the finished Excel model is in the solution set below.
- 01
Write the screen down before you open the extract
- 02
Size the check before you go shopping
- 03
Notice that there are two ceilings, not one
- 04
Run the screen fast and note the reason for every cut
- 05
Separate the numeric screen from the judgment layer
- 06
Fund in cost order and solve for the walk-away
Key Concepts
The ideas this case is built on. Know these cold and the case becomes a question of execution rather than knowledge.
Affordability ceiling
The maximum purchase enterprise value an acquirer can fund from its own resources: usable cash, incremental debt capacity against a stated leverage ceiling, and new equity capped by a dilution limit. Cash and new debt are not additive sources — both raise pro forma net debt by the same amount, so they share one cap. Computing the ceiling first turns an open-ended browse into a screen with a hard edge.
Hard ceiling versus policy ceiling
A board that says it will hold leverage at 1.0x–1.5x but never above 5.0x has given you two different constraints doing two different jobs. The absolute ceiling caps borrowing capacity and disqualifies candidates whose own balance sheets are already through it. The ordinary-course band sizes the deal you actually recommend, and because it is struck on pro forma EBITDA it rises with the target's own earnings. Collapsing the two into one number produces an affordability answer roughly twice too large.
Weighted cost of acquisition
The blended after-tax cost of the consideration, weighted by how much of each currency is used. Cash costs the deposit yield forgone; debt costs its coupon after the tax shield; stock costs the acquirer's own earnings yield, because every share issued hands a permanent claim on future earnings to somebody else. Stock is almost always the most expensive money in the structure even though it carries no interest expense.
Purchase yield
The target's forward operating profit after tax, divided by the purchase enterprise value — the earnings yield the acquirer buys at the price it pays. Taken unlevered where the target's own debt is refinanced into the acquisition package. Its only job is to be compared with the weighted cost of acquisition, which means both sides must be struck on the same basis: after tax, forward, and consistent on leverage.
No-model accretion test
If the purchase yield exceeds the weighted cost of acquisition, the transaction is accretive to earnings per share; if it is below, it is dilutive. That single comparison replaces an entire merger model and is exactly what a thirty-minute exercise is designed to elicit. It also yields the reservation price directly: raise the offer until the spread reaches zero, and that is the price above which the acquirer is paying for the target with its own earnings.
Asset intensity as a screening metric
'Asset-light' is a business model, not a number, so a screen has to convert it into one — typically net property, plant and equipment as a percentage of revenue. The choice of threshold is a judgment you must state and defend, because it decides whether contract logistics, cold-chain warehousing and parcel networks screen in or out. Interviewers rarely argue with a stated, reasoned threshold; they always argue with an unstated one.
Screening drift
The failure mode where thresholds move between candidates — applied strictly to a company you dislike and generously to one you have already chosen. It is the single most common way this archetype is failed, and it is visible to an interviewer within two follow-up questions. The defense is mechanical: fix the thresholds before opening the data, and if you change one, re-run every candidate against it including the ones already cut.
What Makes It Hard
The specific traps in this case — the places candidates lose the assessment without noticing.
Check Your Answer
Type the figures you produced and find out how many are right before you open the worked answer. You get a verdict and, where you are off, a pointer to the part of the build to re-check — never the number itself. Everything you type stays on this device.
How to type a figure. Digits, with an optional unit: 1,234.5, $1,234.5, 2.6x, 21.4%. For a negative use (20.0) or -20.0. Enter as many decimals as you carried — precision is never penalised.
What the Case Asked For
The arithmetic is only half of it. Tick off what you actually produced — this half is yours to score, because nothing can grade a written recommendation from a checkbox.
The Model Answer
The worked answer in full: Excel model, built the way a banker would actually build it. It is a reference, not a submission — a strong answer under the clock is far shorter.
What the Solution Covers
- —Affordability ceiling from stated constraints
- —Strategic fit screening against non-numeric criteria
- —Hard leverage ceiling versus ordinary-course leverage policy
- —Cash/debt/stock mix in after-tax cost order
- —Weighted cost of acquisition versus purchase yield
- —No-model accretion test and reservation price
- —Target ranking, exclusion rationale and verbal defense
Memo
The written recommendation and how it was reached
Upgrade to Diamond
Sign up and upgrade to Diamond to unlock the Excel model and the audio walkthrough.
Get StartedThe Excel Model
The model is linked and tied out end to end — every schedule, every formula and every check, in the file itself.
Downloads are available to Diamond members
Excel Model and Memo (PDF) — yours to open, edit and rebuild
Walkthrough
A conversational walkthrough of how to approach the case under time pressure — where to start, what to cut, and how the recommendation gets defended.
Audio Walkthrough
How to approach Project Calderwood — Buy-Side Target Screen
60-second preview — upgrade to Diamond for the full walkthrough
Frequently Asked Questions
How is a target screen different from a normal M&A case?
A valuation case gives you one company and asks what it is worth. A screen gives you a dozen and asks which one, against criteria somebody else has set. There is no football field, no discounted cash flow, no comparable companies analysis and no precedent transactions — there is not time, and none of them would answer the question. What is graded is whether you apply a consistent screen and can defend every exclusion, which is a test of judgment rather than of modeling.
Why can't I just rank the candidates on EV/EBITDA and pick the cheapest?
Because the constraints are not about price. A screen built from stated strategic criteria will routinely reject the cheapest name in the universe and recommend one trading at a higher multiple, and in this case the cheapest candidate fails on a criterion that cannot be negotiated away. Price enters the exercise at the end, when you are setting the consideration and the walk-away — not at the start, when you are deciding what fits.
How do I test accretion in thirty minutes with no model?
Compare two yields. Work out the weighted after-tax cost of the consideration — cash at the deposit rate forgone, debt at its coupon after tax, stock at the acquirer's own earnings yield — and compare it against the target's forward after-tax operating profit over the purchase enterprise value. If the purchase yield is higher, the deal is accretive. State the basis of both sides explicitly, because the comparison is only valid if the two are struck the same way.
What should I do about a candidate that fits perfectly but is too expensive?
Say so, explicitly, and quantify the gap. 'The company I most want to own is one we cannot fund inside the board's own constraints, here is the price at which that changes, and here is what I would do instead' is a banker's answer. Dropping it from your list without comment, or pretending it screened through, is not — and an interviewer who knows the data will ask you about it directly.
Is the recommended name obvious from the data?
No, and it is designed not to be. The winner is not the highest-margin candidate, not the fastest-growing and not the cheapest; on a single-metric ranking it sits mid-table on all three. It wins because it is the only name that clears every stated criterion and also does the job the constraints were written to achieve, which is a conclusion you can only reach by running the screen properly rather than by pattern-matching on quality.
What will I actually be asked in the defense?
Which one, at what price, in what currency — and then, for as long as the interviewer wants to push, why each of the others is out. Expect to be challenged on the two thresholds you had to invent, on any candidate you cut that passed the numeric screen, and on whether you would change your answer if the board ranked its own constraints differently. Have a view on what extra information would move you.
About This Buy-Side M&A / Target Review Case Study
Buy-Side M&A / Target Review case study for investment banking interviews. 30-minute format covering affordability ceiling from stated constraints, strategic fit screening against non-numeric criteria, hard leverage ceiling versus ordinary-course leverage policy. Includes the full prompt, a tied-out Excel model and an audio walkthrough.
This case study sits in Investment Banking, under Mergers & Acquisitions. Every case ships with the full prompt, the supporting materials, a complete model answer and an audio walkthrough of the judgment behind the recommendation.
30-Minute Format
The time limit a real assessment would give you
Excel Model
Included in the model answer
Audio Walkthrough
How to approach the case under time pressure
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