Hard Skills for Transaction Services: The Technical Foundation

Transaction Services is one of the most technically demanding entry points in M&A advisory. Before you can make a compelling case in an interview, you need to genuinely understand what the work involves and have the hard skills to do it. Here is a structured breakdown.

Core Technical Knowledge Areas

Financial Statement Analysis

The foundation of all TS work. You need to be fluent — not just familiar — with:

Income statement construction and the path from revenue to EBITDA and net profit
Balance sheet relationships: assets, liabilities, equity, and how they interconnect
Cash flow statements: distinguishing operating, investing, and financing cash flows
The linkages between all three statements and how adjustments in one flow through the others

At a minimum, you should be able to read management accounts and identify what is unusual, inconsistent, or unexplained.

EBITDA Normalisation

This is the technical core of Quality of Earnings work. You need to understand:

The categories of EBITDA adjustments: non-recurring items, run-rate adjustments, pro-forma items
How to construct an EBITDA bridge from reported to adjusted EBITDA
How to challenge management add-backs and identify items that should not be included
The distinction between P&L adjustments and pro-forma structural changes

The ability to walk through an EBITDA bridge verbally — explaining each line and its justification — is a standard interview test.

Working Capital Analysis

FDD working capital analysis involves more than calculating current assets minus current liabilities. You need to know:

How to define the normalised working capital perimeter
How to strip cash, financial debt, and non-trading items out of the working capital calculation
How to identify seasonality in working capital and calculate an appropriate average
What a working capital shortfall or excess means in the context of deal mechanics

Net Debt Analysis

Net debt in a transaction context is not the same as net debt in a credit analysis. Key concepts:

The definition of cash and cash equivalents (including restricted cash)
Debt-like items: pension deficits, earn-out liabilities, lease liabilities, deferred revenue
Cash-like items: trapped cash, surplus assets
How the net debt bridge flows from enterprise value to equity value

Excel Proficiency

The operational tool of the trade. Required skills include:

Building structured models with clear assumptions sections
Using formulas confidently: SUMIF, VLOOKUP/INDEX MATCH, IFERROR, pivot tables
Working with large data sets from accounting systems
Formatting outputs for client-facing use

Speed and accuracy in Excel under time pressure is consistently tested in TS case studies.

Accounting Standards Awareness

You do not need to be a technical accounting expert, but you should understand the basics of:

IFRS 15 (revenue recognition) and its implications for revenue quality
IFRS 16 (leases) and how lease liabilities and ROU assets flow through the financials
IAS 19 (employee benefits) and its relevance to pension provisions
The difference between IFRS and local GAAP for multi-jurisdiction businesses

How to Build These Skills

Accounting and financial statements: study through CFA Level 1 materials, accounting textbooks, or formal study programmes. Practice reading real statutory accounts.

EBITDA and QoE: the most efficient way is to work through structured case studies that mirror real transactions — not textbook exercises, but realistic data room scenarios with ambiguous information.

Excel: practice with real financial datasets. Build models from scratch rather than filling in templates.

Net debt: study examples of SPA schedules and get familiar with what items sit above and below the line.

Our programme is built around 8+ realistic case studies and 150+ EBITDA adjustment examples — the fastest way to build the hard skills that TS interviews test. Full access for a one-time payment of €119.99.