The Edit. 11.24.2025.
Forging the Future of Finance.
Week of November 24th, 2025
Market Update
Markets tumbled as investors digested concerns that AI-fueled growth is overhyped. Nvidia, once seen as a leader in the AI boom, saw a sell-off despite strong earnings.
Why it matters: These companies have been key drivers of recent market gains. If valuation risks trigger broader investor pullback, it could slow growth expectations across the sector.
Merck is buying Cidara Therapeutics for $221.50/share in cash, valuing the deal at roughly $9.2 billion.
Why it matters: Cidara’s lead asset is a long-acting flu antiviral that could be a major new revenue stream and could potentially be a transformational flu-prevention drug that could reshape how we think about influenza protection.
Federal Reserve rate-cut expectations cooled, as some Fed officials warned that more cuts could threaten financial stability.
Why it matters: Less easing from the Fed raises borrowing costs and could tighten liquidity, putting pressure on growth-sensitive assets.
Deal of the Week
New Face Entering The Cancer Screening Scene
Abbott Laboratories Acquires Exact Sciences In $23 Billion Deal
On November 20, 2025, Abbott Laboratories (NYSE: ABT) unveiled a definitive agreement to acquire Exact Sciences (NASDAQ: EXAS) in a deal valued up to USD $23 billion. Exact Sciences, known for its flagship noninvasive colorectal cancer test Cologuard, will be absorbed into Abbott’s diagnostics division in what marks Abbott’s largest purchase in nearly a decade. The transaction, approved by both boards, is expected to close by Q2 2026 pending regulatory clearance.
Abbott’s CEO Robert Ford, framed the deal as a bold entry into the ever-faster-growing cancer screening market, aiming to offset slowing COVID-19 test sales by adding a new growth driver to the business. By bringing in Exact’s Cologuard test and its Oncotype DX cancer diagnostics, Abbott plans to expand their availability globally and push for broad insurance reimbursement.
Why This Acquisition Matters
Company Catalyst
The acquisition revives Abbott’s slowing diagnostics portfolio by adding cutting-edge cancer screening tools. Exact’s Cologuard, a stool-based DNA test for colorectal cancer, will act as the core driver in diversifying Abbott’s offerings beyond its core of infectious disease and lab diagnostics.
Market Movement
Abbott’s entry into cancer screening could shake up the competitive landscape. Rival diagnostics players like Roche and Illumina have dominated segments of oncology testing. Abbott’s global scale and distribution network may accelerate the adoption of Exact’s tests worldwide as Abbott plans to leverage its international presence to expand Exact’s primarily U.S.-based sales, potentially bringing tests like Cologuard to new markets that have lacked advanced screening options.
Industry Growth Gamble
The cancer screening industry is one of exponential growth, with very conservative estimates assigning it a minimum CAGR (compound annual growth rate) of ~6.1% until 2030. By acquiring Exact, Abbott positions itself at the center of this booming industry, which is growing considerably faster than many other mature med-tech segments. With more preventive screening, rising global cancer incidence, aging populations, liquid biopsy innovations and regulatory support, Abbott is betting on this structural tailwind to make this acquisition worthwhile for the firm.
More Than Just Screening
Beyond core parts of the business like Cologuard and Oncotype DX, Exact Sciences has been investing in next-gen multi-cancer early detection (MCED), minimal residual disease (MRD) monitoring and blood-based screening technologies. These candidates could unlock multibillion-dollar markets if validated clinically. Abbott now takes ownership of this early-stage pipeline, allowing it to discover the next long-term innovation with potential breakout products.
Interview Prep Questions
Associate - Investment Banking
Question: A company has $100 million in accumulated Net Operating Losses (NOLs). How do you value these in a DCF and an M&A model, and what specific limitation restricts their usage after a Change of Control?
You’re being tested on:
Tax accounting in valuation, deal structuring, and regulatory constraints.
Core concept:
NOLs are valued as a Deferred Tax Asset (DTA), representing the present value of future tax savings. In a DCF, they are typically calculated separately and added to the Enterprise Value to arrive at Equity Value, or modelled explicitly in the tax line to boost Free Cash Flow.
In an M&A context (Change of Control), the usage of NOLs is restricted by Section 382 of the tax code. This limits the annual deduction to the Equity Purchase Price multiplied by the Long-Term Tax-Exempt Rate.
Because of this cap, the present value of the NOLs to a buyer is often significantly lower than their face value, as the tax savings are stretched out over many years (time value of money impact).
Common pitfalls.
Subtracting the NOL DTA from Debt, while it is an asset, it does not reduce gross debt—it adds to Equity Value.
Double-counting the benefit by applying a 0% tax rate in the projection period and adding the separate PV of the NOLs at the end.
Ignoring the expiration period of the NOLs (if applicable under old rules) or assuming the full $100m can be used in Year 1 post-deal to wipe out all taxes.
Associate - M&A Deal Advisory
Question: You are analyzing a retail chain that is aggressively opening new stores. How do you analyze "Same-Store Sales" (Like-for-Like) versus "New Store" performance to adjust EBITDA, and why is this critical for the Quality of Earnings?
You’re being tested on:
Organic vs. Inorganic growth, unit economics, and run-rate normalization.
Core concept:
Aggressive expansion often masks underlying weakness. You must segregate the mature store portfolio (LFL) from the new store cohort to see if the core business is growing or shrinking.
New stores typically have a "drag" on margins (pre-opening costs, low initial efficiency) followed by a "ramp" period. A QoE report will often calculate a "Pro Forma Run-Rate adjustment" to give credit for the mature earnings of stores opened mid-year.
This analysis ensures the buyer isn't paying a mature multiple on a business where the older locations are actually experiencing negative growth or margin compression.
Common pitfalls.
Blindly applying a "mature margin" to new stores in the forecast without validating that recent cohorts are actually achieving the same unit economics as older stores.
Ignoring cannibalization, where new store revenue comes directly at the expense of existing nearby locations, artificially inflates total growth while hurting LFL EBITDA.
Classifying growth capex (new stores) as maintenance capex, or vice versa, which distorts the Free Cash Flow profile of the business.
Analyst - Sales & Trading
Question: Explain the concept of "Volatility Skew" (or the "Smile") in equity options. Why are out-of-the-money (OTM) puts typically more expensive than equidistant OTM Calls, and what does a flattening of this skew imply?
You’re being tested on:
Option pricing theory, market sentiment, and behavioural finance drivers.
Core concept:
The Black-Scholes model assumes a normal distribution, but real markets have "fat tails" (crashes happen more often than models predict). Investors pay a premium for OTM Puts as insurance against these crashes.
Skew refers to the difference in Implied Volatility (IV) across strikes. In equities, lower strikes (Puts) usually trade at higher IVs than higher strikes (Calls), creating a downward sloping curve.
A flattening of the skew (where Put IV drops relative to Call IV) suggests complacency or bullishness, as investors are less willing to pay up for downside protection and may be reaching for upside leverage.
Common pitfalls
Assuming Put-Call Parity forces implied volatilities to be equal across all strikes, it only links prices, not the market's pricing of risk (volatility) at those levels.
Confusing "realized volatility" (how much the stock actually moves) with "implied volatility" (the price of the option).
Thinking a high skew means the market will crash; it only means the market is pricing in a higher cost to insure against a crash (fear is high).
