Series 79 Investment Banking Exam: M&A and FINRA Registration Guide (2026)

Why Series 79 Is Your Gateway to Investment Banking

You're starting your career at a bulge bracket bank, elite boutique, or middle-market advisory firm. You've survived the grueling interview process, memorized league table rankings, and maybe even read Barbarians at the Gate twice.

But before you can work on that $2 billion LBO or advise on a strategic acquisition, you need one critical credential: FINRA Series 79 registration.

The Series 79 Investment Banking Representative Exam validates that you understand M&A advisory, securities offerings, valuation methodologies, and the regulatory framework governing these activities. Unlike the Series 7 (general securities), this exam is specialized for the deal-making world.

With an 88% pass rate for well-prepared candidates, the Series 79 is very passable. This guide covers everything you need to know—including content breakdown, study strategies, and a 5-week preparation plan.

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Series 79 Exam Overview

Quick Facts

Content Outline (2026)

Key Change: FINRA streamlined the exam in 2018, removing trading-focused content and adding emphasis on valuation.

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Function 1: Collection, Analysis, and Evaluation (49%)

Financial Statement Analysis

Key Skills:

• Read and interpret 10-Ks and 10-Qs
• Calculate financial ratios
• Analyze trends over time
• Compare to industry benchmarks

Critical Ratios to Know:

• Profitability: Gross margin, operating margin, net margin, ROE, ROA
• Liquidity: Current ratio, quick ratio
• Leverage: Debt-to-equity, debt-to-EBITDA, interest coverage
• Efficiency: Asset turnover, inventory turnover, receivables days

Common Questions:

• "Based on these financial statements, which ratio demonstrates deteriorating liquidity?"
• "What does this trend in working capital indicate?"

Valuation Methodologies

Comparable Company Analysis ("Comps"):

1. Select comparable companies (industry, size, growth)
2. Calculate valuation multiples
3. Apply to target company's metrics
4. Derive implied valuation range

Key Multiples:

• EV/Revenue: Early-stage, high-growth companies
• EV/EBITDA: Most common for mature companies
• P/E: Public company comparisons
• EV/EBIT: Capital structure neutral

Precedent Transactions Analysis:

• Analyze M&A transactions in the sector
• Calculate transaction multiples (higher than trading multiples due to control premium)
• Apply to target
• Consider timing (recent transactions more relevant)

Discounted Cash Flow (DCF):

• Project free cash flows (5-10 years)
• Calculate terminal value (exit multiple or perpetuity growth)
• Determine appropriate discount rate (WACC)
• Calculate present value

Key Concepts:

• WACC: Weighted average cost of capital
• Terminal value: Often 60-75% of total DCF value
• Sensitivity analysis: Varying assumptions

Common Valuation Questions:

• "Which multiple is most appropriate for this loss-making tech company?"
• "How does adding debt affect WACC?"
• "What is the implied terminal growth rate?"

Fairness Opinions

Definition: A fairness opinion states that the consideration in a transaction is fair to shareholders from a financial point of view.

Key Requirements:

• Prepared by qualified financial advisor
• Disclose relationships and compensation
• Based on valuation analysis
• Not a recommendation (just fairness)
• Include in proxy statements for material transactions

When Required:

• Going-private transactions
• Related-party transactions
• Conflicts of interest
• Material asset sales

Liability Issues:

• Advisor owes duty of care to board
• Must not be misleading
• Subject to antifraud provisions

Due Diligence

Types of Due Diligence:

• Financial: Financial statements, projections, working capital
• Legal: Contracts, litigation, IP, regulatory compliance
• Commercial: Market, competition, customers, growth drivers
• Operational: Facilities, management, systems
• Tax: Tax exposure, structuring opportunities

Red Flags:

• Aggressive revenue recognition
• Related-party transactions
• Customer concentration
• Declining margins
• Unresolved litigation

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Function 2: Underwriting/New Financing (26%)

Public Offerings

Types of Offerings:

• IPO: Initial public offering (primary + secondary)
• Follow-on: Additional shares after IPO
• Shelf offering: Pre-registered securities (Rule 415)
• Rights offering: Existing shareholders

Registration Process:

1. Pre-filing: Engage underwriters, prepare disclosure
2. File S-1 (or F-1 for foreign): Registration statement with SEC
3. SEC Review: Comments and amendments
4. Pre-effective: Roadshow, book building
5. Effective: Pricing, allocation, trading

Key Documents:

• Prospectus: Primary disclosure document
• Registration statement: Includes prospectus + exhibits
• Underwriting agreement: Contract with underwriters
• Comfort letter: Auditor assurance to underwriters

Due Diligence Defense:

• Underwriters must conduct reasonable investigation
• "Due diligence" meeting with management
• Document review and verification
• Qualified legal opinion

Private Placements

Rule 506(b) (Traditional):

• Unlimited accredited investors
• Up to 35 non-accredited (sophisticated)
• No general solicitation
• Self-certification of accredited status

Rule 506(c) (General Solicitation):

• Only accredited investors
• Must verify accredited status
• Can use general advertising

Regulation S:

• Offshore offerings
• No directed selling efforts in US
• Category 1, 2, or 3 requirements

Resale Restrictions:

• Rule 144: Hold periods for restricted securities
• Rule 144A: Qualified institutional buyers (QIBs)

Underwriting Arrangements

Firm Commitment:

• Underwriters buy securities from issuer
• Underwriters bear risk
• Most common for IPOs
• Higher fees (5-7% for IPOs)

Best Efforts:

• Underwriters sell what they can
• Issuer bears risk
• Common for smaller offerings
• Lower fees

Syndicate Structure:

• Lead manager (bookrunner): Runs deal, largest allocation
• Co-managers: Participate in underwriting
• Syndicate members: Smaller allocations

Green Shoe (Overallotment):

• Option to sell additional shares (typically 15%)
• Stabilizes aftermarket
• Can be exercised within 30 days

Liability and Regulation

Section 11 (1933 Act):

• Liability for false/misleading registration statements
• Plaintiffs need only show misstatement
• Due diligence defense available
• Applies to underwriters, directors, signers, experts

Section 12(a)(2):

• Liability for misstatements in prospectus or oral communication
• Scienter not required
• Due diligence defense available

Section 17(a):

• Antifraud provision
• Scienter required for some subsections

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Function 3: M&A and Financial Restructuring (24%)

M&A Transaction Structures

Asset Purchase:

• Buyer purchases specific assets
• Buyer can cherry-pick assets
• May avoid liabilities
• Tax advantages (step-up in basis)
• Requires individual asset transfers
• Third-party consents may be needed

Stock Purchase:

• Buyer purchases target's stock
• All assets and liabilities transfer
• Simpler than asset purchase
• No step-up in tax basis (unless 338(h)(10) election)
• Target remains in existence

Merger:

• Target merges into buyer (or subsidiary)
• Target ceases to exist
• Stockholders receive consideration
• Requires shareholder approval
• Appraisal rights may apply

Key Considerations:

• Tax implications: Asset vs. stock treatment
• Liabilities: Assumed vs. excluded
• Consents: Change of control provisions
• Timing: Closing mechanics

Deal Protection Mechanisms

Lock-ups:

• Voting agreements: Commit to vote for deal
• Tender agreements: Commit to tender shares
• No-shop provisions: Limit target's ability to shop

Break-up Fees:

• Typically 2-4% of transaction value
• Payable if deal doesn't close due to competing bid
• Must be reasonable to be enforceable
• Directors must satisfy Revlon duties

Go-shop Provisions:

• Allows target to actively solicit competing bids
• Typically 30-60 day period
• Lower break-up fee for superior bid
• Common in private equity deals

Material Adverse Change (MAC):

• Allows buyer to walk from deal
• High threshold to invoke
• Must be disproportionate effect
• Excludes market/industry-wide changes

Tender Offers and Proxy Contests

Tender Offer Requirements:

• Schedule TO filing with SEC
• Offer must remain open 20 business days
• Must accept all tendered shares if conditions met
• Best price rule (all shareholders get highest price)
• Pro-rata acceptance if oversubscribed

Proxy Contests:

• Schedule 14A filing
• Solicit shareholder votes
• Board nominations
• Mergers requiring shareholder approval
• Short slate vs. full slate

Poison Pills (Shareholder Rights Plans):

• Dilute hostile acquirer
• Triggered at threshold (typically 10-15%)
• Board can redeem
• Delaware courts generally uphold

Antitrust Considerations

HSR Act:

• Pre-merger notification for large transactions
• Size-of-person and size-of-transaction thresholds
• 30-day waiting period (can be shortened)
• Failure to file = penalties

Second Request:

• Extended DOJ/FTC review
• Substantial document production
• Can significantly delay closing
• Often leads to divestitures or deal abandonment

Key Concerns:

• Market concentration (HHI analysis)
• Potential for coordinated effects
• Barriers to entry
• Efficiencies defense

Financial Restructuring

Out-of-Court Restructuring:

• Workout agreements with creditors
• Exchange offers
• Debt buybacks
• Avoids Chapter 11 costs
• Requires creditor cooperation

Chapter 11 Bankruptcy:

• Reorganization (not liquidation)
• Debtor-in-possession financing
• Automatic stay stops creditor actions
• Plan of reorganization requires creditor approval
• Cram-down if classes don't approve

Section 363 Sales:

• Sale of assets in bankruptcy
• Stalking horse bidder
• Overbidding process
• Free and clear of liens
• Faster than plan confirmation

Key Concepts:

• Absolute priority rule: Secured creditors paid before unsecured
• New value exception: Equity holders can contribute new capital
• Exclusivity period: Only debtor can propose plan

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Function 4: General Securities Regulations (1%)

While only 1% of the exam, don't ignore entirely:

Key Topics:

• Insider trading prohibitions
• Books and records requirements
• Supervisory obligations
• Continuing education requirements

This section often has straightforward questions.

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5-Week Series 79 Study Plan

Week 1: Foundation and Function 1 (Part 1)

Days 1-2: Exam Overview & Financial Analysis

• Understand exam structure
• Review financial statement components
• Practice ratio calculations

Days 3-4: Valuation Basics

• Comparable company analysis
• Precedent transactions
• Multiple selection and calculation

Days 5-7: Advanced Valuation & Fairness

• DCF methodology
• WACC calculation
• Fairness opinion requirements
• Practice questions (20-30)

Week 2: Function 1 (Part 2) and Function 2

Days 8-10: Due Diligence & Analysis

• Due diligence types and process
• Red flags
• 10-K analysis

Days 11-13: Underwriting

• Registration process
• Public vs. private offerings
• Underwriting arrangements
• Documents and liability

Days 14: Practice Exam

• 75-question mini exam
• Review wrong answers

Week 3: Function 3 Focus

Days 15-17: M&A Structures

• Asset vs. stock vs. merger
• Tax implications
• Transaction mechanics

Days 18-20: Deal Protection

• Lock-ups and agreements
• Break-up fees
• MAC clauses

Days 21: M&A Deep Dive

• Tender offers
• Proxy contests
• Antitrust basics

Week 4: Advanced M&A and Restructuring

Days 22-24: Advanced M&A

• Poison pills
• Hostile takeovers
• Regulatory considerations

Days 25-27: Financial Restructuring

• Out-of-court workouts
• Chapter 11 basics
• Section 363 sales

Days 28: Full Practice Exam

• Simulate test conditions
• Time yourself (2.5 hours)
• Detailed review

Week 5: Final Review and Practice

Days 29-31: Weak Area Focus

• Review lowest-scoring topics
• Additional practice questions
• Formula memorization

Days 32-34: Final Practice

• 2-3 full practice exams
• Speed and accuracy focus
• Build confidence

Days 35: Light Review

• Quick formula review
• Key concept refresh
• Early rest

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Study Tips for Series 79 Success

1. Focus on the Heavy Functions

• 49% Function 1: Spend nearly half your time here
• Valuation is king: Know your multiples and DCF
• Practice calculations: Many questions require math

2. Use Quality Prep Materials

Recommended Providers:

• STC (Securities Training Corporation): Comprehensive textbooks
• Kaplan: Good practice questions
• PassPerfect: Detailed explanations
• Knopman Marks: Well-regarded for investment banking

3. Practice Under Time Pressure

• 2.5 hours for 75 questions = 2 minutes per question
• Practice exams build stamina
• Flag difficult questions and return

4. Understand, Don't Memorize

• Conceptual questions test understanding
• "Why" is as important as "what"
• Connect concepts across functions

5. Know the Regulators

• SEC: Securities registration, disclosure
• FINRA: Self-regulatory organization
• DOJ/FTC: Antitrust
• State securities regulators: Blue sky laws

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Exam Day Strategy

Before the Exam

• Get good sleep (don't cram)
• Light breakfast
• Arrive early
• Bring required ID

During the Exam

1. First pass: Answer all questions you know (1.5 min each)
2. Second pass: Tackle moderately difficult questions
3. Third pass: Address flagged/difficult questions
4. Final review: Check for unanswered questions

Question Strategy:

• Read carefully—details matter
• Eliminate obviously wrong answers
• Don't overthink—first instinct is often correct
• Watch for "except" and "not"

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Career Impact

Who Needs Series 79?

Required for:

• Investment banking analysts
• M&A advisors
• Private equity professionals (sometimes)
• Corporate development professionals
• Valuation specialists

Beneficial for:

• Equity research (understand deals)
• Sales (understand products)
• Wealth management (alternative investments)

Salary Context

Series 79 is your ticket to entry.

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Conclusion

The Series 79 is your license to work on Wall Street's biggest deals—mergers that reshape industries, IPOs that create billionaires, and restructurings that save companies.

With focused preparation using this guide's framework, you'll pass the exam and begin your investment banking career.

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