Tuesday, January 31, 2023

First Round Investment Banking Interview

Don't Miss

If I Dont Know The Answer To A Technical Question Or Get The Answer Wrong Should I Ask For The Correct Response

Investment Banking First Round Interview

If you have no idea about the answer to the question posed, then you should just move on. However, if you make a valid attempt, and get the answer wrong, then it probably makes sense to ask for the correct answer. You never know if you will be asked the same question again in a later interview so you might as well get it right the second time. The only time that I wouldnt ask the interviewer for the answer is if you think the interviewer doesnt know the correct answer . If the interviewer doesnt know, then he or she is just going to look stupid, and thats never going to help your cause.

M& i 400 Investment Banking Questions Guide Vs Wsp’s The Investment Banking Interview Guide Vs Wso’s Investment Banking Interview Prep Course

One question we receive a lot from students and professionals alike, given the many courses flooding the market, is which interview course is the best in the industry for breaking into investment banking.The following table and comparison present a comparison between the top three resource providers: the Wall Street Oasis , WallStreetPrep , and Mergers & Inquisitions . This comparison explains why we believe WSO’s IB Prep Course remains the gold standard in the industry, with features unmatched by competitors.

Product
Unknown

With that being said, WSO leads the industry for IB recruiting as the IB prep course gives you access to thousands of interview insights by actual candidates all across the world across a variety of divisions in finance. The advantages and insights gained by this are simply unmatched by our competitors, and we believe you’ll feel the same way as us once you’ve got our guide as well.

Breaking Down Core Recruiting

Again, core recruiting refers to investment banking recruiting where the banks will visit your school for on-campus recruitment. These schools are the backbone of the hiring process and generally makeup roughly 70% of total hiring for analyst and associate programs for Bulge Bracket banks.

Core recruiting is a very structured process and it is really important for you to understand how this process works, if you are a candidate from a core/target school. Later in this training program we will discuss dates and deadlines, but for now letâs focus on how the overall process works. Generally, the core recruiting process is done in 3 steps.

You May Like: How To Prepare For A Mock Interview

How Would You Value A Company

This is another industry-specific question that aims to assess your knowledge of the industry, along with your familiarity with different investment banking terms and situations. State the various options, and then back up your honest opinion with evidence. Be prepared to answer follow-up questions about which industries youre interested in and the valuation multiples youd use.

There are a few different ways you can value a company: the multiples approach, the transactions approach, and the DCF approach. The multiples approach is where you multiply the earnings of a company by the P/E ratio of its industry. The transactions approach is where you compare the company to other competitors that have recently been acquired. And the DCF approach is where you discount the values of future cash flows back to the present. I generally prefer the DCF approach, because its academic and data-based.

Tell Me About Financial Statements And Why They Are Important

Healthcare Investment Banking

The three common financial statements are balance sheets, income statements, and cash flow statements.

  • Balance sheets show a companys assets and liabilities, including shareholder equity, debt, and accounts payable.
  • The income statement displays the companys net income over a period of time and shows revenue and expenses.
  • Cash flow statements show a companys cash flow from operating, financing, and investing activities.

Read Also: How To Crack Assistant Manager Interview

Brush Up On Recent News And Insights

Finally, being up to speed on recent news or insights related to your target firm can help you avoid getting stumped by questions related to current events.

To stay up to speed, consider subscribing to any newsletter published by your target firm. For example, these types of resources:

You could also set-up news alerts for your target firm, or simply keep an eye out for stories related to your target firm in a more general news publication. If you dont have a favorite source already, then consider trying The Economist or the Morning Brew newsletter.

Top 10 Investment Banking Interview Questions And Answers

If you want a career that you can take to the bank, look no further than the world of investment banking. Professionals in this popular, competitive field work have a range of career options, working with corporations, governments, or commercial banks. To make yourself stand out from the crowd, its vital that youre prepared for your interview. One of the best ways to do this is through practice, practice, practice, so read on for our top investment banking interview questions and answers.

Recommended Reading: Behavioral Based Interview Questions For Customer Service

Analyze One Deal By The Firm In

At some point during the interview process, youll probably encounter a question related to deals. For example, tell me about a recent transaction or something like that.

This is not inherently a firm-specific question, but if youre applying to Goldman Sachs it would be ideal to be ready to discuss a recent deal that Goldman Sachs completed.

So, you should prepare to discuss at least one recent IB transaction from your target firm in-depth. Be ready to give your opinion on whether the deal was a good move, and memorize some key numbers to back up your analysis. If youre applying for a particular group within your target firm, its even better to discuss deals relevant to that group.

You can find information about recent deals by reading the Investment Banking section of the Financial Times, which frequently covers stories involving leading firms, like Goldman Sachs, JP Morgan, and Morgan Stanley. Weve also found this guide on preparing for deal interview questions to be really helpful.

How To Prepare For Investment Banking Interviews

Investment Banking Interview Preparation

What is listed above is only a fraction of what you need to know for investment banking interviews. Having been through the process and understanding how this process works, Street of Walls has developed comprehensive guides to help with the more detailed, technical aspects of what you should know for your investment banking interviews. In particular, be sure to see the Investment Banking Technical Guide for further information on what can be covered in a banking interview.

Also Check: Questions To Ask For Front Desk Interview

Receiving An Internship/job Offer

Being well prepared for technical questions and getting most questions correct is certainly needed to land an offer but getting along well with the interviewers will set you apart and is arguably just as important in driving the outcome.

From the perspective of current employees, they want competent hires capable of performing their job well, but also someone that they can see themselves working grueling hours alongside.

At the end of the day, the interviewer sitting across from you is human not a scantron scoring machine so sell yourself and be personable, as doing so will make you stand out more.

Hence, youll often hear of personal stories of candidates that completely botched a technical question but handled it well and somehow still received an offer.

In particular, if you happen to leave a positive impression on a senior banker that later vouches for you, the probability of you receiving an offer will likely have gone up ten-fold.

Once the Superday interviews for the week have wrapped up, the bankers will debrief either in-person or virtually to discuss their thoughts/notes on the candidate pool.

Introduce Yourself And Past Experiences

A simple introduce yourself’ is a common way to start an interview and although easy, first impressions last, so getting this nailed is key.

As I discuss in the elevator pitch snippet , I believe there are 4 elements to smashing this 60-90 second response:

Brief Outline: Im currently in my x year studying y at z – be prepared for a very brief note on what drew you to that subject.

Introduce hooks: I found that including lines such as my interest in the commercial world stemmed from a personal story was a good compromise between keeping the intro short and giving the interviewer the chance to delve deeper into my story if they wished .

Introduce past experiences: Introduce any previous work experiences you have or extracurriculars that led you to apply. Follow the hook principle again, not fleshing out every detail, but giving hints as to what experiences led you to apply e.g. I would talk about insight weeks in Audit from sixth form followed by the line I discovered and felt more suited to Capital Markets over Audit. I would then follow this with more relevant experiences. Do not get stressed if you feel you dont have relevant experiences since this introduction should be personal to you and will evolve over time.

‘Walk me through your CV’ is another question asked so be prepared for slight variations.

Read Also: Where To Stream Oprah Interview With Harry And Meghan

What To Expect With First Round Investment Banking Interviews

After the application process, the next step in the investment banking recruiting process for summer analyst and analyst roles is a first-round interview. This interview is usually a thirty-minute interview with a junior member of the team conducted on a phone call or a virtual face-to-face interview on an application such as Zoom or Microsoft Teams. The main objective for the firm is to select the best candidates for super day interviews.

Investment Banking Interview Questions Category : Fit Questions

Citi Off

This category includes questions such as:

  • Whats your greatest strength?
  • Whats your greatest failure?
  • Tell me about a team activity that did not go as planned.
  • Why is your GPA on the low side?

All questions that are not related to your story, deal/market/company discussions, and technical concepts are in this category.

You can get a wide range of questions here, but you dont need tomemorize a wide range of answers just come up with 2-3 examples that you can recycle for everything.

We explain how to do that in the article on investment banking fit questions, but in short:

First, you should outline 3 short stories a leadership story, a success story, and a failure story. These should come from your work experience, but 1-2 can be from school if youre an undergrad or recent grad.

Next, you should select 3 strengths and 3 weaknesses based on what bankers want to see .

Possible, not-completely-terrible weaknesses might include your inability to delegate tasks well, second-guessing yourself when making decisions, not managing your time well, or not always speaking up when a teammate has made a mistake.

Finally, you should prepare for the key objections that bankers will raise about your background: Did you not attend top universities? Are your grades on the low side? Do you not have much work experience? Are you too old? Did you not major in something technical? Are you a job hopper?

Compare yourself to the ideal candidate and pinpoint how youre different.

Read Also: How Do I Prepare For An Operations Manager Interview

Example M& a And Merger Model Interview Questions

These questions are less important than those in the other technical categories above, but you should still know the basic concepts. We have a full YouTube video tutorial on these questions:

But if you prefer the text version, heres a sample:

QUESTION: Walk me through a merger model.

ANSWER: Start by projecting the financial statements of the Buyer and Seller. Then, you estimate the Purchase Price and the mix of Cash, Debt, and Stock used to fund the deal. You create a Sources & Uses schedule and Purchase Price Allocation schedule to estimate the true cost of the acquisition and its effects.

Then, you combine the Balance Sheets of the Buyer and Seller, reflecting the Cash, Debt, and Stock used, new Goodwill created, and any write-ups. You then combine the Income Statements, reflecting the Foregone Interest on Cash, Interest on Debt, and Synergies . If Debt or Cash changes over time, the Interest figures should also change.

The Combined Net Income equals the Combined Pre-Tax Income times , and you divide that by to get the Combined EPS.

You calculate the accretion/dilution by dividing the Combined EPS by the Buyers standalone EPS and subtracting 1.

QUESTION: A company with a P / E multiple of 25x acquires another company for a purchase P / E multiple of 15x. Will the deal be accretive or dilutive?

ANSWER: The buyers EPS is $10 / 10 = $1.00. It must issue $150 / $25.00 = 6 additional shares to do the deal, so the Combined Share Count is 10 + 6 = 16.

Why I Think Technical Questions Are Dumb

Ok, so reading this particular post isnt going to help you get a job. But I happen to feel strongly that asking applicants technical questions in interviews is silly . Heres why:

1. Banking is easy. That is to say, the knowledge that you need to be a successful investment banker is not that difficult to learn. Banking is not rocket science. Youll hear that phrase thousands of times. Its true.

2. You learn on the job. No matter how many corporate finance classes someone has taken, nobody comes into banking knowing how to value a company or do a model or put together a pitch.

Therefore, I dont care if youve memorized the formula for WACC or the key assumptions of a Black-Scholes model. You need to be smart and you need to have the right attitude. Convince me of that and Ill teach you to be a good banker.

Read Also: Sample Product Manager Interview Questions

What Is Typical Of An Lbo Transaction

A firm uses a high amount of debt to finance the purchase of a company, then uses the company’s cash flows to pay off that debt over time.

The acquired company’s assets may be used as collateral. Ideally, the original debt of the acquired company would have been partially retired at the time of exit.

In the context of a private equity investment, the debt acts as a way to magnify returns , but it can also backfire if the acquisition turns south.

Preparation Is Key To Investment Banking Interview Success

How to Pass the Investment Banking Superday (Final Round Interview)

The technical knowledge, in-depth industry understanding and experience required to succeed at interview means that you must begin planning well in advance. You simply wouldnât be able to acquire the necessary knowledge and skills in just a few weeks.

This is why itâs a great idea to start scouting for extracurricular activities and positions of responsibility, and researching financial trends and issues early on at university. For example, you might become the treasurer for the debating society or choose to follow a particular companyâs share price over a year and see what affects it.

It’s also important to spend plenty of time practising answering typical questions you may be asked so that you’ll feel more at ease on the day itself. Don’t leave this until the night before: book a practice interview at your careers service or schedule in some time with a friend. You could also try the online video interview practice resources provided by our partners Shortlist.Me .

You May Like: Technical Test Questions For Interview

Second Round Investment Banking Associate Interview At Head Office

I was told my interview was at 2:00 pm and I arrived at 1:49, and the individual in charge of organizing said they thought I was going to be late or a no show, which seemed like a tactic to throw me off.

I was asked to hang up my jacket and leave all of my belongings in a particular room and then they asked me to go to a holding room. This room was right in between the two rooms that were being used for the interview panels.

I was waiting for my interview to begin and two individuals a VP and Director came into the room and started speaking about how they planned to be intimidating to the students being interviewed .

I was then taken before the first panel by one of the individuals who was interviewing me he was an Associate.

I was seated around a round table and interviewed by three bankers two Associates and a VP who moved over recently from a bulge bracket bank.

I was then asked the following interview questions:
  • Tell us a little bit about yourself
  • What do you think IB does, and what kind of hours does it require?
  • Why did you apply for this position?
  • What do you think the toughest aspect of the job will be?
  • Why did you apply for a position at this investment bank?
  • Tell us something about the market
  • Why did the university career center not better prepare you for the interview?

I was then asked to leave that panel and to go down the hall to the other panel. I was asked to take a seat directly in front of three bankers an Associate and two Directors.

Investment Banking Associate Interview Experience

This is a detailed breakdown of the actual interview questions for an investment banking Associate position at a global investment bank. Any references to names of people, universities, banks, or cities have been removed to keep the information anonymous. This individuals investment banking associate interview experience went down as follows

Also Check: Food And Beverage Director Interview Questions

What Are The Three Main Financial Statements

Sample Answer:

The Income Statement discloses a company’s revenues and expenses, which together yield net income over a period of time. The Balance Sheet discloses a company’s assets, liabilities, and equity on a specific date. The Cash Flow Statement starts with net income from the Income Statement then adjusts for non-cash expenses, non-operating expenses like capital expenditures, changes in working capital, or debt repayment and issuance, to arrive at the company’s closing cash balance.

More articles

Popular Articles