Investment Banking Interview: How to Prepare

Congratulations! You’ve landed yourself an interview with an investment bank and you’re one step closer to breaking into the industry. But, where should you start, how can you prepare for the big day, and what should you know?

The amount of information available online regarding this topic can be overwhelming. However, it’s important to not let that deter you. Just make sure you prepare well in advance and turn up to your investment banking interview armed with answers to possible questions.

Introductory Questions

There are no two ways about it, first impressions count. Remember, appear presentable, practice good manners and be willing to listen. First and foremost, it is likely that the employer will ask you questions such as:

• “Why are you interested in banking and which part?”
• “Tell me why you want to join us?”
• “Tell me what an investment bank does.”
• “Walk me through your resume.”

These types of questions are used to evaluate your understanding of the industry, the role you are applying for and why you want to do it. Make sure you discuss your academic achievements, what piqued your interest in investment banking, what you have done to develop a foothold in the industry and where you’d like to see yourself in the future. On top of this, you should mention anything that will help you to stand out. Do you have any quirky hobbies, play any sport or have you travelled anywhere interesting? Do everything you can to make yourself memorable.

The Best Fit?

It’s important that you can show your interviewee you are an ideal fit for the company. Investment banking and teamwork go hand in hand, and with long hours working on deals together, it’s important that you come across as likable and hard-working. Prepare to be quizzed on your strengths and weaknesses and come up with real-life examples to add gravitas to your answers.

Professional skills questions may include:

• “Tell me about a team activity you helped to lead.”
• “Take me through an experience which was particularly challenging.”

Think about what will help you to get noticed. Has there been a time where you’ve helped to lead a team? Have you gone the extra mile during a work experience placement or an internship? It’s important that you can leverage these examples to make a lasting impression. Write down and revise moments like these so you are ready to use them when necessary. Think of them as your secret weapon.

Don’t forget, you will also almost certainly be grilled on any pitfalls which are apparent in your resume. For instance, this might be low grades or little experience in investment banking. Make sure you are aware of your shortcomings and be prepared to demonstrate why the interviewee should overlook these.

Technical Questions

You might be expected to have a solid understanding of basic technical skills in valuation, financing and M&A, particularly if your degree is related to finance.

Valuation Sample Questions

• A client is considering selling to a competitor or doing an IPO, what is the valuation difference?
• What differences would you expect between results of a comps and a DCF valuation?
• Why do we use fully diluted shares in calculating equity value?

Financing Sample Questions

• What is an LBO and why do they happen?
• What are the benefits of doing a spin-off rather than a trade sale?
• How would you estimate WACC for a private company?

M&A sample questions

• What factors influence the control premium an acquirer might pay?
• Which financing will result in a higher Pro-forma earnings per share post-acquisition?
• What advice would you have for a conglomerate trading at a discount to the sum of its parts?

Demonstrating the process you used to find the answer is just as important as your response. To prepare for these questions, you can visit our online store where there is a variety of learning materials, including online courses and publications.

Other Questions

You may also find that your interviewee asks you to solve some brain teaser questions. This is to assess your overall common sense.

Top tips to remember while answering these kinds of questions:

• Repeat the question to give yourself time
• Ask for assumptions/clarification if necessary
• Break down your thought process – you don’t need to get to the exact answer necessarily
• Answer very quickly and you will probably get additional questions

Example brainteasers:

• How many cans of coke are drunk in the world in August?
• Sum 1 to 100

On top of this, you might find that you are asked questions that are tailored to the news. Again, this is so the interviewee can glean an insight into your thought-process and identify your enthusiasm for finance.

An example of this may be:

• What do you think about banking regulation?
• Do you think the EU is a good thing and why?

If you remember nothing else, just ensure you turn up expressing both a willingness to learn and a sense of humility. Good luck!