Investment Banking Interview

  1. What is Investment Banking?
    → Investment banking is a special segment of banking operation that helps individuals or organisations raise capital and provide financial consultancy services to them. They act as intermediaries between security issuers and investors and help new firms to go public.
  2. What is Comparable Companies Analysis?
    It provides a market benchmark
  3. What is Total Addressable Market?
    • also referred to as total available market
    • is the overall revenue opportunity that is available to a product or service if 100% market share was achieved.
    • It shows the level of effort and funding that a person or company can put into a new business line.
  4. What is Dilutive EPS?
    • is calculated using all possible conversions that can take place and increase the number of shares held by parties.
    • Companies with options, convertible bonds, etc., disclose both basic as well as diluted EPS in their financial disclosures.
  5. What’s in a pitch book?
    • It depends on the type of deal the bank is pitching for, but the most common structure is: (V-PRAC)
    • 1. Bank “credentials” (similar deals they’ve done to “prove” their expertise).
    • 2. Summary of a company’s options (“strategic alternatives” in banker-speak).
    • 3. Valuation and appropriate financial models (for example, if you’re pitching for an IPO you might show where the IPO proceeds would go).
    • 4. Potential acquisition targets (buy-side M&A deal) or potential buyers (sell-side M&A deal). This is not applicable for equity/debt deals.
    • 5. Summary and key recommendations.
  6. Can you talk about a team project or some kind of group activity you’ve worked on
    • Ideally, you will talk about something that was a success rather than a failure. You
    • should use the following 3-point structure for these questions:
    • 1. State upfront what the problem was – Maximizing returns? Attracting more
    • donors for your nonprofit? Winning more customers?
    • 2. Talk about the team you worked in, who did what, and what your role was. Did
    • you manage people or delegate tasks? Those are best, but if you were a “foot
    • soldier” that can also work as long as you worked long hours, were attentive to
    • detail and/or came through in the end to save the team in some way.
    • 3. State the results – Did your brand awareness go up? Did you get more funding?
    • More members for your organization?
    • This is one of the fundamental questions that you need to be prepared for, because it will
    • almost always come up in some form in interviews.
  7. In your last internship, you analyzed portfolios and recommended investments to clients. Can you walk me through your thought process for analyzing the returns of a client portfolio?
    • The key is to break everything down into steps and be very specific about what you did.
    • So you might say that “Step 1” was getting a list of when they bought each investment
    • and how much they invested / how many shares they acquired; “Step 2” was finding a list of when they sold each investment, and what they sold them for; and “Step 3” was aggregating this data over the years in-between for each investment to calculate the compound return.
  8. Can you tell me about the process you used to analyze space requirements for the building designs you worked on this past summer?
    • Similar to the reasoning above, break it into steps and start by discussing how you made
    • the initial estimates, then how you refined them and made them more exact over time
    • while staying within budget and collaborating with your team.
  9. What initiative have you taken on your own to learn more about finance?
    You should either present a list of self-study courses or certifications such as the CFA that you’ve obtained, or speak about your own work studying independently from textbooks, self-study courses and other sources. Be conservative with how much you claim to know – re-iterate that you’re “not an expert” but that you have taken the initiative to learn something on your own.
  10. Can you tell me about a time when you submitted a report or project with misspellings or grammatical mistakes?
    • It’s unrealistic to claim that you’re perfect and have never done this. Instead, briefly
    • mention a time when you made a careless mistake and then spend the majority of time in
    • your answer discussing what you learned and how you improved, citing another specific
    • example of how you improved the second time around.
  11. How well can you multi-task?
    In keeping with our theme of specificity, give a concrete example of a time when you were working on multiple projects at the same time – work, school, or activities work equally well for this one. Also emphasize that despite the considerable demands, you pulled off everything successfully. Anything involving teamwork or collaboration is also good to use in this response.
  12. Have you ever worked on a project or report that was shown to a large number of
    • A journal, student publication or anything similar could be good to mention here, as
    • could anything shown to a client or multiple clients in your work experience or in an
    • internship.
    • If you don’t have something like this, the best approach is to come as close possible by
    • saying, for example, “I haven’t worked on a widely circulated publication, but I did
    • work on such-and-such…, which required that all the details were perfect and that there
    • were no mistakes…”
    • You could even cite lab or medical work – even if it wasn’t widely circulated, anything
    • requiring strong attention to detail suffices.
  13. Walk me through your resume.
    • Start at “the beginning” – if you’re in college, that might be where you grew up or where
    • you went to high school. For anyone in business school or beyond, it might be where
    • you went to undergraduate, your first job, or even where you went to business school.
    • Then, go through how you first became interested in finance/business, how your interest
    • developed over the years via the specific internships / jobs / other experiences you had
    • and conclude with a strong statement about why you’re interviewing today.
    • Aim for 2-3 minutes – if you go on longer than this, the interviewer may get bored or
    • impatient. Also, do not look at your resume when going through your “story.”
    • The 4 most important points:
    • 1. Be chronological.
    • 2. Show how each experience along the way led you in the direction of finance.
    • 3. State why you’re here interviewing today.
    • 4. Aim for 2-3 minutes.
    • What are the most common mistakes with the “Walk me through your resume” question?
    • 1. Going out of order chronologically.
    • 2. Too much exposition – don’t start off by saying, “I’ve had a lot of great
    • experiences.”
    • 3. Being too short (under 1 minute) or too long (over 5 minutes).
    • 4. Not sounding certain you want to do banking/finance.
    • 5. Listing your experiences rather than giving a logical transition between each one.
  14. Why did you attend [Your University / Business School]? I’m sure you had many
    options. / Why did you transfer to [University Name]?
    • Why did you attend [Your University / Business School]? I’m sure you had many
    • options. / Why did you transfer to [University Name]?
  15. Why did you major in [Your Major]?
    • If it was something related to business/economics, you can discuss your interest in those
    • fields; for other majors, you can emphasize how you liked the challenge and/or had a
    • personal interest in the field, but also took the time to learn the basics of
    • business/finance on your own.
  16. Where else did you apply for school? Did you get in anywhere else?
    • You applied to a number of top schools and got in at other places, but you went through
    • a careful decision-making process and settled on your school for a very good reason.
    • Show that you’re “in-demand” by others and you always become more attractive –
    • whether it’s to the bank you’re interviewing at or to the schools you’re applying to.
  17. What do you do for fun?
    • Obviously, don’t say anything illegal or questionable/controversial. If you have
    • anything interesting or not very common (hang gliding, directing movies, bungee
    • jumping) you should bring that up. Otherwise, just be honest and if you really like watching football (North American football for international readers) or other sports, just
    • talk about your interest in those.
  18. Where else are you interviewing? Is it just banking? Consulting? Other
    • Just banking. You’re not interested in consulting / other options and don’t want to
    • waste recruiters’ time.
    • You need to say this even if you’re so uncertain that you’re deciding between opening a
    • zebra ranch, going on a spiritual journey to Nepal, going back to McKinsey or starting a
    • laundromat with your roommate’s uncle.
  19. Are you mostly interviewing at larger banks like us? What kinds of options within
    banking are you considering?
    • Mostly larger banks, but you have received some interest from other places so you’re
    • looking at a couple options. If you can mention specific names, that makes your answer
    • even better.
    • If you’re interviewing in a group like M&A or Healthcare, talk about how you’re mostly
    • speaking with similar groups to show you’re serious about that one area.
  20. Before you entered business school, I see you switched jobs about once a year.
    How do I know that you’re here to stay for the long-term?
    • Although you switched jobs pre-MBA, it’s quite common to move when better
    • opportunity arises. However, you’ve done a lot of research, spoken with friends, alumni
    • and other connections and are certain banking is for you after doing your own due
    • diligence. You’ve actually looked into other career options and nothing is as attractive
    • to you as banking.
  21. Recently some Analysts and Associates have left “early” and jumped to hedge
    funds or private equity. If the opportunity comes up, why would you stay here
    • You looked into investing but realized you don’t like the nature of the work – there’s too
    • much due diligence and “looking at deals” rather than taking action and actually doing
    • deals. As a result, after all your research speaking with alumni and other connections,
    • you’re set on banking.
  22. Tell me about a time when you failed to honor a commitment.
    • The key with this type of question is to bring up a “failure” briefly and then to spend
    • most of your time talking about what you’ve learned from it and how you’ve improved
    • rather than dwelling on the failure itself.
  23. Why are you interested in our M&A division rather than our industry groups? Our
    Tech, Healthcare and Energy teams have been really successful this year.
    • Say that you want to gain solid technical and modeling skills and be exposed to a wide
    • variety of industries and different markets. Depending on the interviewer, it may also
    • be appropriate to mention your interest in private equity (if you’re planning to go that
    • route) and how M&A will get you there.
    • M&A bankers love to think they’re superior to others because of their “in-depth
    • technical knowledge and negotiation skills,” so you should play off that and use it to
    • your advantage.
Card Set
Investment Banking Interview