Investment banking interviews are highly demanding and are intended to evaluate candidates’ capacity to navigate the complexities of the financial transactions they will encounter. Interviewers seek candidates who are not only quick thinkers and detail-oriented but also personable, resilient, and consistent.
What is the Interviewer Looking For?
Interviewers are looking for characteristics that include strong financial knowledge, analytical skills, problem-solving abilities, resilience, teamwork, leadership, adaptability, cultural fit, and excellent communication skills. Even when you don’t have a relevant background in finance or relevant internships, you can still create an impact by demonstrating genuine interest and enthusiasm for the field, evident through your preparation and answers.
How to Structure your Answer?
Listen to the Question
When answering a question, listen carefully to ensure you understand the core of the question, then take a moment to gather your thoughts.
Structure your Answer – Non-technical Questions
For non-technical questions, use a structured approach like the STAR, Situation, Task, Action, and Result, to explain how these experiences can contribute to a career in investment banking.
- Situation: Begin by describing the situation or context of the experience you are sharing. This could include details like the setting, the people involved, and the challenge or problem you were facing. E.g. being the leader of a team in a college finance competition, developing a strategy for international expansion of a tech startup.
- Task: Explain the task or goal you were working towards. The specific objectives you were trying to achieve or the desired outcome. E.g. Evaluating financial status, identifying markets for possible expansion, and creating a strategy.
- Action: Describe the actions you took to address the situation and accomplish the task. This could include the steps you took, the decisions you made, and the strategies you employed. E.g. completing market research, financial analysis, and strategic planning to identify possible locations for expansion, assessing financial viability, and developing a strategy.
- Result: Finally, share the result or outcome of your actions. This could include the impact you had, the success you achieved, and the lessons you learned. E.g. Winning the competition, being praised specifically for the analysis and practicality by the panel of experts. This experience developed leadership skills and affirmed my interest in investment banking.
By following this structure, you can provide a clear and concise response that effectively communicates your experience and skills.
Structure your Answer – Technical Questions
Technical questions require more preparation as you will need to understand the concepts theoretically and practice with real-world examples, particularly if your degree is related to finance. Spending time preparing answers with real world examples demonstrates your commitment and willingness to go the extra mile for the job.
Assessing the Interviewer’s Personality
Before we delve into the interview structure, another approach to consider is to assess the interviewer’s personality and adjust your approach accordingly.
- If they are assertive, highlight your accomplishments and discuss challenging situations you’ve faced and how you overcame or navigated through them.
- If they are outgoing or vivacious, emphasize your enthusiasm for the job role. Include aspects that show how enjoyable you are to work with.
- If they are affable or congenial, find common ground. Do you share the same alma mater? Or perhaps a connection within your networks?
- If they are inquisitive or analytical, showcase your methodical approach. How do you plan your day? Mention specific numbers and details of deals if you worked on any during your internship.
Interview Structure
The investment banking interviews typically follow a structured format. This structure often includes a personal introduction, resume-based questions, technical questions, and behavioral questions. Tailoring your preparation to address each of these sections can significantly improve your performance by ensuring you are well-prepared for every aspect of the interview process. Understanding the typical flow and types of questions will help you respond more confidently and effectively.
Your Personal Story
Estimated time to prepare: 2 days
Interviews typically begin with one of following questions:
- Tell me about yourself
- Could you share some highlights about yourself?
- Walk me through your resume
Though they may sound like different questions, but these are all looking for a similar answer. The interviewer wants to know your personal and unique story. You should be prepared with your personal narrative. Share your story confidently, emphasizing the courses you found most engaging and their direct relevance to investment banking. Discuss your internships and hands-on projects where you worked on live deals or banking-related case studies that captured your interest. Highlight the activities and events you’ve organized and outline your leadership skills. Weave these elements together into a cohesive narrative to demonstrate how a career in investment banking aligns with your overall objectives.
Resume-Related Questions
Estimated time to prepare: 2 days
Following the introduction, you can expect to answer questions on your resume. You should be thoroughly familiar with every aspect of your resume, down to the word and letter.
Non-Finance Background
If you haven’t worked on investment banking-related projects or internships, don’t worry. Be prepared to share stories about the major activities or projects you’ve undertaken. Even if your internship was not in banking, familiarize yourself with the financials of the company where you interned, the overall industry, key players, and any major M&A activity in the past two years. If there’s been a significant M&A deal, study it, particularly if the bank you’re interviewing with led the transaction. This could be an advantageous point to bring up during your interview.
Expected question for those without an investment banking internship or related projects:
- Share an example of a situation where you had to communicate complex information to a non-technical audience.
- Tell me about a project where you faced tight deadlines. How did you manage your time?
- Can you describe a scenario where you worked effectively in a team?
Finance Background
If you have worked on investment banking-related projects or completed an internship at an investment bank, and the interviewer asks if you prepared the model seize this moment. You can guide the direction of the interview towards this topic. Remember the finer details of the projects or deals you’ve worked on, such as how you valued the company and its peers, the Beta used to calculate the WACC, the approach taken for project valuation, the research involved, and the databases used. At this stage, it’s wise to familiarize yourself with the industry you’ve worked in, understand the key players, the value chain dynamics, and future projections.
Expected question for those with an investment banking internship or related projects:
- Can you discuss a time when you had to adjust your valuation approach due to unexpected market changes or new information?
- Which methods did you use for company valuation in your previous projects?
- What was the most challenging aspect of building a financial model or conducting a valuation, and how did you overcome it?
- Could you explain how did you calculate Beta to arrive at the Weighted Average Cost of Capital (WACC) in any of your projects?
- Can you share key players and trends in the industries you’ve worked in?
Behavioral Questions
Estimated time to prepare: 2 days
Investment banking behavioral questions, are non-technical and are asked to determine whether the candidate would be a good cultural and professional fit with the company.
- What draws you to investment banking?
- Why do you want to join this particular bank?
- Describe a situation in which you encountered a complex problem and how you solved it?
- Describe an experience where you had to adapt to change quickly.
- How do you handle setbacks or failures, and what have you learned from them?
20 Technical Investment Banking Interview Questions
Estimated time to prepare: Up to 10 weeks
For technical questions, the ideal preparation involves understanding the concepts theoretically and practicing with real-world examples. This approach not only shows your readiness for the interview but also demonstrates your commitment and willingness to go the extra mile for the job. Completing an online training program is a great way to develop knowledge and demonstrate your willingness to learn to the interviewer. The investment banking course reflects the same training new analysts receive at the leading investment banks across accounting, financial modeling, valuation, M&A and LBO analysis.
Market
- What is your outlook on the economy?
- Which industry do you follow? Have you tracked any major M&A activity in that industry recently?
Corporate Finance
- What are the three financial statements?
- How does depreciation affect each of these statements?
- How do depreciation and tax together impact each of these statements?
- Between higher NPV and IRR, which is preferable?
Merger & Acquisition
- What factors would you consider while evaluating a potential acquisition for the client?
- What is the role of investment banks in M&A transactions?
Valuation
- What is Enterprise Value (EV)? How do you calculate it?
- Why is cash & cash equivalent deducted from EV?
- What is Discounted Cash Flow Analysis (DCF)?
- What is the trading comparables method of valuation?
- What is the transaction comparables method of valuation?
WACC
- What is WACC?
- How would you calculate WACC for a private firm?
LBO
- What is a leveraged buyout (LBO)?
- Why do private equity firms use high levels of debt in an LBO?
- How do you determine the maximum purchase price for an LBO?
Investments
- What factors do you consider when assessing the value of a company’s stock for investment purposes?
- Pitch a stock.
Candidate Questions
It’s common for interviewers to end with a prompt inviting you to ask questions. This is a chance to show your keen interest in both the position and the company. Asking insightful questions can be a valuable way to engage further. You can ask questions like:
Role and Team
- Could you tell me more about the team I would be working with?
- Can you describe your typical workday?
Key Challenges
- What are the biggest challenges in this role?
Company Culture
- What do you enjoy the most about working here?
Future Prospects
- What are the typical career paths in this role?
- How does the company plan to evolve for next few years?
Next Steps
- What are the next steps in this interview process?
Asking questions not only shows your enthusiasm for the role but also helps you gather insights into whether the job and the company are the right fit for you. Tailor your questions to the conversation you’ve had during the interview to show you’ve been engaged and are genuinely interested in the opportunity.
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