“If your enemy is superior, evade him. If angry, irritate him. If equally matched, fight, and if not split and reevaluate. “-Sun Tzu
Ah, yes – the infamous investment banking interview.
There’s nothing quite as unnatural as being locked in a room for 30 minutes with hostile bankers asking you obscure technical questions and grilling you on your background.
But if you want to land investment banking offers, interviews are a rite of passage – so here’s how to dominate them.
The Process and What to Expect
In the US, the investment banking interview process goes like this:
- Submit your resume online or through your contacts;
- Go through a first-round, usually on-campus, interview;
- If you do well, you move to the next round – “superday interviews,” which are held at the bank’s offices (the article you’re reading right now covers this step);
- If all the bankers like you, they give you an offer.
It’s not much different for summer internships vs. full-time positions; analyst and associate interviews are also not much different, though associates need to be more polished.
If you’re going for lateral positions or you’re breaking in after having already worked full-time in another field, the process will be more extended and you might go through dozens of interviews without an official “Superday.”
This article is strictly about interviews, so please refer to the Recruiting section of the site for advice on resumes, networking, and getting interviews in the first place.
The Rest of the World
In Europe, Australia, and parts of Asia, there’s a big difference: you go toassessment centres rather than the usual Superday and complete case studies and presentations in front of bankers as your final round.
In the interviews prior to assessment day, the questions are the same as what you receive in the US, so the “fit” and technical questions in this article still apply to you.
Just be aware that assessment days require extra preparation – so read my complete guide to assessment centres and practice the case studies there.
If you’re in another region like Africa, the Middle East, or Latin America, interviews are more likely to follow the Superday structure you see in the US, though you may still run into case studies.
The Superday Process – People and Time
At the minimum, you’ll speak with at least 1 banker at every level – Analyst, Associate, VP, and MD – in your final round interviews.
You can go higher than that and “Superday” can last all day, from 8 AM to 6 PM, with 10+ interviews.
Bulge brackets tend to conduct more interviews than boutique and middle-market firms because they have the resources to do so.
Most of the time, though, no bank wants to devote entire days of senior banker time to interviews – so you should expect around half a day of interviews.
There’s no particular “best order” in which you should go through these interviews – it’s up to the bank, and you have no control over it.
Each interview lasts for 30 minutes, with the first few minutes devoted totelling your story (see below).
Investment Banking Interview Questions
You can expect 3 types of interview questions:
- Your Story – “Walk me through your resume/CV” or “Tell me about yourself.”
- “Fit” Questions – “Are you a team player? Tell me about your weaknesses. How was your last internship?”
- Technical Questions – “Walk me through a DCF. How does 40% cash vs. 50% cash affect a merger model? What happens on all 3 statements when COGS goes up by $10?”
Almost all interviewers will ask you #1 – so follow my guide to telling your story and apply the 5 points there to your own background.
Senior bankers are more likely to focus on “fit” questions, while junior bankers (analysts and associates) enjoy asking technical questions to test your mettle.
You may get brain teasers and “stress test”-type questions, but these were more common in ancient times (the 80′s, 90′s, and early 00′s).
This is the most important question you will get in interviews.
Bankers often judge you 90% based on what you say in the first few minutes; the rest of the interview is just a formality.
After your “story,” fit questions are the second most important type – they are more important than technical questions for 2 reasons:
- Unless you’ve had a previous investment banking summer internship or other full-time experience in finance, you will usually get more fit questions than technical ones.
- The senior bankers (VPs and MDs) who interview you will focus more on fit questions and they are the ones who decide on job offers.
The guide to getting investment banking jobs covers some “fit” questions, but just to summarize the most common categories:
- Analytical – “Walk me through how you analysed / calculated…”
- Background – “Why did you pick that university / business school / major?”
- Career Changer – “Why are you moving from engineering / accounting/ law / marketing etc. into banking?”
- Commitment – Are you going to bounce at the first job offer that comes your way?
- Culture – Why us? Why this group rather than another group?
- Future – What are your long-term career plans?
- Strengths / Weaknesses – Name them, or tell me about the feedback you received in your last internship.
- Team / Leadership – Talk about when you led a team, resolving conflicts, and so on.
- Understanding Banking – Walk me through an IPO or M&A deal; What do bankers really do? What’s in a pitch book?
- “Warren Buffet” – How would you invest $10 million? Tell me about the market. Pitch me a stock.
- Why Banking? – Why would you want to move from another industry into banking and give up seniority? Where did your interest in finance begin?
How to Answer All of These
Many of these questions will flow directly from your “story” – for example, #3, #6, and #11 can all be re-purposed based on your resume walk-through.
For #9, read everything on this site and you’ll be good.
The other categories either flow from your networking efforts – for example, cite other people you’ve met for the “why this bank” question – or are common sense (give examples of your commitment in the past and say you’re in banking to stay there).
For the remaining questions – on strengths/weaknesses, team/leadership, and analytical abilities, you should review your resume/CV and come up with2-3 mini-stories.
For example, pick an internship project you worked on or a client you worked with and use that as an example to demonstrate quantitative abilities andteamwork.
Or pick a project that didn’t go well and use that for the “weaknesses” and “overcoming failure” questions.
What to Avoid
The biggest problem when answering fit questions?
Lack of enthusiasm.
If you memorize all your answers word-for-word or you read directly from a script, any banker can tell within 5 seconds.
Technical questions cause more panic than anything else – just like GPA and test scores, answering them incorrectly hurts you but getting everything perfect doesn’t push you over the top.
Junior bankers ask more technical questions than senior bankers because they’re closer to Excel and modelling all day; technical questions tend to be more common in earlier rounds of interviews than in Superdays.
You should prepare for 4 types of technical questions:
- modelling (Merger Model and LBO)
- Brain Teasers
I’ll summarize the key points here, but it’s impossible to explain everything without writing a book – so if you want more detail, sign up for the Breaking Into Wall Street courses.
Even if you have no accounting or finance background, you should expectaccounting questions because they’re the most basic ones.
At the bare minimum, know the 3 financial statements and how they link together, and be able to walk the interviewer through the process; also know how adding 10 to depreciation or inventory, or other items, affect the statements.
You may also get more advanced questions on “real-life scenarios” (e.g. what happens to the 3 statements when Apple manufactures and sells iPads?), what goes into shareholders’ equity, LIFO vs. FIFO, and less common topics like GAAP vs. non-GAAP and revenue and expense recognition.
You need to know the 3 main methodologies:
- Comparable Company Analysis – Look at publicly traded companies and the multiples they trade at, and then apply those to the company in question.
- Precedent Transaction Analysis – Look at what buyers paid for sellers in similar industries and with similar financial profiles and apply the multiples to your own company.
- Discounted Cash Flow Analysis (DCF) – Use a company’s projected cash flows, discounting them for the time-value of money and cost of capital, and sum those with the company’s discounted terminal value to find its present value.
Know those and the various trade-offs among them (e.g. a DCF tends to be more variable than the others because there are so many assumptions).
More advanced questions will cover how inputs affect each methodology’s output, different valuation techniques, and industry-specific valuation, such as dividend discount models and residual income models for banks.
Most modelling questions are on merger models – looking at what happens when a company acquires another company – or Leveraged Buyout (LBO) Models – calculating the return to a PE firm when they buy a company.
The most important part of a merger model is the accretion/dilution – will a company have a higher or lower earnings per share (EPS) after acquiring another company?
It’s an analysis of the trade-offs between using cash, stock, or debt to finance an acquisition.
Using any combination of these will result in a different EPS, and you have to take into account how much debt the acquirer can actually afford, how much stock can really be issued, and how much cash they have.
More advanced questions might cover synergies (when 1 + 1 = 3), how the combined balance sheet is affected by items like goodwill and intangibles, and different transaction structures like stock vs. asset vs. 338(h)(10) purchases.
Think of an LBO model like buying a house with a mortgage – you have a down payment (the equity in an LBO) and the mortgage (the debt used to finance an LBO).
You plug that debt into a 3-statement model for a company, assume that they pay interest and part of the principal each year, and are then sold at the end of a 5-year period.
The LBO model measures how much the company’s value grows and how much debt is paid off over time; the most important drivers are purchase price, exit price, debt used, and the company’s growth rate andprofitability.
The most common question: “Walk me through an LBO model.” You could also get questions on the different drivers and how they affect the return at the end.
More advanced questions cover different types of debt (e.g. bank vs. senior vs. subordinated vs. mezzanine), pro-forma balance sheet adjustments, and debt covenants.
These are really stupid to ask and quite uncommon, but some interviewers like them.
Just maintain your calm and reason through the questions, thinking out-loud where possible; do a Google search to find common brain teasers.
Extras Outside the Interview – Superday Dinners
Everything that transpires on Superday is part of the interview, even if they try to position a dinner as a “time to relax” and “get to know others.”
Never let your guard down, and do not get drunk.
Do not ask nerdy finance questions or too much about investment bankers’ own jobs – no one likes the guy who starts talking about WACC during dinner.
Talk about your own interests and be an interesting and ambitious person who can also have fun.
Think, “Work hard, play hard” – that is the best way to describe bankers’ mindset and lifestyle.
If you do something stupid during the dinner, that could easily sink your chances of getting an offer.
Judgment is a critical part of your job as an investment banking analyst, and the Superday Dinner lets bankers assess your judgment for themselves.
How Many Interviewees Get Offers?
This one varies by the bank and the group you’re interviewing with, how many analysts they need, what location you’re at, and so on.
Generally 1-2 out of 10 superday interviewees will receive immediate offers.
Most of the rest will be put “on hold” and they may receive offers if others back out.
The odds aren’t great, but if you follow all the advice here you’ll be at a big advantage next to the competition.
One really important point : most interviewees come across as mediocre.
They’re not spectacular, but they’re not horrible either. So if you can find your “hook” – something that makes people remember you – that could easily put you over the top.
When You’ll Hear Back
It is a very good sign if you hear back immediately.
If you’re getting an offer, you’ll hear back the day of the interview or early the next day – the bank wants to join immediately.
It isn’t the end of the world if you don’t hear back immediately; sometimes you’ll get a “yes” response a few days to a few weeks afterward, and that’s because you were put “on hold” and others in front of you accepted offers elsewhere.
If you don’t hear back quickly, do follow-up and contact the bank every so often to show your continued interest in the position. Just don’t be annoying and call them every day.
The Odds & Numbers Elsewhere in the World
The odds are about the same at assessment centres, but it’s easier to tip the scales in your favour there because it’s more about content than personality.
For lateral hiring, it’s difficult to define the “odds” because interviews are a more extended process – overall, a 10% offer rate is about right.
What Not to Worry About
- What to ask the interviewers at the end.
- Thank you notes.
Bankers make a decision about a candidate within 5-10 minutes of the interview starting; while it’s nice to ask some thoughtful questions at the end, they won’t make or break your offer status – just ask something.
Similarly, sending thank you notes has no effect on getting an offer – decisions are made very quickly following the interview and no one will even read your notes before deciding.
For Further Learning
This article just scratches the surface of interviews – I’ve gotten requests for more in-depth material on interviews since I started the site, so I’ve developed interview guides and financial modelling courses to help you.
If you have time and want to learn accounting, valuation, and modelling from the ground up, the Excel & modelling Fundamentals program is your best bet.
If, on the other hand, you want more help on the “fit” or “story” side and don’t have as much time, the investment banking interview guide is the better bet.
This is in no way a hard sell – these programs will help you, but you don’t “need” them to win offers.
Just from the guide above, you already have a great start on interviews – good luck, and leave a comment below to let us know how many offers you land.