The 400 Investment Banking Interview Questions & Answers You Need to Know

The 400 Investment Banking Interview Questions & Answers Introduction This guide has one purpose: to help you answer the most important "fit" and technical questions in investment banking interviews. We tell you what's important and what you need to say - nothing more and nothing less. Most other guides suffer from several problems: 1. The information is not investment banking-specific. Do you think you're going to get a question about "Why you're interested in this position?" I'll tell you why you're interested - because you want to make a lot of money! 2. The information is out-of-date, wrong or incomplete (see: The Vault Guide). These days, interviewers assume you know the basics - like how to value a company - and go beyond that with advanced questions that require thinking more than memorization. 3. No answers are provided, or there's minimal direction (see: The Recruiting Guide to Investment Banking). Of course, you shouldn't memorize answers word-forword, but it's helpful to have an idea of how you might structure your answers. 4. The questions do not apply to interviewees from diverse backgrounds. If you worked at Goldman Sachs this past summer it's not hard to convince them you're serious about finance - but what if you didn't? What if you're making a career transition or you're coming in as a more experienced hire? That's what this guide is for. 5. The guides were not written by bankers. If you doubt my credentials, just refer to Mergers & Inquisitions, where I've written over 200 detailed articles on networking, resumes, interviews, and recruiting for investment banking and private equity. The proof is in the pudding. Your time is limited - so we get you the answers you need, when you need them (right now). What follows is a list of 400 investment banking interview questions and answers, divided into different types of “fit" questions (personal, team / leadership, "why banking," etc.), technical questions (accounting, valuation, DCF, merger models and LBO models, and brain teasers), and other topics (restructuring, distressed M&A, and discussing transactions). What's New in the 2nd Edition? A lot. Dozens of more advanced technical questions in each section. 40 Restructuring/Distressed M&A questions - very important in today's market. How to discuss transactions and deal experience in interviews, with sample "good" responses for each question. More fit questions and answers that address important scenarios (explaining bad grades, gaps in your resume, etc.). Plus, video tutorials on how to tell your "story," sample deal discussions, and sample investment banking interview with full critiques - which you can access via the BIWS membership site you have access to if you've signed up for this guide. These new editions make the guide twice the length of the original version, but you don't have to read everything. Pick and choose which sections are most relevant to you. I recommend reviewing the table of contents first and then skipping to the questions you are most in need of understanding. Or you caan read the entire guide all at once as well - it's up to you. In either case, though, the key is to apply what you're learning and test yourself. Rather than reading everything passively, try to answer each question - and then check whether or not you got it right. Do that, and you'll be several steps closer to landing investment banking offers. -Brian Mergers & Inquisitions Breaking Into Wall Street Fit/Qualitative Questions Although we'd like to think otherwise, there are no "correct" answers you can use for the qualitative questions you'll get. They depend on your background and your own experience, and everyone's different. However, there are good ways to answer and poor ways to answer. In this section, we detail the best techniques along with what you should say - and avoid saying. Most candidates make 2 big mistakes when answering "fit" questions: 1. They fail to use specific anecdotes to support their points. 2. They do not structure their answers properly. Whenever you're asked a generic question about "how you work in teams" or something of that nature, you need to have anecdotes ready to back up what you say. You should go through this list and your resume and make sure you have stories prepared for the most common questions - you can then use those and then adapt them as necessary for any new questions you get. Regardless of the question, you also need to structure it properly. Don't jump around from point to point - start with the main idea you want to get across and then support it with examples. Don't start going off on tangents about your former life in the circus or how you climbed Mt. Everest. With the exception of the "Walk me through your resume" question, most "fit" questions should take no more than 1 minute for you to answer. Be succinct and conversational in your tone, and you should do fine. nalytical / Attention to Detail Questions & Suggested Answers Analytical and quantitative questions are more common if you're a Liberal Arts major or if you haven't had finance, engineering or math experience. Interviewers are trying to assess whether "you can count" - you don't need to be a math whiz to be a banker, but you do need to be comfortable with numbers and calculations in Excel. So if you haven't majored in something quantitative or your work experience is all journalism-related, you'll want to prepare a few examples of your analytical abilities. Even if you have had finance or analytical experience, you're still likely to be asked about your analytical skills - they want to test your communication abilities and make sure you can express abstract concepts clearly. These questions are also a good chance to bring up any independent study of finance you've done, which will help your case once again. 1. I see you've done mostly journalism and research internships before. Can you discuss your quantitative skills? You should respond by discussing specific times when you had to analyze numbers and/or use logic. Good examples might include: your personal portfolio, any math/science classes you've taken, any type of budgeting process you've been through, any type of research you've done that involved numbers. 2. 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. 3. 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. 4. You've been working as a lawyer for the past 3 years - 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. 5. You were an English major - how do you know you can handle the quantitative rigor required in investment banking? Combine the answers to questions #1 and #4 for this one - the key is to use specific examples rather than just saying, "I got a high math SAT score!" Personal financial experience, classes, self-study courses and independent study work well. 6. 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. 7. What's the most number of classes you ever took at once and how well did you do in each of them? Once again, it's best to point to something specific - "During my junior year, I was taking 5 classes at once as well as working part-time and running my business fraternity - and I still got A's in all of them."