BIWS 400 QUESTIONS - ALL TECHNICALS | 357
QUESTIONS | WITH COMPLETE SOLUTIONS.
You've never worked in finance before. How much do you know about what
bankers actually do?Answer - I've done a lot of research on my own.
Based on that, I know that bankers advise companies on transactions - buying
and selling other companies, and raising capital. They are "agents" that
connect a company with the appropriate buyer, seller, or investor.
The day-to-day work involves creating presentations, financial analysis and
marketing materials such as Executive Summaries.
Let's say I'm working on an IPO for a client. Can you describe briefly what I
would do?Answer - You meet with the client and gather basic information -
such as their financial details, an industry overview, and who their customers
are. You meet with other bankers and the lawyers to draft the S-1 registration
statement - which describes the company's business and markets it to
investors. You receive some comments from the SEC and keep revising the
document until it's acceptable. You spend a few weeks going on a "road show"
where you present the company to institutional investors and convince them to
invest. The company begins trading on an exchange once you've raised the
capital from investors.
How much do you know about the lifestyle in this industry? Do you know how
many hours you're going to work each week?Answer - I've done my homework
and I understand it's going to be an 80-100 hour per week job but I'm not
afraid of that.
,Can you tell me about the different product and industry groups at our bank?
Answer - Being a bulge bracket bank, Credit Suisse offers pretty much anything
a client could ask for. Restructuring, M&A, LevFin, Debt and Equity Capital
Markets. Some specific groups - Financial Sponsors, ECMS, DCMS, Ultra High
Net Worth (UHNW). Some specific industries - healthcare, industrials (my
previous interviewer), financial institutions, etc.
What's in a pitch book?Answer - It depends.
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.
How do companies select the bankers they work with?Answer - Usually based
on relationships. When it comes time to do a deal, the company calls different
banks it has spoken with and asks them to "pitch" for the business. This is
called a "bake-off" and the company selects the "winner" afterward
Walk me through the process of a typical sell-side M&A deal.Answer - 1. Meet
with company, create initial marketing materials like the Executive Summary
and Offering Memorandum (OM), and decide on potential buyers.
2. Send out Executive Summary to potential buyers to gauge interest.
3. Send NDAs (Non-Disclosure Agreements) to interested buyers along with
more detailed information like the Offering Memorandum, and respond to any
follow-up due diligence requests from the buyers.
4. Set a "bid deadline" and solicit written Indications of Interest (IOIs) from
buyers.
5. Select which buyers advance to the next round.
,6. Continue responding to information requests and setting up due diligence
meetings between the company and potential buyers.
7. Set another bid deadline and pick the "winner."
8. Negotiate terms of the Purchase Agreement with the winner and announce
the deal.
Walk me through the process of a typical buy-side M&A deal.Answer - 1.
Spend a lot of time upfront doing research on dozens or hundreds of potential
acquisition targets, and go through multiple cycles of selection and filtering
with the company you're representing.
2. Narrow down the list based on their feedback and decide which ones to
approach.
3. Conduct meetings and gauge the receptivity of each potential seller.
4. As discussions with the most likely seller become more serious, conduct
more in-depth due diligence and figure out your offer price.
5. Negotiate the price and key terms of the Purchase Agreement and then
announce the transaction.
Walk me through a debt issuance deal.Answer - 1. Meet with the client and
gather basic financial, industry, and customer information.
2. Work closely with DCM / Leveraged Finance to develop a debt financing or
LBO model for the company and figure out what kind of leverage, coverage
ratios, and covenants might be appropriate.
3. Create an investor memorandum describing all of this.
4. Go out to potential debt investors and win commitments from them to
finance the deal.
How are Equity Capital Markets (ECM) and Debt Capital Markets (DCM)
different from M&A or industry groups?Answer - ECM and DCM are both more
"markets-based" than M&A. In M&A your job is to execute sell-side and buy-
side transactions, whereas in ECM/DCM most of your tasks are related to
, staying on top of the market, following current trends, and making
recommendations to industry and product groups for clients and pitch books.
In ECM/DCM you go more in-depth on certain parts of the deal process, but
you don't get as broad a view as you might in other groups.
What's the difference between DCM and Leveraged Finance?Answer - They're
similar and there is some overlap but Leveraged Finance is more "modeling-
intensive" and does more of the deal execution with industry and M&A groups
on LBOs and debt financings. DCM, by contrast, is more closely tied to the
markets and tracks trends and relevant data.
Explain what a divestiture is.Answer - It's when a company decides to sell off a
specific division rather than sell the entire company. The process is very similar
to the sell-side M&A process, but it tends to be "messier" because you're
dealing with a part of one company rather than the whole thing. Creating a
"standalone operating model" for the particular division they're selling is
extremely important, and the transaction structure and valuation are more
complex than they would be for a "plain-vanilla" M&A deal.
Imagine you want to draft a 1-slide company profile for an investor. What
would you put there?Answer - "Put the name of the company in the header,
then divide the slide into 4 equal parts. The top-left is for the business
description, headquarters, and key executives. Put a stock chart and the key
historical and projected financial metrics and multiples on the top right. The
bottom left can have descriptions of products and services, and the bottom
right should have key geographies with a color-coded map to make it look
pretty."
Let's say you had $10 million to invest in anything. What would you do with it?
Answer - It depends.
1. Always ask what the investor or business goals are.
2. Always ask if there are any constraints, limitations, time horizons, or any
other limiting factors.
QUESTIONS | WITH COMPLETE SOLUTIONS.
You've never worked in finance before. How much do you know about what
bankers actually do?Answer - I've done a lot of research on my own.
Based on that, I know that bankers advise companies on transactions - buying
and selling other companies, and raising capital. They are "agents" that
connect a company with the appropriate buyer, seller, or investor.
The day-to-day work involves creating presentations, financial analysis and
marketing materials such as Executive Summaries.
Let's say I'm working on an IPO for a client. Can you describe briefly what I
would do?Answer - You meet with the client and gather basic information -
such as their financial details, an industry overview, and who their customers
are. You meet with other bankers and the lawyers to draft the S-1 registration
statement - which describes the company's business and markets it to
investors. You receive some comments from the SEC and keep revising the
document until it's acceptable. You spend a few weeks going on a "road show"
where you present the company to institutional investors and convince them to
invest. The company begins trading on an exchange once you've raised the
capital from investors.
How much do you know about the lifestyle in this industry? Do you know how
many hours you're going to work each week?Answer - I've done my homework
and I understand it's going to be an 80-100 hour per week job but I'm not
afraid of that.
,Can you tell me about the different product and industry groups at our bank?
Answer - Being a bulge bracket bank, Credit Suisse offers pretty much anything
a client could ask for. Restructuring, M&A, LevFin, Debt and Equity Capital
Markets. Some specific groups - Financial Sponsors, ECMS, DCMS, Ultra High
Net Worth (UHNW). Some specific industries - healthcare, industrials (my
previous interviewer), financial institutions, etc.
What's in a pitch book?Answer - It depends.
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.
How do companies select the bankers they work with?Answer - Usually based
on relationships. When it comes time to do a deal, the company calls different
banks it has spoken with and asks them to "pitch" for the business. This is
called a "bake-off" and the company selects the "winner" afterward
Walk me through the process of a typical sell-side M&A deal.Answer - 1. Meet
with company, create initial marketing materials like the Executive Summary
and Offering Memorandum (OM), and decide on potential buyers.
2. Send out Executive Summary to potential buyers to gauge interest.
3. Send NDAs (Non-Disclosure Agreements) to interested buyers along with
more detailed information like the Offering Memorandum, and respond to any
follow-up due diligence requests from the buyers.
4. Set a "bid deadline" and solicit written Indications of Interest (IOIs) from
buyers.
5. Select which buyers advance to the next round.
,6. Continue responding to information requests and setting up due diligence
meetings between the company and potential buyers.
7. Set another bid deadline and pick the "winner."
8. Negotiate terms of the Purchase Agreement with the winner and announce
the deal.
Walk me through the process of a typical buy-side M&A deal.Answer - 1.
Spend a lot of time upfront doing research on dozens or hundreds of potential
acquisition targets, and go through multiple cycles of selection and filtering
with the company you're representing.
2. Narrow down the list based on their feedback and decide which ones to
approach.
3. Conduct meetings and gauge the receptivity of each potential seller.
4. As discussions with the most likely seller become more serious, conduct
more in-depth due diligence and figure out your offer price.
5. Negotiate the price and key terms of the Purchase Agreement and then
announce the transaction.
Walk me through a debt issuance deal.Answer - 1. Meet with the client and
gather basic financial, industry, and customer information.
2. Work closely with DCM / Leveraged Finance to develop a debt financing or
LBO model for the company and figure out what kind of leverage, coverage
ratios, and covenants might be appropriate.
3. Create an investor memorandum describing all of this.
4. Go out to potential debt investors and win commitments from them to
finance the deal.
How are Equity Capital Markets (ECM) and Debt Capital Markets (DCM)
different from M&A or industry groups?Answer - ECM and DCM are both more
"markets-based" than M&A. In M&A your job is to execute sell-side and buy-
side transactions, whereas in ECM/DCM most of your tasks are related to
, staying on top of the market, following current trends, and making
recommendations to industry and product groups for clients and pitch books.
In ECM/DCM you go more in-depth on certain parts of the deal process, but
you don't get as broad a view as you might in other groups.
What's the difference between DCM and Leveraged Finance?Answer - They're
similar and there is some overlap but Leveraged Finance is more "modeling-
intensive" and does more of the deal execution with industry and M&A groups
on LBOs and debt financings. DCM, by contrast, is more closely tied to the
markets and tracks trends and relevant data.
Explain what a divestiture is.Answer - It's when a company decides to sell off a
specific division rather than sell the entire company. The process is very similar
to the sell-side M&A process, but it tends to be "messier" because you're
dealing with a part of one company rather than the whole thing. Creating a
"standalone operating model" for the particular division they're selling is
extremely important, and the transaction structure and valuation are more
complex than they would be for a "plain-vanilla" M&A deal.
Imagine you want to draft a 1-slide company profile for an investor. What
would you put there?Answer - "Put the name of the company in the header,
then divide the slide into 4 equal parts. The top-left is for the business
description, headquarters, and key executives. Put a stock chart and the key
historical and projected financial metrics and multiples on the top right. The
bottom left can have descriptions of products and services, and the bottom
right should have key geographies with a color-coded map to make it look
pretty."
Let's say you had $10 million to invest in anything. What would you do with it?
Answer - It depends.
1. Always ask what the investor or business goals are.
2. Always ask if there are any constraints, limitations, time horizons, or any
other limiting factors.
