BIWS 400 QUESTIONS - ALL TECHNICALS,
WALL STREET PREP REDBOOK EXAM
WITH CORRECT SOLUTIONS
How do companies select the bankers they work with? - -ANS☑️☑️--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. - -ANS☑️☑️--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. - -ANS☑️☑️--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. - -ANS☑️☑️--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? - -ANS☑️☑️--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.
You've never worked in finance before. How much do you know about what
bankers actually do? - -ANS☑️☑️--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? - -ANS☑️☑️--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? - -ANS☑️☑️--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? - -ANS☑️☑️--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? - -ANS☑️☑️--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.
, What's the difference between DCM and Leveraged Finance? - -ANS☑️☑️--
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. - -ANS☑️☑️--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? - -ANS☑️☑️--"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? - -ANS☑️☑️--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.
If you owned a small business and were approached by a larger company
about an acquisition, how would you think about the offer, and how would
WALL STREET PREP REDBOOK EXAM
WITH CORRECT SOLUTIONS
How do companies select the bankers they work with? - -ANS☑️☑️--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. - -ANS☑️☑️--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. - -ANS☑️☑️--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. - -ANS☑️☑️--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? - -ANS☑️☑️--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.
You've never worked in finance before. How much do you know about what
bankers actually do? - -ANS☑️☑️--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? - -ANS☑️☑️--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? - -ANS☑️☑️--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? - -ANS☑️☑️--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? - -ANS☑️☑️--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.
, What's the difference between DCM and Leveraged Finance? - -ANS☑️☑️--
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. - -ANS☑️☑️--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? - -ANS☑️☑️--"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? - -ANS☑️☑️--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.
If you owned a small business and were approached by a larger company
about an acquisition, how would you think about the offer, and how would
