Investment Banking Interview Questions

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Define Why You Want To Do Investment Banking

  • Opportunity to work and learn from the smartest people
  • Ability to execute a large amount of transactions and learn the deal process inside and out
  • Passion for finance; IB provides exposure to sophisticated deals as well as financial modeling
  • Fast-paced environment
  • Collegial team environment

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Handling The Interview

Staying calm and focused on answering the questions clearly.

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Interviewing With Multiple Banks

Being honest and letting your potential employer know that you are invested in searching.

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Strengths & Weaknesses

Understand your strengths and weaknesses so your employer can ensure perfect fit.

Where do you see yourself in 5, 10 and 15 years?

This question may be good to show bits of your personality and how you plan to use banking to pivot in maybe 15 years to another career of your passion.

Why do you want to work at a boutique or bulge bracket or Canadian or American bank?

Both boutique and bulge brackets are tremendous firms to work for, but it is key that you have set stories for both types of banks.

What makes a good modeler?

A good modeler is someone who is curious and tenacious. A great model is a tedious process that involves research and looking at numerous forms of guidance to come up with reasonable numbers and assumptions.

Have You Ever Managed A Team Before?

  • Describe the context of the team’s goals and how you arrived into a leadership position. Elaborate on the challenges you faced and how you overcame them. Make sure to communicate clearly and provide tangible details on both the challenges and the steps you took to overcome them.
  • Finally, speak about how your efforts led to a positive result; if you can quantify this result, that’s even better, although it’s not necessary. Conclude with what you learned and gained from the experience.

Why Not Private Equity?

  • Although some candidates may be interested in private equity, it’s important to speak to your interest in investment banking. The focus should be talking about all the advantages of investment banking, rather than talking about the disadvantages of private equity.
  • For example, maybe you enjoy the client presentation aspect of investment banking, which requires you to understand what the client wants and how the deliverable should be framed to maximize value.

8 Articles You Need To Ace Your Next Financial Interview

If Company A is 30% equity, 70% debt currently, but will have a capital structure of 50% equity, 50% debt in year 5, which capital structure do you use for your DCF?

The 50/50% capital structure would be used. When calculating WACC, we assume the target capital structure, which is the capital structure the company will have in the long term. This is because the value of a company is determined by its future cash flows, and not its current cash flows, so the long-term capital structure […]

What are some key debt metrics, and why are they important?

The leverage multiple, debt / EBITDA, is a common metric comparing debt and EBITDA. EBITDA is a proxy for cashflow that can be used to pay back the debt. It also remains neutral in terms of capital structure, tax jurisdiction, and accounting policies. The interest coverage ratio is another key debt metric, and is calculated […]

What type of multiples would you use for a company in real estate?

P / FFO Per ShareP / AFFO Per ShareP / NAV Per Share FFO = Funds from Operations, which adds D&A and subtracts capital gainsAFFO = FFO + capital expenditures + rent increasesInterest is core to business, so debt is consideredNAV = Net Asset Value (Assets – Liabilities) -> Note that this is a different […]

Do private equity companies add more value to portfolio companies through their ability to do financial engineering and take on more debt, or do they add more value to their portfolio companies by enhancing their strategy? (1 min)

Enhancing strategy adds more value as the impact is far more permanent than temporarily playing around with the capital structure. Strategic shifts may last a lifetime, while capital structure changes will only affect the company until the PE firm sells the company. This is often asked by mid-market PE funds, which are typically more involved […]

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