A note on timing. Recruiting timelines differ by bank, by group and by year, and they've moved earlier over time. Check each firm's careers page, your school's career office and people you've networked with for the dates that apply to you. The questions below come up whatever the timeline.
Behavioral and “fit” questions
These often decide the interview. Prepare and rehearse them as carefully as the technicals.
- Walk me through your resume. Two minutes, chronological, ending with why you're interviewing for this role now.
- Why investment banking? Be specific: the learning curve, exposure to transactions, working in teams on high-stakes problems. Tie it to something you've actually done.
- Why our firm? Mention people you spoke with, the firm's deal mix or groups, and what stood out to you. Generic praise doesn't count.
- Tell me about a time you worked on a team / faced a setback / led something. Use a clear structure (situation, task, action, result) and give the result in numbers where you can.
- What are your strengths and weaknesses? Pick a real weakness and show what you're doing about it.
Accounting questions
- Walk me through the three financial statements. What each one shows, and how net income, cash and retained earnings connect them.
- How do the statements link? Net income starts the cash flow statement; ending cash goes to the balance sheet; net income (less dividends) increases retained earnings.
- If depreciation goes up by $10, what happens? With a 25% tax rate, net income falls $7.50, cash rises $2.50 (the tax saving), PP&E falls $10 and equity falls $7.50, so the balance sheet still balances. We walk through it step by step in How depreciation flows through the three statements.
- What's working capital, and why does an increase use cash?
- Why is interest expense on the income statement but debt repayment isn't? See our explainer.
Valuation questions
- What are the main ways to value a company? Comparable companies, precedent transactions and a DCF; for sponsor buyers, an LBO analysis too.
- Walk me through a DCF. Project unlevered free cash flow, calculate a terminal value, discount both at the WACC, add them to get enterprise value, then subtract net debt for equity value.
- What's the difference between enterprise value and equity value? Enterprise value is the value of the whole business to all capital providers; equity value is what's left for shareholders after net debt (and other claims).
- How do you calculate WACC, and why might it change?
- Why would you use EV/EBITDA rather than P/E? EV/EBITDA isn't distorted by capital structure, tax differences or D&A policies.
- Which valuation method usually gives the highest value? Often precedent transactions, because they include a control premium, but it depends on the market.
LBO questions
- Walk me through an LBO. See our model answer.
- Why do sponsors use debt?
- What makes a good LBO candidate?
- Quick math: “A sponsor doubles its money in five years. Roughly what's the IRR?” (About 15%.)
Markets and deals
- Tell me about a deal you've followed. Pick one announced in the last few months. Know the buyer, seller, price, multiple, rationale, and whether you think it makes sense.
- What's happening in the markets? Know roughly where interest rates and major indices stand, and one or two themes affecting M&A activity. Read the financial news daily in the weeks before interviews.
- Pitch me a company (more common at boutiques and for sector groups).
How to prepare in the weeks before
- Write your story and practice it out loud until it sounds natural, not memorized.
- Master the accounting and valuation basics before the advanced topics. Most mistakes happen on the fundamentals.
- Do timed mock interviews with friends, mentors or your school's finance club.
- Prepare two deals and one market view, and update them weekly.
- Prepare thoughtful questions for each interviewer.
Turn technicals into muscle memory
Practice every step of an LBO in a live spreadsheet, free.