Investment Banking Interview Questions

Investment banking interviews are highly demanding. This is because they are intended to evaluate a candidate’s ability to navigate complex financial transactions. Interviewers are looking for candidates who are not only quick thinkers and detail-oriented, but also personable, resilient, and consistent.

What an Interviewer is Looking for?

Interviewers are looking for candidates with:

• Strong financial knowledge
• Analytical skills
• Problem-solving abilities
• Resilience
• Teamwork
• Leadership
• Adaptability
• Cultural fit
• Excellent communication skills

How to Structure your Answer

When preparing to answer a question, make sure to listen carefully to the question to ensure you understand what you are being asked, so you can give a good answer. Taking a moment to gather your thoughts is often a good idea.

STAR Technique

For non-technical questions, a structured approach like the STAR technique is most suitable. STAR stands for Situation, Task, Action, and Result.

For example:

• Situation: In my sophomore year, I led a finance competition team tasked with developing a financial strategy for a tech startup’s international expansion.
• Task: We needed to evaluate the startup’s financial status, identify potential markets for expansion, and create a strategy encompassing fundraising, budgeting, and risk management.
• Action: My team focused on market research, financial analysis, and strategic planning. We identified promising locations for expansion, assessed their financial viability, and developed a phased strategy that included regular brainstorming sessions for innovation and strategy refinement.
• Result: Our strategy won the competition, receiving praise for its comprehensive analysis, realism, and practicality from a panel of academic and industry experts. This experience honed my leadership skills, deepened my understanding of global finance, and affirmed my interest in investment banking.

Interview Structure

Investment banking interviews typically follow a structured format. This tends to include a personal introduction, resume-based questions, behavioral, and technical questions. Making sure you are ready to address each of these types of questions can help you feel more prepared and confident helping to improve your performance in the interview.

Your Personal Story

Interviews typically begin with one of following questions:

• Tell me about yourself
• Could you share some highlights about yourself?
• Walk me through your resume
• Can you discuss your background in more detail?
• What brings you to us today?

These questions are varied but are all essentially asking the same thing. The interviewer wants to find out about your personal story. When responding to these questions, prepare a brief summary of your personal journey:

• Highlight the university courses that you found interesting and how they relate directly to investment banking.
• Talk about your internships and practical projects where you were involved in real deals or banking-related case studies that piqued your interest.
• Mention the events you’ve managed and showcase your leadership abilities.

Combine all these aspects to form a clear story that shows how your career goals align with a career in investment banking.

Resume Related Questions

Following the introduction, you can expect the interviewer to ask you questions based on your resume. You should be completely familiar with every aspect of your resume.

Non-finance Experience

Candidates from non-finance backgrounds and without finance experience, can create impact in interviews by demonstrating genuine interest and enthusiasm for the field, evident through your preparation and answers. If you haven’t worked on investment banking-related projects or internships. Be prepared to answer questions about projects you’ve undertaken.

1. Share an example of a situation where you had to communicate complex information to a non-technical audience.
2. Tell me about a project where you faced tight deadlines. How did you manage your time?
3. Can you describe a scenario where you worked effectively in a team?

Internship or Related Projects Experience

If you’ve had experience with projects related to investment banking or interned at an investment bank, and the interviewer inquires if you were involved in model preparation, take this opportunity. You can steer the interview towards this subject. Recall the specific details of the projects or deals you’ve been part of, like how you determined the value of the company and its competitors, the Beta used for WACC calculation, the method used for project valuation, the research conducted, and the databases utilized. At this point, it’s beneficial to have a good understanding of the industry you’ve worked in, know the major players, the dynamics of the value chain, and future forecasts.

1. Can you describe a financial model you’ve developed during your internship or a project?
2. What strategies did you employ to ensure the accuracy and reliability of the data used in those models?
3. Can you discuss a time when you had to adjust your valuation approach due to unexpected market changes or new information?
4. Which methods did you use for company valuation in your previous projects?
5. What was the most challenging aspect of building a financial model or conducting a valuation, and how did you overcome it?

Behavioural Questions

Investment banking behavioral or ‘best fit’ questions, are used to determine if the candidate would be a good fit culturally and professionally with the organization. Example questions include:

1. What draws you to investment banking?
2. Why do you want to join this particular bank?
3. How do you handle stress?
4. Tell me a situation where you encountered a complex problem and how did you solve it?
5. How do you prioritize and manage multiple tasks simultaneously?
6. Describe an experience where you had to adapt to change quickly.
7. How do you handle setbacks or failures, and what have you learned from them?

Technical Questions

You might be expected to have a solid understanding of basic technical skills in valuation, financing and M&A, particularly if your degree is related to finance. To prepare for technical questions in your interview, you should learn the theories and apply them through practical examples. When answering technical questions, being able to demonstrate the process you used to find the answer is just as important as your response. An online training program is a great way to learn the core technical topics and demonstrate a willingness to learn. The investment banker online course reflects the training new analysts receive at the leading financial organizations across accounting, financial modeling, valuation, M&A and LBO analysis.

Some examples of technical questions include:

Economic Outlook

1. What is your outlook on the economy?
2. Which industry do you follow? Have you tracked any major M&A activity in that industry recently?
3. Pitch a stock.

Corporate Finance

4. What are the three financial statements?
5. How does depreciation affect each of these statements?
6. How do depreciation and tax together impact each of these statements?
7. Between higher NPV and IRR, which is preferable?
8. As an investor would you consider EBITDA or Net Profit for judging a potential investment?

Valuation

9. What is Enterprise Value (EV)? How do you calculate it?
10. Why is cash & cash equivalent deducted from EV?
11. What is Discounted Cash Flow Analysis (DCF)?
12. What is the trading comparables method of valuation?
13. What is the transaction comparables method of valuation?
14. What is WACC?
15. Can you provide an example of a sector or company with a negative beta?
16. What is the difference between FCFF and FCFE?

Merger & Acquisition

17. What is the difference between a merger and an acquisition?
18. Explain the main types of M&A transactions: horizontal, vertical, and conglomerate.
19. How do synergies play a role in M&A transactions?

Leveraged Buy-out (LBO)

20. What is a leveraged buyout (LBO)?
21. What are the main benefits and risks associated with LBO transactions?
22. What factors influence the decision to use debt financing in an LBO?

Find 100 technical investment banking interview questions in the free download section to see what else you might be asked in an interview and practice your answers.

Candidate Questions

Towards the end of the interview, interviewers usually allow candidates to ask their own questions. This is your opportunity to demonstrate your strong interest in the role and the company. By asking thoughtful questions, you can further engage in the conversation. You might want to ask questions about the role and the team, the culture, your interviewer, or the interview process.

1. Could you tell me more about the team I would be working with?
2. Can you describe your typical workday?
3. What are the biggest challenges in this role?
4. What do you enjoy the most about working here?
5. What are the typical career paths in this role?
6. How does the company plan to evolve for next few years?
7. What are the next steps in this interview process?

Asking questions demonstrates your interest in the role and helps you determine if the job and company suit you. Adjust your questions based on the interview discussion to show your engagement and sincere interest in the opportunity.

Additional Resources

• Everything You Need to Know about Investment Banking Spring Weeks
• Investment Banking Recruitment: The Ultimate Guide
• The Investment Banker Micro-Degree
• Investment Banking Interview Skills Course
• Investment Banking Superday – 2024 Guide