Investment banking interview questions can be extremely challenging if you don’t prepare for them. Because investment banking is one of the most lucrative and high-profile areas of finance, it attracts top talent, which makes getting a job at a top firm exceedingly competitive. Firms must be discerning with who and how they conduct interviews. After all, investment banks play a central role in large-scale financial transactions that will have millions, or sometimes billions, of dollars changing hands.
One of the most important choke points on the path to an investment banking career is the investment banking interview. So, today, we’ll take a close look at what you can expect from the investment banking interview, and we’ll help you prepare for some of the most common and important investment banking interview questions.
Table of Contents
- The Investment Banking Interview
- Top Investment Banking Interview Questions
- Business Intelligence Tools
- Investment Banking Case Interviews
The Investment Banking Interview
For some, the investment banking interview is the place where their investment banking dreams go to die. This has led to horror stories on the internet about particularly terrible interviews. Some say certain interviewers adopt a “bad cop” persona on purpose. But this is far from the norm. In truth, while the investment banking interview is a challenging process, it’s generally not an antagonistic process.
The investment banking interview exists to give the interviewer and the company a chance to get to know you as a person, a colleague, and an investment banker. The interview is an opportunity for them to test whether you have the chops to cut it as an investment banker:
- Will you be a harmonious person to work and communicate with?
- Are you detail oriented?
- Are you well versed in financial methodologies (i.e., modeling) and terminology?
- Do you have the work ethic to survive in a role that often demands>100-hour workweeks?
A relaxed but alert energy level combined with a tone of humble confidence goes a long way, but that’s just the beginning.
So here we’ll examine the top ten investment banking interview questions you’re likely to encounter, broken into categories along with ways you can prepare to answer them.
Note, you may also face more in-depth case interview questions, though this is less common for entry-level hires.
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Top Investment Banking Interview Questions
Personal Story Questions
These questions are specifically designed to help the interviewer determine your personality, your personal history/narrative, your character, your life experience, and all the other personal components you’ll bring to the work of investment banking. It is a good idea to prepare authentic (yet polished) stories to these questions. These stories should be rooted in your academic, leadership, and professional experience.
- Why Investment Banking?
- Tell Me About Yourself
We group these questions together because, in a sense, they’re asking the same thing. The interviewer wants the human through-line from the resume on their desk to the person sitting in front of them. A good answer “why investment banking” interview answer also goes a long way toward telling the applicant who you are.
It may be the case that what draws you to investment banking, at first, is the big salaries and flashy headlines. But as you answer the “why investment banking” interview question, it would be better to speak more to what you’re passionate about, inspired by, or what you can contribute to the field. It may be that you must do some research to find things about the industry you’re authentically inspired by. Do not talk about how you are considering investment banking amongst other options. This can often be a deal killer. There are enough people 100% devoted to investment banking for a firm to continue to consider someone who isn’t even sure this demanding field is for them.
Investment Banking Technical Questions
Investment banking is a highly technical profession. Successful investment bankers make difficult decisions involving complex analysis and specialized knowledge. Investment banking technical interview questions will test you to see whether you possess the Excel and modeling acuity needed for the job.
Even if you studied hard in your finance classes, you’ll want to revisit some core concepts. You’ll especially want to focus on accounting, valuation, and DCF analysis, which tend to make up most of the technical questions.
- How do you value a company?
Valuing companies makes up a large part of the investment banker’s job, so it’s important to have a thorough answer to this question. Review the three most common valuation methods: the multiples approach, the transactions approach, and the discounted cash flow (DCF) approach. You should be able to confidently explain these approaches, their utility, and apply them if asked to value an actual company on the spot.
- What are the three most important financial statements?
You should be able explain what’s contained in the Income Statement, the Balance Sheet, and the Cash Flow Statement. You should also be able to explain the ways they relate to each other and their significance to the investment banker (hint: investment bankers spend much more time in a balance sheet, while consultants focus more on the income statement). Further technical investment banking interview questions are likely to ask more about how you would use these and other documents to analyze specific situations.
- Tell me about a time you demonstrated leadership potential.
- What’s an example of a time you and your team achieved success?
- What’s an example of a time you and your team failed?
Most good interviewers will try to get at these three varieties of experience. In addition to helping flesh out your personal story, they also demonstrate how well you work with others, particularly in challenging situations. It is possible to strike a balance between telling a positive story and acknowledging adversity you may have faced. A successful applicant tells a positive and cohesive story demonstrating how each of these kinds of experiences have prepared them to be an effective investment banker.
These investment banking interview questions assess your knowledge of the industry. It’s not enough just to have all the technical and theoretical knowledge you can learn in textbooks. You’ll also need a genuine sense of how finance works in the real world (e.g., what investors and firms are doing in certain situations). Reading the Wall Street Journal is a great place to begin to gather this knowledge base.
- What’s a recent deal that caught your attention?
Interviewers want to know that you’re actively monitoring the space. Again, there are so many competitive applicants, firms have no reason to hire someone whose heart isn’t in the work. Spend the weeks or months leading up to your interview paying close attention to the current investment banking landscape. You should prepare some knowledge and analysis of a recent deal that’s taken place on the Street.
- Tell me the next company I should invest in.
Spend a few hours before your interview researching a specific company that you think may be ripe for investment. You should have a solid sense of the company’s financials, as well as its place in the market. Perhaps most importantly, you should be able to communicate your analysis effectively.
- What did you think of our bank’s last deal?
While you may be interviewing thinking you’ll take an offer at any bank, interviewers are hiring for their specific company. It’s important to communicate some knowledge of and authentic interest in the bank you’re interviewing for. You should research the company’s recent history through reviewing recent earnings calls, as well as the corporate culture through networking.
Business Intelligence Tools
The investment banking interview is likely to include some questions about business intelligence tools. The explosion of big data means companies must use ever more sophisticated resources to collect and analyze mass quantities of information. Business intelligence software helps to do this.
It’s possible you have some experience working with business intelligence tools. If not, you should do some research into the most popular business intelligence software used by investment banking companies today. These tools include SAP Business Objects, SAS Analytics, Oracle, Domo, Sisense, and more. Even if you don’t have firsthand experience in all of them, it will be helpful to demonstrate general knowledge of the tools that are available and which are appropriate for different purposes.
Investment Banking Case Interviews
While it’s not a universal experience for applicants to encounter investment banking case interviews, it does happen. As you move up the chain and interview for more senior positions, it’ll only become more and more likely that you’ll be met with a case question in your investment banking interview.
So, it’s a good idea to start familiarizing yourself with the case interview process and ways to prepare. Luckily, Management Consulted has everything you need in the Complete Case Interview Prep Guide.
There isn’t an easy way to skate through the interview process for one of the most in-demand and competitive jobs in the world. In short, there’s no real way to cheat the investment banking interview process. Banks have too much money on the line, and too many gifted applicants to choose from.
Still, with dedication and adequate preparation for the investment banking interview questions you’re likely to face, it is possible to nail the interview. Work with our expert team to prepare specifically for the behavioral questions you’re likely to face in an investment banking interview. And remember, don’t screw up the handshake!
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