Questions to Ask Investment Bankers for a Successful Interview

Asking the right questions in an investment banking interview can make all the difference between landing a job and being left in the dust. To stand out from the crowd, you need to be prepared with thoughtful and insightful questions that demonstrate your interest in the role and the company.

Investment bankers often talk about the importance of teamwork and collaboration, but you want to know what that really means in practice. According to the article, "Investment bankers typically work in teams of 5-10 people, with a clear division of labor and a focus on delivering results." This is a great opportunity to ask questions like "Can you describe a recent deal that required collaboration between team members?" or "How does the bank support teamwork and communication among employees?"

The interview is also a chance to learn more about the company culture and values. For example, the article notes that investment banks often prioritize "long hours and high stress" but also "encourage work-life balance and employee well-being." You might ask questions like "How does the bank support its employees' mental health and well-being?" or "What are some ways that the bank promotes work-life balance?"

Discover more: Do Investment Bankers Work Weekends

To end an investment banking interview on a positive note, it's essential to ask thoughtful questions. Interviews typically finish with the candidate asking questions to the interviewer.

Research is key to coming up with good questions. You can find recent deals on a bank's website or via Google searches. Look up one deal the bank has worked on recently, and outline the background, deal rationale, 1-2 financial stats, and your opinion of it.

Preparation is crucial for in-depth discussions. You should prepare for one in-depth discussion of a deal, market, or company. This requires background information, deal rationale, a few financial stats, and your opinion of it. If they ask you to discuss a market, pick the market from this deal and make sure you know the approximate market size, key trends/drivers, major competitors, and your opinion of its prospects.

Here are the steps to prepare for these discussions:

In the corporate finance group at Goldman Sachs, investment bankers were tasked with advising on a $10 billion acquisition deal, which involved negotiating with both the target company's management and the acquiring company's board of directors.

You might like: Bank Holding Company Act

Investment bankers at Morgan Stanley worked on a leveraged buyout deal, where they had to structure a complex debt package to finance the acquisition.

Investment bankers at J.P. Morgan were involved in advising on a $5 billion IPO, which required them to value the company and advise on the optimal pricing.

They worked with a client who was considering a merger with a competitor, which involved analyzing the potential synergies and risks of the deal.

Investment bankers at Bank of America Merrill Lynch were tasked with advising on a $2 billion asset sale, which required them to identify potential buyers and negotiate the sale price.

In each of these cases, investment bankers had to use their analytical and communication skills to advise clients on the best course of action.

A fresh viewpoint: J.p. Morgan Virtual Internship Investment Banking

Investment banking interviews can be challenging, but knowing the right categories of questions to ask can help you stand out. There are four main categories of open-ended questions to ask an interviewer: Background Questions, Experience Questions, Industry and Firm-Specific Questions, and Career Advice Questions.

These categories can help guide your preparation and ensure you're asking the right questions. For example, Industry and Firm-Specific Questions can be used to discuss deals, markets, and companies, such as asking about a recent deal or a company the interviewer is interested in.

Here are some key points to keep in mind when asking these types of questions:

When asking an interviewer questions, it's essential to organize them into categories to ensure you get the most out of the conversation.

There are four main categories of questions to ask an interviewer: Background Questions, Experience Questions, Industry and Firm-Specific Questions, and Career Advice Questions.

Each category serves a unique purpose and can help you gain valuable insights into the interviewer's perspective.

Background Questions can help you understand the interviewer's personal history and experiences that have shaped their career.

Experience Questions allow you to delve into the interviewer's past experiences and learn from their successes and failures.

Industry and Firm-Specific Questions give you a deeper understanding of the industry and firm, helping you determine if it's a good fit for your skills and interests.

Career Advice Questions provide an opportunity to gain valuable insights and advice from someone who has been in your shoes.

Here are the four categories of questions to ask an interviewer:

These questions are not that important unless you've had extensive deal experience that the interviewers plan to dig into.

You'll need to research and prepare for a few deals, markets, and companies to feel confident answering these questions. Look up one deal the bank has worked on recently and find something from the past ~6 months on the bank's website or via Google searches.

Outline the background, deal rationale, 1-2 financial stats, and your opinion of it. This can be very short because you just need to show that you know something about the bank. Prepare for 1 In-Depth Deal/Market/Company Discussion by gathering background information, deal rationale, a few financial stats, and your opinion of it.

If they ask you to discuss a market, pick the market from this deal and make sure you know the approximate market size, key trends/drivers, major competitors, and your opinion of its prospects. If you've had previous IB, PE, corporate law, or Big 4 experience, prepare for 2 Discussions of Your Own Deals by gathering background information, deal motivation, your personal contributions, and the current status for each one you use.

Morgan Stanley is a bank, and banks are typically valued using the Comparable Companies method.

This type of question is also similar to question number 2 above, because your interviewer will probably be expecting you to compare DCF to the other valuation methods.

A relative valuation method would usually be better than DCF when the company's assets and liabilities are legally required to be "marked to market".

DCF would work better than a relative valuation when the company's financial data is not publicly available.

Here's a quick overview of how you could approach this type of question:

There are three main ways to value a company: the Discounted Cash Flow method, the CompCo method, and the CompAq method.

The Discounted Cash Flow method values a company using the present value of its future cash flows. This method is often used in investment banking interviews, making it a good one to practice.

The CompCo method values a business by comparing its multiples (e.g. the P/E ratio) with similar companies. This method is typically used for banks, as they are required to "mark to market" their assets and liabilities.

You should be able to quickly identify the most suitable method for a company, such as using the Price to Book Value multiple for banks.

Here are some key points to keep in mind when it comes to valuation methods:

It's worth noting that the primary method for calculating cost of equity is using CAPM, and there are two main ways to calculate cost of debt.

Valuation methods can be overwhelming, but let's break it down. There are three main ways to value a company: the Discounted Cash Flow method, the CompCo method, and the CompAq method.

The Discounted Cash Flow method values a company using the present value of its future cash flows. This method is often used in investment banking interviews, and it's essential to understand how to calculate it.

The CompCo method values a business by comparing its multiples, such as the P/E ratio, with similar companies. This method is also known as the Comparable Company method.

The CompAq method values a company by comparing it with similar companies that have sold in the past. This method is also known as the Comparable Acquisition method.

Here's a quick comparison of the three methods:

In investment banking interviews, you may be asked to compare these methods or to choose the best method for a specific company. It's essential to have a solid understanding of each method and how to apply it.

The LBO model interview is a critical part of the investment banking process, where you'll be grilled on your ability to value companies and create financial models.

You can expect to be asked about your understanding of the LBO model, which is a financial model used to value companies that are being acquired or taken private.

The LBO model takes into account the company's financial performance, debt structure, and other factors to determine its value.

A key component of the LBO model is the concept of enterprise value, which represents the total value of a company's assets and liabilities.

The enterprise value is calculated by adding the company's debt and equity, and then subtracting its cash and other liquid assets.

To prepare for the LBO model interview, make sure you have a solid understanding of financial statements and how to analyze them.

You should be able to walk through a financial model and explain your assumptions and calculations.

A good LBO model should be able to handle different scenarios, such as changes in interest rates or debt levels.

Consider reading: Questions to Ask Debt Collectors

If you're asked about a recent deal, be prepared to find something from the past 6 months on the bank's website or via Google searches, and outline the background, deal rationale, 1-2 financial stats, and your opinion of it.

To prepare for an in-depth discussion, gather background information, deal rationale, a few financial stats, and your opinion of the deal. If discussing a market, pick the market from the deal and know the approximate market size, key trends/drivers, major competitors, and your opinion of its prospects.

For more extensive experience, consider preparing 2 discussions of your own deals, including background information, deal motivation, your personal contributions, and the current status for each one.

In the world of mergers and acquisitions, it's essential to demonstrate your knowledge and enthusiasm for the industry and firm you're interviewing with. To do this, you'll want to be prepared to answer industry and firm-specific questions.

When asked about the industry, you can talk about the trends that excite you. For example, you might mention the growing demand for renewable energy or the increasing popularity of e-commerce.

You might be asked to compare your predictions for the industry's outlook with those of others. This is your chance to show your analytical skills and provide a unique perspective.

To answer questions about the firm, you'll want to be familiar with its recent deal flow and any notable transactions it's made. This will give you a sense of the firm's current focus and priorities.

Here are some examples of industry and firm-specific questions you might be asked, along with some tips for answering them:

By being prepared to answer these types of questions, you'll be able to showcase your knowledge and enthusiasm for the industry and firm, and increase your chances of success in your M&A career.

To ace an M&A and merger model interview, you'll need to be familiar with deal analysis and financial modeling. Start by researching a recent deal worked on by the bank, and outline the background, deal rationale, and financial stats.

When asked about a deal, be prepared to discuss its merits and drawbacks. You can use the bank's website or Google searches to find relevant information. For a more in-depth discussion, prepare a detailed analysis of a deal, including background information, deal rationale, and financial stats.

If you have previous experience in investment banking, private equity, or corporate law, be prepared to discuss your own deals. Gather background information, deal motivation, and your personal contributions to each deal.

To determine if an acquisition is accretive or dilutive, consider the impact on the buyer's Earnings Per Share (EPS). A deal that increases the buyer's EPS is accretive, while one that decreases it is dilutive. If the deal is all stock, it's easy to determine if it's accretive or dilutive.

Here's a quick reference guide to help you determine if an acquisition is accretive or dilutive:

Remember to ask your interviewer if the deal is all stock, and be prepared to explain your reasoning if it's not. With practice and research, you'll be well-prepared to tackle M&A and merger model interview questions.

An LBO, or Leveraged Buyout, is an acquisition made using a high percentage of debt. The success of an LBO is heavily influenced by the actions the acquiring firm takes to increase the exit price of the target business.

The most basic drivers for the success or failure of an LBO are the purchase price, the amount of debt used and the cost of debt, and the expected exit price.

A successful LBO typically involves expanding or restructuring the business to increase its value.

Take a look at this: Questions to Ask Debt Consolidation Company

As an investment banker, it's essential to have a strong foundation in technical knowledge. You'll be working with complex financial models, so make sure you understand how to build and analyze them.

Investment bankers use financial modeling software like Excel to create detailed financial projections for companies. They need to be proficient in using Excel formulas and functions.

Understanding accounting principles is crucial for investment bankers. They need to be able to read and analyze financial statements, including the balance sheet, income statement, and cash flow statement.

Investment bankers also need to know how to value companies using different methods, such as the discounted cash flow (DCF) model. This involves forecasting a company's future cash flows and discounting them back to their present value.

Investment bankers often work with mergers and acquisitions (M&A) transactions, so they need to understand how to analyze a company's financials and identify potential synergies. They also need to know how to negotiate deals and structure transactions.

Investment bankers use financial ratios and metrics to analyze a company's performance and identify areas for improvement. They need to be able to calculate and interpret ratios like the debt-to-equity ratio and the return on equity (ROE).

Investment bankers also need to stay up-to-date on market trends and economic conditions. They need to understand how changes in interest rates, inflation, and GDP can impact a company's financial performance.

Curious to learn more? Check out: What Is Value Investing