The Complete Investment Banking Interview Guide: Technicals, Fit & Final Prep

Quick answer: To prepare for an investment banking interview, master four things: a 90-second story for “walk me through your resume” and “why investment banking”; the core technicals (accounting, valuation, DCF, M&A and LBOs); two recent deals you can discuss in depth; and sharp questions for each interviewer. This guide covers all four, round by round.

1. Mentor’s note: how to use this guide

Every investment banking interview tests three things: can you do the work, can you take the pressure, and would the team trust you at 2 a.m. before a client deadline. Technicals get you into the room. Judgment and fit get you the offer.

Drill the technical questions in sections 4–10 (full answers to the core ones are in the Top 50 article) until you can answer every Core question out loud in under 60 seconds, without notes. Then layer on Intermediate questions, which separate good candidates from strong ones. Advanced questions mostly come up for laterals, associates and technical-heavy groups.

How interviews are usually structured

How your answers are scored

• Answer first, then reason. “Net income falls by $7.50 — here’s why” beats a long build-up to the number.
• Precision. Use the right term (unlevered free cash flow, not “cash flow”) and the right sign.
• Composure under uncertainty. When you don’t know, reason aloud from first principles. “I haven’t seen that, but I’d think about it this way” scores far better than a confident guess.
• Consistency. Superday interviewers compare notes. Your “why IB” story must be identical in every room.

Conventions in this guide. Difficulty tags: Core = expected of every candidate · Intermediate = differentiates strong candidates · Advanced = laterals, associates, technical groups. Accounting walk-throughs assume a 25% tax rate; in the room, state your tax assumption out loud — interviewers accept 25% or 40% as long as you are consistent.

How this guide fits with the Top 50 article. The core technical answers live in the companion article, Top 50 Investment Banking Interview Questions & Answers — called “the Top 50 article” below. Sections 4–10 here list every technical question with a short answer, give full answers to the advanced questions the Top 50 article doesn’t cover, and point you to the full model answer for the rest.

2. Investment banking industry fundamentals

An investment bank earns fees for advising on transactions and for raising capital. Every task an analyst does traces back to one of those two revenue lines.

2.1What does an investment bank do? Core

It helps companies, governments and investors raise capital and complete strategic transactions. The advisory side covers M&A, divestitures and restructuring. The capital-raising side underwrites equity (IPOs, follow-ons) and debt (bonds, leveraged loans). Larger banks also run sales & trading, research and asset management, separated from advisory by information barriers.

2.2What is the difference between coverage and product groups? Core

Coverage (industry) groups own client relationships in a sector — TMT, healthcare, FIG, industrials, consumer. Product groups own transaction expertise — M&A, ECM, DCM, leveraged finance, restructuring. A typical mandate pairs a coverage banker who knows the client with a product banker who knows the deal type.

2.3How do banks differ by tier? Core

Know exactly where your target firm sits and why that matters to you. “Why our firm” answers fail when a candidate cannot articulate the difference between tiers.

2.4What are the front, middle and back office? Core

Front office generates revenue: investment banking, sales & trading, research. Middle office controls risk: risk management, compliance, treasury, product control. Back office runs the plumbing: operations, settlements, technology.

2.5How do banks get paid? Core

Advisory pays a retainer plus a success fee at closing; underwriting pays a gross spread — about 7% on mid-sized US IPOs, according to an SEC analysis of Jay Ritter’s data. Full answer: Top 50 article, Q50.

2.6What is an information barrier (“Chinese wall”)? Core

It separates the private side (investment banking, which holds material non-public information) from the public side (sales & trading, research). It prevents insider trading and conflicts. Bringing a public-side person over for a specific deal is called “wall-crossing” and requires compliance approval.

2.7Who is on a deal team and what does each person do? Core

2.8What does an analyst actually do day to day? Core

Build and update models (comps, DCF, merger, LBO), produce pitch books, draft CIMs and management presentations, and coordinate due diligence. It is mostly execution detail. In year one, accuracy and reliability matter more than brilliance.

2.9Name the key documents in an M&A process. Core

Teaser, NDA, CIM, IOI, LOI, definitive agreement and fairness opinion, in roughly that order. Full answer: Top 50 article, Q47–Q48.

2.10How is IB different from private equity, research and trading? Core

Investment banks advise and execute for fees; they are intermediaries. Private equity invests a fund’s capital, owns companies and earns returns on that capital. Equity research publishes views on public stocks. Sales & trading executes trades and makes markets for clients.

2.11What is restructuring advisory? Intermediate

Advising distressed companies or their creditors on fixing an unsustainable capital structure. Tools include amend-and-extend, debt-for-equity swaps, distressed M&A and court-led processes such as US Chapter 11. It is the most counter-cyclical group in the bank — busiest when credit markets are worst.

3. Behavioral and fit interview questions

Fit decides more offers than technicals, because every finalist can walk through a DCF. Prepare six stories — leadership, teamwork, failure, conflict, pressure, analytical win — and practise flexing each one across several questions.

3.1Walk me through your resume. Core

This is a 90-second story, not a recital of bullet points. Structure it as: where you started (one line) → two or three deliberate choices, each with why you made it and what you learned → the moment IB became the logical next step → why this firm now. Every sentence should build toward “and that’s why I’m here.”

3.2Why investment banking? Core

Give three reasons, each backed by evidence:

1. Learning curve — nowhere else do you learn valuation, accounting and deal negotiation this fast.
2. Proven interest — an internship, a finance club deal, or a transaction you followed closely.
3. Fit with the work — you like high-stakes, detail-heavy, team-based problems with real deadlines.

Model answer: “I want the fastest possible education in how companies are valued and how deals actually get done. My internship at [firm] showed me I enjoy building the analysis behind a decision, not just reading about it. I also do my best work in small teams under deadlines — that’s how I ran [project]. Banking is where those three things meet.”

Never lead with money, prestige or exit opportunities.

3.3Why our firm? Core

Give three firm-specific points: a recent deal the group advised on, the people you spoke with (by name), and a structural feature that matters to you — lean deal teams, a generalist program, or sector leadership. Generic praise (“great culture, great brand”) is an automatic miss.

3.4Why this group or sector? Core

Tie it to a genuine interest you can defend for five minutes: the sector’s economics, a trend you follow, and two recent deals. Interviewers will probe with “what’s the biggest issue facing the sector right now?”

3.5What are your strengths and weaknesses? Core

A strength needs a concrete proof point. A weakness must be real, not fatal to the job, and already being fixed.

Example weakness: “I used to say yes to every request without flagging capacity, which put quality at risk. Now I give a realistic ETA and a status update before taking on new work.” Avoid “I’m a perfectionist” — interviewers hear it daily.

3.6Tell me about a time you led a team, failed, or handled conflict. Core

Use STAR — Situation, Task, Action, Result — in 60–90 seconds. Spend 70% of the time on Action and Result, quantify the result, and close with what you would do differently. Failure stories must show ownership, not blame.

3.7How do you handle long hours and pressure? Core

Offer evidence, not adjectives: a semester juggling a full course load and a job, a competitive sport, a live-deadline project. Show you understand the lifestyle and have a system — prioritising, checking your work when tired, asking early when blocked.

3.8You find an error in a model an hour before it goes to the client. What do you do? Intermediate

Flag it immediately to your associate or VP, with the size of the impact and a proposed fix. Never hide it and never send it silently. This question tests integrity and judgment under time pressure, not technical skill.

3.9Your MD asks you to push the valuation to a number you think is unjustified. What do you do? Intermediate

Separate judgment from integrity. Assumptions are subjective, so present the data behind your view and show what inputs the MD’s number implies. If it crosses into misrepresenting facts, escalate through compliance.

3.10Where do you see yourself in five years? Core

Show commitment to the role and to growing within it — “in banking, ideally promoted and running workstreams on deals.” Do not open with a buy-side exit plan in a banking interview.

3.11Why should we hire you? Core

Close with three points: technical readiness, proof of work ethic, and fit with this team. Keep it to 30 seconds — confident, not arrogant.

3.12Where else are you interviewing? Core

Be honest and consistent: name firms of a similar type, which reinforces that your interest is genuine. Then say why this firm is a top choice.

Mentor’s tip: Record yourself answering 3.1 and 3.2. If you hear “um” more than twice or the answer passes 2 minutes, rewrite it.

4. Accounting and financial statement questions

Every valuation and model rests on the three statements, so interviewers use accounting to test whether you think in linkages. Master the walk-through pattern once and you can answer any variation.

4.1Walk me through the three financial statements. Core

The income statement shows profit over a period, the balance sheet is a point-in-time snapshot, and the cash flow statement reconciles net income to the change in cash. Full answer: Top 50 article, Q1.

4.2How are the three statements linked? Core

Net income links the income statement to both other statements, and the ending cash on the cash flow statement becomes the balance sheet’s cash line. Full answer: Top 50 article, Q2.

4.3If you could use only one statement to judge a company, which would you choose? Core

The cash flow statement, because cash is harder to manipulate than accounting earnings. Full answer: Top 50 article, Q3.

4.4Depreciation increases by $10. Walk me through the statements. Core

At a 25% tax rate, net income falls $7.50, cash rises $2.50 from the tax saving, and both sides of the balance sheet fall $7.50. Full answer, plus a cheat sheet of six more walk-throughs: Top 50 article, Q4.

4.5A company buys $100 of PP&E with debt. A year later, it has depreciated $10 and the debt carries 10% interest. What changes? Intermediate

After a year of $10 depreciation and 10% interest, net income falls $15 and cash falls $5; debt stays at $100. Full answer: Top 50 article, Q5.

4.6Why can a profitable company go bankrupt? Core

Profit is not cash: working capital can absorb cash, and debt maturities can come due before the business can pay. Full answer: Top 50 article, Q6.

4.7What is working capital, and why does an increase reduce cash? Core

Current operating assets minus current operating liabilities; a rise means cash is tied up in operations. Full answer: Top 50 article, Q7.

4.8What is EBITDA and why do bankers use it? Core

A capital-structure-neutral proxy for operating cash flow — useful for comparisons, but it ignores capex, working capital and taxes. Full answer: Top 50 article, Q8.

4.9What is goodwill and when is it impaired? Intermediate

The excess of purchase price over the fair value of net identifiable assets; it is tested for impairment at least annually, not amortized. Full answer: Top 50 article, Q9.

4.10What are deferred tax assets and liabilities? Advanced

They arise from timing differences between book and tax accounting. A deferred tax liability means you paid less tax now than your book expense implies — accelerated tax depreciation is the classic cause. A deferred tax asset means you paid more tax now or have tax losses (NOLs) to use later.

4.11How do lease rules affect EBITDA? Advanced

Under IFRS 16, almost all leases go on the balance sheet and lease cost is split into depreciation and interest, so EBITDA rises. Under US GAAP (ASC 842), operating leases also go on the balance sheet, but the cost stays in operating expenses, so EBITDA is unaffected. When comparing an IFRS and a US GAAP company, adjust so EV and EBITDA treat leases consistently.

IFRS 16 has applied since 1 January 2019; lessees record a right-of-use asset and a lease liability for every lease except those of 12 months or less or of low-value assets (IFRS Foundation).

4.12LIFO versus FIFO in a period of rising prices? Intermediate

LIFO expenses the newest, most expensive inventory first: higher COGS, lower taxable income, lower ending inventory. FIFO does the reverse. IFRS prohibits LIFO; it is used mainly by US companies for its tax benefit.

5. Enterprise value vs equity value

Equity value is what the shareholders own; enterprise value is what the core operating business is worth to all capital providers. Nearly every “trick” question here is solved by asking whether an action changes the operating business or only its financing.

5.1Define equity value and enterprise value. Core

Equity value belongs to common shareholders; enterprise value is the operating business, available to all capital providers. Full answer, with formulas: Top 50 article, Q10.

5.2Why do you subtract cash? Core

Cash is a non-operating asset that an acquirer effectively gets back at closing. Full answer: Top 50 article, Q11.

5.3Why add noncontrolling interest? Intermediate

Because the parent consolidates 100% of the subsidiary’s EBITDA, EV must include the share it does not own. Full answer: Top 50 article, Q11.

5.4Can enterprise value be negative? Core

Yes, when cash exceeds equity value plus debt — common in distressed or cash-rich, out-of-favour companies. It usually signals the market expects the company to burn through that cash.

5.5How do you calculate diluted shares? Walk through the treasury stock method. Core

Count only in-the-money options, and assume the exercise proceeds buy back shares at today’s price. Full answer, with a worked example: Top 50 article, Q12.

5.6Which multiples use EV and which use equity value? Core

Metrics before interest (revenue, EBITDA, EBIT) pair with enterprise value; metrics after interest (net income, book value) pair with equity value. Full answer: Top 50 article, Q13.

5.7How do these events change equity value and enterprise value? Core

Financing moves — raising debt, issuing equity, paying dividends — leave enterprise value unchanged; turning cash into an operating asset raises it. Full answer, with a table: Top 50 article, Q14.

5.8Why is equity value different from shareholders’ equity on the balance sheet? Core

Shareholders’ equity is a historical, accounting number. Equity value is the market’s forward-looking view of future cash flows. A profitable company with strong growth trades far above book value.

5.9Why can P/E mislead when comparing two companies? Intermediate

Net income is after interest, so capital structure distorts it. Two identical businesses with different leverage report different earnings and P/E multiples. EV/EBITDA removes that distortion, which is why bankers prefer it for operating comparisons.

5.10What else might you add to the EV bridge? Advanced

Depending on the situation: unfunded pension liabilities, operating lease liabilities (only if EBITDA is measured before lease costs), and equity-method investments (subtracted, because their earnings are not in EBITDA). The rule never changes — whatever EV includes, the metric must include too.

6. Valuation methodologies

Bankers triangulate value from three core methods — trading comps, precedent transactions and DCF — and show the results side by side on a football field. No single method is “right”; the skill is explaining why the ranges differ.

6.1What are the main ways to value a company? Core

Trading comps, precedent transactions, DCF and LBO analysis, shown side by side on a football field. Full answer: Top 50 article, Q15.

6.2Which method usually gives the highest value? Core

Usually precedent transactions, because they include a control premium and expected synergies. Full answer: Top 50 article, Q16.

6.3Walk me through a trading comps analysis. Core

Pick peers, gather their financials, calculate multiples, take the median and range, then apply them to the target. Full answer: Top 50 article, Q17.

6.4How do you choose comparable companies? Core

Industry and business model first, then size, geography, growth and margins. Full answer: Top 50 article, Q17.

6.5How are precedent transactions different? Core

They use prices paid in completed deals, so they include a control premium. Full answer: Top 50 article, Q18.

6.6What is a football field chart? Core

A bar chart that shows every method’s valuation range on one scale — the summary page clients remember. Full answer: Top 50 article, Q15.

6.7Two companies grow at the same rate. Why might one trade at a much higher multiple? Intermediate

Multiples reflect more than growth: return on invested capital, margin stability, capital intensity, risk, recurring versus one-off revenue, and management credibility. A company that needs little capex to grow deserves a higher multiple than one that must reinvest heavily.

6.8Why use the median rather than the mean for comps? Core

The median resists outliers that can badly skew the mean. Full answer: Top 50 article, Q17.

6.9LTM versus NTM multiples — when do you use each? Intermediate

LTM uses actual reported results, so it is verifiable. NTM (forward) reflects where the market is looking and matters more for high-growth companies. When fiscal years end in different months, calendarize the figures to a common period before comparing.

6.10How do you value a company with negative EBITDA? Intermediate

Use EV/Revenue or EV/Gross profit, forward multiples on a year when profits turn positive, operating metrics (users, subscribers, bookings), or a longer-horizon DCF. State that the valuation leans on assumptions about the path to profitability.

6.11How do you value a bank or insurer? Advanced

Enterprise value is not meaningful for financial institutions, because debt and deposits are their raw material, not financing. Use equity-based measures: P/E, price to book, price to tangible book, and dividend discount models. Tie P/TBV to return on tangible equity.

6.12What is a sum-of-the-parts valuation? Intermediate

Valuing each business segment separately with its own peer multiples, then adding them up and subtracting net debt. Used for conglomerates with segments in different industries. A large gap between the SOTP and the market value is often a catalyst for a spin-off.

7. DCF interview questions: a deep dive

A DCF values a business as the present value of the cash it will generate, discounted at the return its capital providers require. “Walk me through a DCF” is the single most-asked technical question — you must be able to deliver it in 60 seconds, flawlessly.

7.1Walk me through a DCF. Core

Project unlevered free cash flow, add a terminal value, discount both at WACC to get enterprise value, then bridge to equity value per share. Full answer: Top 50 article, Q19.

7.2How do you calculate unlevered free cash flow? Core

EBIT × (1 − tax rate) + D&A − capex − change in net working capital. Full answer: Top 50 article, Q20.

7.3Why use unlevered rather than levered free cash flow? Core

Unlevered FCF belongs to all capital providers, so it pairs with WACC and values the business independently of its capital structure; a levered DCF instead discounts free cash flow to equity at the cost of equity. Full answer: Top 50 article, Q20.

7.4How do you calculate WACC? Core

Weight the cost of equity and the after-tax cost of debt by their market-value shares of the capital structure. Full answer, with the formula: Top 50 article, Q21.

7.5How do you calculate the cost of equity? Core

Use CAPM: the risk-free rate plus beta times the equity risk premium. Full answer: Top 50 article, Q22.

7.6How do you get beta for a private company? Intermediate

Unlever comparable companies’ betas, take the median, and relever at the target’s capital structure. Full answer, with the formula: Top 50 article, Q22.

7.7Why is the cost of equity higher than the cost of debt? Core

Equity is paid last and has no contractual return, while interest is tax-deductible. Full answer: Top 50 article, Q23.

7.8What happens to WACC as a company adds debt? Intermediate

It falls at first as cheaper debt replaces equity, then rises as distress risk grows — a U-shape. Full answer: Top 50 article, Q23.

7.9What are the two terminal value methods? Core

The perpetuity growth (Gordon growth) method and the exit multiple method; cross-check each against the other. Full answer, with formulas: Top 50 article, Q24.

7.10What long-term growth rate would you use? Core

No higher than long-run nominal GDP growth — typically 2–3% in developed markets. Full answer: Top 50 article, Q25.

7.11How much of DCF value typically comes from terminal value? Intermediate

Often 60–80%, which is why terminal assumptions deserve the most scrutiny. Full answer: Top 50 article, Q25.

7.12What is the mid-year convention? Intermediate

It assumes cash flows arrive evenly through the year, so each year’s cash flow is discounted by half a period less (0.5, 1.5, 2.5…). It slightly raises the valuation and better reflects how businesses actually generate cash.

7.13What has a bigger impact: a 10% increase in revenue or a 1% drop in the discount rate? Intermediate

It depends on the model, but a 1% change in the discount rate usually moves value more, because it compounds across every year and the terminal value. A 10% revenue increase only helps if it flows through to cash flow at the same margins.

7.14When is a DCF not appropriate? Core

When cash flows are unpredictable or negative for years, or when debt is part of operations, as at banks and insurers. Full answer: Top 50 article, Q26.

7.15How would you treat net operating losses in a DCF? Advanced

Model them separately: use the NOLs to reduce cash taxes in the projection years, subject to any annual usage limits, and discount the tax savings. Do not embed them in the terminal value unless they last beyond the projection period.

8. Mergers & acquisitions (M&A) questions

M&A questions test whether you understand why deals happen, how they run, and how a buyer’s shareholders are affected. Know the sell-side process cold and be able to do an accretion/dilution calculation in your head.

8.1Why do companies acquire other companies? Core

To grow faster, gain capabilities or market share, and capture synergies — and, in the long run, only if the combined company is worth more than the price paid. Full answer: Top 50 article, Q27.

8.2Walk me through a sell-side M&A process. Core

Preparation, first-round bids, second-round diligence, final bids, signing and closing — typically four to six months to signing. Full answer: Top 50 article, Q46.

8.3Walk me through an accretion/dilution analysis. Core

Combine both companies’ net income, adjust for financing costs, new amortization and synergies, then compare pro forma EPS with the buyer’s standalone EPS. Full answer: Top 50 article, Q28.

8.4Work an example: all-stock versus all-cash. Intermediate

With a 20× buyer P/E and a 15× purchase P/E, the all-stock deal is 4.3% accretive and the all-cash deal 11% accretive. Full worked example: Top 50 article, Q29.

8.5What is the quick rule for accretion or dilution? Core

All-stock: accretive if the buyer’s P/E beats the purchase P/E. Cash or debt: accretive if the after-tax cost is below the target’s earnings yield. Full answer: Top 50 article, Q30.

8.6Is an accretive deal always a good deal? Intermediate

No — EPS accretion is an accounting result, not value creation. Full answer: Top 50 article, Q31.

8.7Cash, stock or debt — how does a buyer choose? Core

Cash is cheapest but uses up liquidity, debt adds leverage, and stock dilutes ownership but shares risk with sellers. Full answer: Top 50 article, Q32.

8.8What are synergies? Which kind is more credible? Core

Cost synergies, from removing duplicate costs, are more credible than revenue synergies. Full answer: Top 50 article, Q33.

8.9How is goodwill created in an acquisition? Intermediate

Purchase price minus the fair value of identifiable net assets, including newly recognized intangibles. Full answer, with an example: Top 50 article, Q9.

8.10What is a fairness opinion? Core

A bank’s letter to the board stating the price is fair to shareholders from a financial point of view. Full answer: Top 50 article, Q48.

8.11What is a break fee? Intermediate

A payment the target owes the buyer if it walks away; a reverse break fee runs from buyer to target. Full answer: Top 50 article, Q49.

8.12Asset purchase or stock purchase — what is the difference? Advanced

In a stock purchase, the buyer acquires the entity with all its liabilities; the seller usually prefers this for simplicity and tax. In an asset purchase, the buyer picks specific assets and liabilities and can step up their tax basis, creating tax-deductible depreciation and amortization. Buyers prefer asset deals; sellers prefer stock deals. Tax rules and hybrid structures vary by jurisdiction.

8.13What are common takeover defences? Advanced

Shareholder rights plans (poison pills), staggered boards, supermajority voting requirements, and seeking a friendly “white knight” buyer. Boards use them to buy time or extract a higher price, not always to block the deal outright.

9. LBO interview questions

In a leveraged buyout, a private equity firm buys a company using mostly borrowed money, repays debt with the company’s cash flow, and sells it after three to seven years. Returns come from three levers: EBITDA growth, debt paydown and multiple expansion.

9.1Walk me through a basic LBO model. Core

Set the price and financing, project cash flow, repay debt, then calculate exit equity value, IRR and MOIC. Full answer: Top 50 article, Q34.

9.2Why use leverage? Core

Debt shrinks the equity check, so the same gain produces a higher return — at the cost of higher risk. Full answer: Top 50 article, Q35.

9.3What makes a good LBO candidate? Core

Stable cash flows, low capex, a strong market position, room to cut costs and a clear exit route. Full answer: Top 50 article, Q36.

9.4Do a paper LBO. Intermediate

Buy $100 of EBITDA at 10× with 60% debt, grow EBITDA to $150, repay $300 of debt and exit at 10×: a 3.0× MOIC, or about 25% IRR. Full walk-through: Top 50 article, Q37.

9.5Memorise these IRR rules of thumb. Core

2× over five years is about 15% IRR; 3× over five years is about 25%. Full grid: Top 50 article, Q38.

9.6What are the main layers of LBO debt? Intermediate

From most to least senior: revolver, Term Loans A and B, high-yield notes, and subordinated or mezzanine debt. Full answer, with a table: Top 50 article, Q39.

9.7Why does an LBO analysis set a floor on valuation? Intermediate

It shows the maximum price a financial sponsor could pay and still earn its target return — often around 20% or higher. Strategic buyers with synergies can usually pay more. In a sale process, the LBO value tells the seller the minimum a credible bidder should offer.

9.8What is a dividend recapitalization? Intermediate

The portfolio company raises new debt and pays the proceeds to the sponsor as a dividend. It returns capital early and boosts IRR without selling the company, but it increases leverage and risk.

9.9How does a sponsor exit? Core

A sale to a strategic buyer, a sale to another sponsor (secondary buyout), an IPO, or a partial exit through continuation vehicles or dividend recaps. Sponsors plan the exit route before they buy.

9.10Holding everything else constant, what raises LBO returns? Core

A lower entry price, a higher exit multiple, faster EBITDA growth, more leverage (within limits), faster debt paydown, and a shorter holding period for the same MOIC.

10. Capital markets and IPO questions

Capital markets groups help clients raise money: ECM for equity, DCM for investment-grade debt, and leveraged finance for high-yield bonds and leveraged loans. Interviewers want to see you understand the process, the pricing logic, and why an issuer picks one instrument over another.

10.1What do ECM, DCM and leveraged finance do? Core

10.2Walk me through an IPO process. Core

Bank selection, drafting, regulatory review, pre-marketing, roadshow, pricing and trading, then lock-up expiry — most lock-ups last 180 days (Investor.gov, SEC). Full answer: Top 50 article, Q40.

10.3Why would a company go public — and why not? Core

To raise capital, create liquidity and gain a share currency — at the cost of disclosure, expense and quarterly pressure. Full answer: Top 50 article, Q41.

10.4Why are IPOs typically underpriced? Intermediate

A modest first-day pop rewards investors for taking a risk — but middle-market companies left $38.9 billion on the table between 2000 and 2017 (SEC). Full answer: Top 50 article, Q42.

10.5What is the greenshoe? Intermediate

An option letting underwriters sell up to 15% more shares to stabilize the price — a cap that dates to a 1983 NASD policy (FINRA Notice 83-44). Full answer: Top 50 article, Q43.

10.6What are follow-ons, block trades and at-the-market offerings? Intermediate

A follow-on is any post-IPO equity raise, a block trade is an overnight sale of existing shares, and an ATM program drips new shares into the market. Full answer: Top 50 article, Q44.

10.7Why would a company issue debt instead of equity? Core

Debt is usually cheaper — interest is tax-deductible and lenders take less risk — and it does not dilute ownership. Equity makes sense when leverage is already high, cash flows are volatile, or the share price is strong. Watch the signal: equity issuance can suggest management thinks shares are fully valued.

10.8What separates investment grade from high yield? Core

The credit rating: BBB− (S&P / Fitch) or Baa3 (Moody’s) and above is investment grade; anything below is high yield. High-yield issuers pay wider spreads, accept tighter covenants and usually offer call protection.

10.9How do bond prices and yields move, and what is duration? Core

They move inversely: when yields rise, existing bond prices fall. Duration measures a bond’s price sensitivity to interest rate changes. A bond with a duration of 7 loses roughly 7% of its value if yields rise by 1 percentage point.

10.10What is a credit spread? Core

The extra yield over a benchmark government bond or reference rate that compensates investors for credit risk. Spreads widen when markets fear defaults and tighten when risk appetite is strong. New-issue pricing is quoted as a spread.

10.11Maintenance versus incurrence covenants? Intermediate

Maintenance covenants must be met every quarter — for example, leverage below 4.0× — and are typical of bank loans. Incurrence covenants apply only when the company takes an action, such as raising more debt or paying a dividend, and are typical of high-yield bonds. Many leveraged loans are now “covenant-lite.”

10.12Why would a company issue a convertible bond? Intermediate

The conversion option lets it pay a lower coupon than straight debt, and it sells equity at a premium to today’s price if converted. Investors get downside protection with equity upside. The trade-off is potential future dilution.

10.13How do direct listings and SPACs differ from IPOs? Advanced

A direct listing floats existing shares without underwriting; a SPAC is a listed shell company that merges with a private company. Full answer: Top 50 article, Q45.

11. Market awareness, deal discussion and mental math

Senior bankers use these questions to test whether you actually follow markets — and whether you can think quickly under pressure. Numbers change daily, so refresh the dashboard below on the morning of every interview.

11.1Walk me through a recent deal you followed. Core

Pick one or two deals from the last six months, ideally in the group you are interviewing with. Use this structure and aim for two minutes:

1. Parties and size: who bought whom, for how much, announced when.
2. Rationale: strategic logic — growth, synergies, capabilities, defence.
3. Valuation: the multiple paid (EV/EBITDA or EV/Revenue) versus peers and precedents, and the premium to the unaffected price.
4. Structure and financing: cash, stock or mix; how the cash was funded.
5. Reaction: how both share prices moved on announcement.
6. Your view: would you have done it, and the biggest risk (integration, regulation, overpayment).

Expect follow-ups: “Who advised?”, “What would you have paid?”, “Who else could have bid?”

11.2What market numbers should you know on interview day? Core

Rough levels are fine — “around 4.2%” — but a wrong direction of travel is a red flag.

11.3How do rising interest rates affect M&A and valuations? Core

Higher rates raise the discount rate, which lowers DCF values and compresses multiples, especially for long-duration growth stocks. They also raise financing costs, so sponsors can borrow less and pay lower prices. Strategic buyers with strong balance sheets often gain relative to sponsors in high-rate environments.

11.4Pitch me a stock. Intermediate

Keep it to 90 seconds: the company and what it does → your thesis in one sentence → two or three supporting points with numbers → valuation versus peers → the catalyst that will close the gap → the key risk and why you accept it. Have one long and one short idea ready.

11.5Mental math drills Core

11.6Estimation and brain-teaser questions Intermediate

For market-sizing (“How many coffee shops are there in this city?”), state a structure before any number: population → share who buy coffee → frequency → cups per shop per day → shops. Round aggressively and sanity-check the result.

Classic quick ones:

• Angle between clock hands at 3:15? 7.5°. The hour hand moves 0.5° per minute, so at 3:15 it sits 7.5° past the 3.
• Sum of the integers 1 to 100? 5,050. Pair them: 50 pairs of 101.
• Which is larger, 2 to the power of 10 or 10 cubed? 1,024 beats 1,000.

The interviewer cares more about your structure and composure than the exact answer.

12. Closing the interview: questions, red flags and final prep

The last five minutes shape the interviewer’s write-up. Ask a question that shows you listened, avoid the handful of mistakes that sink strong candidates, and walk in having run the checklist below.

Questions worth asking

Avoid questions about pay, hours or vacation in early rounds, and anything a two-minute website search would answer.

Red flags that cost offers

• A resume detail you cannot explain in depth — every line is fair game.
• Memorised answers delivered robotically, or a different “why IB” story in each room.
• Guessing confidently on a technical instead of reasoning aloud.
• Leading with money, prestige or exit opportunities.
• Criticising a former employer, school or colleague.
• Not knowing the firm’s recent deals, or confusing it with a competitor.
• Low energy in the fourth or fifth superday interview.

Final-week checklist

• Deliver “walk me through your resume” and “why IB” in under 90 seconds each, out loud
• Answer every Core question in sections 4–10 without notes, using the Top 50 article for the full answers
• Rehearse the depreciation walk-through and two other rows of the cheat sheet in the Top 50 article (Q4)
• Do the paper LBO (Q37) and the accretion/dilution example (Q29) from the Top 50 article on paper, under 5 minutes each
• Prepare six STAR stories and map each to at least two behavioral questions
• Prepare two deals in the 11.1 structure, one in the target group’s sector
• Learn three recent deals the firm advised on and the names of people you have spoken with
• Refresh the market dashboard in 11.2 on the morning of the interview
• Prepare two questions for each seniority level
• Send a short, specific thank-you note within 24 hours

Final word from your mentor: the candidates who win are rarely the smartest in the room. They are the ones who are prepared, precise, and pleasant to work with at midnight. Be that person in every interview.

Sources

• Initial Public Offerings: Lockup Agreements — Investor.gov, U.S. Securities and Exchange Commission
• Notice to Members 83-44: Change of Policy on Overallotment Options — FINRA (then NASD), August 1983
• Data Appendix: The Middle-Market IPO Tax — SEC Commissioner Robert J. Jackson Jr., April 2018, using data from Jay Ritter
• IFRS 16 Leases — IFRS Foundation