Bank Interview Tips and Guide

When it’s my turn to ask my interviewer questions, what should I ask?

2007-06-23T08:24:00.000-07:00

When it’s my turn to ask my interviewer questions, what should I ask?
Good question. This is a topic on which reasonable people can (and do) disagree.
Some insiders insist that you should always ask a question when offered
the opportunity, and that your question should prove to your interviewer how
much research you’ve done on the industry and the specific firm. We disagree
with both points, however well-intentioned the advice. If the sole purpose of
your question is to prove that you’ve checked out the firm’s website, read its
annual report, or read Investment Dealers’ Digest, chances are your interviewer can
tell a mile away. “I made that mistake,” says one insider, “I attended a dinner for
all of the candidates who had been invited to interview with a top-tier firm.
There was a moment of silence and I asked the recruiter across from me what
she thought of the recent article in The Economist about the banking industry. I
could actually tell by the expression on her face that she was breathing a deep
internal sigh of resignation. I wanted to crumple up in a ball under my chair. I’d
never do that again—even if I did read The Economist.”
As this insider learned the hard way, it’s probably best to err on the side of
caution with your questions. We advise that you stick to those questions that
you’d genuinely like answered, not to mention the questions that would be difficult
for you to answer without the benefit of insider insight. So if you really do
want to know why your interviewers chose to work at Firm XYZ, then ask
away. We didn’t speak to a single recruiter who dinged a candidate because their
questions weren’t insightful or penetrating enough. Of course, your questions
shouldn’t display blatant ignorance regarding the industry, the company, or the
specific position (i.e., don’t ask your M&A interviewer how long it will be
before you have your own accounts, or your Citigroup recruiter to explain the
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firm’s commitment to remain a pure-play investment bank). You won’t win
points for playing it safe and asking your interviewer to describe the last project
he worked on, but you probably won’t lose any, either. If you’ve had a reasonably
good interview so far (and perhaps even more so if you haven’t), you may
not want to rock the boat with questions designed to demonstrate how very
clever you are.
However, if you’re determined to ask a highly nuanced question that you’ve
crafted from the bowels of the company’s annual report, you’d better keep a
few things in mind. First of all, botching the details is not an option; we were
surprised by the number of insiders who recalled (with some glee, we might
add, and no small degree of derision) candidates who got the name of the
CEO wrong when they asked a question designed to showcase their inquisitive
mind. It’s also not unheard of for a candidate to ask an interviewer about a
high-profile deal on which the recruiter’s bank was not hired as an advisor.
(Even if you’re sure the bank in question was involved, however, we wouldn’t
advise asking questions regarding a specific transaction. The chances that your
interviewer was involved directly in the deal—or even has a particularly welldeveloped
opinion on its significance—are slim, and your question won’t be
particularly enlightening for either you or the recruiter.)
Not only must you keep your facts straight if you decide to show off your
industry knowledge, but you’d better be ready to offer a credible reason for
your particular query. Perhaps to a greater extent than their counterparts in
other industries, bankers are notorious bluff-callers; if you are indeed bluffing,
the person on the other side of the desk will make you rue the day you even
looked at the annual report. And if it’s a question that’s so obscure they can’t
answer it, you’d really better hang onto your hat; you’ll most likely incur their
well-restrained, buttoned-up wrath, and they’ll derive a particular sense of
satisfaction from putting you back in your place.

If all of this advice has your head spinning, don’t worry! There are ways to jazz
up your standard-issue “What Questions Do You Have For Us?” queries. One
recruiter suggests that candidates reframe relatively broad questions by personalizing
them. For example, rather than asking your interviewer to describe the
firm’s culture, you may choose to put it this way: “I’ve talked to several analysts
representing a range of product and function areas, and a number of them
have mentioned that they’ve been surprised by how accessible the senior people
are at Bank XYZ. I wondered if this was consistent with what you’ve experienced,
and whether you feel that’s indicative of the culture throughout the
bank.” Provided that you actually have spoken to analysts (and don’t even think
about referring to fictitious conversations), this question allows you to establish
your sincere interest in the firm while remaining relatively safe.
Another insider tip: Pay attention when your interviewer introduces himself,
and make a mental note of the group he represents. When the spotlight turns
to you, give your question a group-specific slant. “You mentioned earlier that
you worked in the energy group. I know that group assignments play a big part
in determining analysts’ experience, and I wondered if you could describe the
ways in which the energy group maintains its own unique culture. I’d be interested
to know whether you’ve worked in other areas of the bank, and how your
experiences in other groups compare.” Again, this question isn’t so generic that
your interviewer’s eyes glaze over, but it doesn’t suggest that your primary
objective is proving your business acumen.
As with any other interviewer question, there are a few types of questions to
avoid like the plague, including the following:
Presumptuous questions. “I really want to spend my third year in the London
office. How can I improve my chances of getting my first-choice location?”
Well, let’s see: You could start by getting a job offer with this firm in the first place.
Interviewers typically dislike questions from candidates who prematurely
assume they’ll receive an offer, so be careful to avoid even the teensiest bit of
presumptuousness in your questions.
Questions with a tattle-tale tone. “I know that during the 1999–2000 recruiting
season, most banks on the Street significantly overestimated the number of
analysts and associates they’d need to hire, and then many of those same
people lost their jobs a year or two later. I’m curious whether your firm has
developed a better way of adjusting hiring activity to the market.” This is a
question that you may indeed want to ask, but use your better judgment. After
all, it’s a little early in the process to reveal your cynicism about the industry.
Questions that suggest you have underlying concerns about the job. “One of
the things I’ve heard over and over again is that the hours are really, really
brutal, and that it’s tough to take vacations or even long weekends. How many
weekends would you say you’ve had to work over the past year?” How many
times do we have to tell you that the job is demanding? Interviewers expect that
by the time you’ve gotten to this stage in the process, you know what you’re
getting into and that you’ve accepted it. If you’re still worried about evenings,
weekends, and vacations, you’re interviewing for the wrong job.
While you’re crafting questions to lob in your interviewer’s direction, keep one
last thing in mind: Most of your interviewers will be on a fairly tight timetable,
and they’ll be struggling to keep each interview to the 30- or 45-minute time
slot it’s been allotted. Learn to read your interviewer: If it’s clear that she is
trying desperately to wrap things up, don’t feel pressured to ask your questions
simply because you’ve prepared them. If you sense she’s trying to move things
along, a diplomatic response might be, “Thanks. I’m conscious of your time
restraints and know that the interview schedule is tight. Perhaps I could take
one of your cards and contact you later with any questions?” This way, you’ve
left it up to her—if she’s indeed at the end of her interview tether, she’ll take
you up on your offer. If she’s got plenty of time, she’ll invite you to ask away
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(and she’ll be impressed that you’ve respected her schedule—major
interpersonal aptitude points!).
If asked to name a group preference, should I provide a specific answer, or
should I say that I’m open to any industry or product group?
That depends. If a particular industry or product interests you, then by all means
mention this interest to your interviewer. As with any other interview question,
be prepared to provide solid reasons for your specific answer. If your unique
background is consistent with your choice (e.g., you completed a summer internship
at Procter & Gamble and cultivated a genuine interest in consumer products),
so much the better. However, you should refrain from expressing too narrow an
industry or product focus too early in the process or implying that your decision
to join a particular firm depends solely on whether it can accommodate your
stated interests. In early rounds, for example, it’s not appropriate to imply to
your interviewer that it’s either an offer in the firm’s health-care industry group
or no offer as far as you’re concerned. While firms often try to achieve a match
between candidates’ interest and their own staffing needs, several factors (almost
always beyond your interviewer’s control) determine where you’ll be placed.
If you’ve decided to indicate a group preference, make sure that the firm’s
organization allows for such a specialization; many firms have reshuffled their
industry and product groups significantly in the past few years, and it’s possible
that the group you have in mind has actually been lumped in with another one.
Not all firms have a consumer products or industrials group, for example, and
stating a keen interest in joining a group that does not exist may not advance
your candidacy. And even if you’re certain that your world would end if you
don’t land a spot in the mergers group, it’s probably best to say you’re openminded.
One possible answer to this question might be, “Well, as I mentioned earlier, I’m
a finance and accounting major, and so my academic interests and training have
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typically centered around the highly quantitative and strategic analysis driving
corporate finance. So far, I’ve gotten the sense that I might be a good fit in
either Mergers & Acquisitions or Leveraged Finance, but I’m flexible. Through
my conversations with current analysts, I’ve learned that a personality fit with a
given group makes a big difference in the analyst experience, so I’d be interested
to know your thoughts on which groups are likely to be a good match for me.”
As part of your preinterview research process, be sure to ask current bankers
whether analysts and associates are hired into particular groups, or whether
placement decisions are made once the training program begins. If you join a
firm that hires directly into groups, you may have little or no involvement in the
placement decision. On the other hand, firms that make placement decisions
once training begins allow you to meet with various groups before stating your
group preferences. Still others offer a rotation program in which incoming hires
work in multiple functions or products before a permanent placement occurs.
Each method offers its own advantages. If you’re hired directly into a product or
industry group, you may find yourself specializing earlier than you’d like.
Conversely, analysts who participate in a “matching” process once training
begins sometimes report a sense of competitiveness with classmates to snag
coveted spots in the most high-profile groups.
If you don’t have a decided placement preference, don’t feel pressured to name
a few groups or products for the sake of doing so. (In particular, don’t say
“M&A” unless you can offer a solid reason for it. It’s the default answer for
many candidates who just don’t know the names of any other functions or
products, or those captivated by the apparent glamour of Wall Street). While it’s
probably best to demonstrate that you’ve given the various functions and
products a thought (or—at the very least—that you know what they are), you
won’t lose points for being flexible in your response.
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Everyone says I’m expected to “do my homework.” What exactly does this
mean? How much will I be expected to know about each company with
which I interview?
First and foremost, “doing your homework” means that you genuinely understand
the role of an investment bank and can clearly articulate the distinct roles
of its various functions and that you have devoted some time to distinguishing
among the major players. It means you’ve considered all of this information
and shaped an idea of which firm you’d like to work for, and in which general
area. It means that you’ve developed reasonable job expectations, done some
good old-fashioned soul searching to decide whether or not the inherent
sacrifices are worth it to you, and determined the specific benefits you’d hope
to gain from the analyst or associate experience.
As we discussed earlier in this guide, the homework bar is higher at the MBA
level than it is at the undergraduate level. In general, interviewers are more
forgiving of analyst candidates for two primary reasons: First, no one expects a
22-year old interviewing for his first job to know for certain that his destiny lies
in investment banking. Second, investment banks typically hire analysts for a
2- to 3-year time horizon, after which they expect many will go on to business
school or other jobs. Nonetheless, firms will expect that both undergraduates
and MBA candidates alike can articulate solid reasons for pursuing a job in the
field, and they will expect to see evidence that you’ve invested some serious time
determining whether this career—and this firm in particular—is right for you.
Regardless of the specific position for which you are applying, “doing your
homework” has two primary components: understanding what distinguishes the
firm in its industry, and understanding what distinguishes the firm as a place to
work. The first of these relates to the firm’s position in the financial marketplace,
while the second has to do with its “employment brand”—the unique
way the firm positions itself to prospective employees.
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Our Seven-Step Homework Guide should help you to learn about both
distinctions:
1. Particularly if you’re an undergraduate with little prior exposure to investment
banking, make sure you understand what an investment bank
does and how the various functions of a securities firm fit together.
We’d recommend that you start with WetFeet’s Insider Guide to Careers in
Investment Banking. Mariam Naficy’s book The Fast Track: The Insider’s Guide to
Winning Jobs in Management Consulting, Investment Banking, and Securities Trading
also provides an excellent overview. As the name implies, this book is a
particularly good resource for those candidates comparing potential
opportunities in multiple areas.
2. Once you’ve determined which firms you’ll be interviewing with,
check out any firm-specific literature you can find. This includes the
WetFeet Insider Guides to investment banking firms (see the list at the end
of this book), which provide insights into the firms’ areas of relative
strength and insiders’ perceptions of the companies’ culture. In addition,
be sure to review any recruiting literature on file at your campus career
center. This information is likely to be fairly general, but it will provide a
useful overview of each firm’s organizational structure and respective
recruiting processes. Also, these materials will give you a general sense of
the “employment brand” that the firm is trying to convey—in other words,
you’ll get a sense of how the firm distinguishes itself from other firms in
the marketplace that compete for talent.
3. Check out the website of each firm with which you’ll be interviewing.
This does not mean that you’ll be expected to memorize and regurgitate
either the company’s financials or its business principles in the course of
the interview. However, if you’re interviewing with a public company, you
should probably at least take a gander at the firm’s annual report (generally
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162
available through the Investor Relations section of the firm’s website). In
addition to providing detailed information on the company’s financials,
the annual report highlights the key transactions in which the bank was
involved over the course of the previous year and summarizes the relative
performance of each of its major revenue-generating areas. Also, check out
the most recent press releases for any noteworthy developments that have
taken place since the last annual report went to press.
4. Refine your industry-specific knowledge and review the major
transactions in which each firm is involved. Trade journals such as
Institutional Investor, Investment Dealers’ Digest, and The Daily Deal provide a
wealth of timely industry-specific information. For example, Investment
Dealers’ Digest (www.interactiddmagazine.com) offers an excellent online
database for subscribers, which includes league table information, recent
deal flow activity, and information on the biggest transactions in various
areas (M&A advisory, high-technology, energy, etc.). Unfortunately, an
annual subscription to this little gem costs a hefty $995, but full-text
articles from the print publication are available through Factiva, a comprehensive
online news database; if your business school library offers Factiva
access (and it’s worth checking into), you may want to take a look. If not,
Investment Dealers’ Digest occasionally offers trial subscriptions at little to no
cost. In all likelihood, you won’t ever be asked about a particular bank’s
league table standings, but it doesn’t hurt to develop a sense of who does
what on the Street.
5. Keep abreast of current events—those relating to the financial
markets and otherwise. Even if you’re not ordinarily a faithful Wall Street
Journal reader or subscriber, it may behoove you to become one, at least
during the recruiting season. The publication’s online edition is particularly
user-friendly and is available to students at a significant discount (as is the
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print version). The Financial Times (WSJ’s European equivalent) is another
excellent source of financial news and not surprisingly provides a more
pronounced international focus than the Wall Street Journal. At a minimum,
you should know the major developments and trends characterizing the
investment banking industry. In particular, the increasingly widespread
practice of “bundling” investment and commercial banking services and
the intense scrutiny over firms’ investment research franchises are two
trends you should feel comfortable discussing in an interview. Also, be sure
to have at least a general sense of movements in the major indices (investment
banking interviewers have been known to ask what the Dow closed
at the previous day) and the events that most directly affect the financial
markets.
6. Attend the on-campus information session. Trust us: The hour that
you spend at each firm’s on-campus meet-and-greet will be time well spent.
At the information session, the company will undoubtedly address the
topic of what sets it apart from its chief competitors—its competitors for
business and its competitors for talented people. Pay attention to what the
firm’s representatives stress as its key selling points: whether it’s the firm’s
untrammeled dominance of M&A activity, its unique rotation program for
incoming analysts or associates, or its unparalleled reputation as an employer
of choice. In addition, these information sessions provide an
opportunity for you to meet current analysts and associates and to hear
them answer the questions that you’ve been formulating throughout the
course of your research.
7. Take the time to speak with insiders! There’s really no substitute for
good old-fashioned informational networking (a process which should be
relatively easy for current MBA students, who have a considerable network
of b-school students, former analysts, summer associates, and alumni to
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consult). If you’re an undergrad with fewer industry contacts, check out
your career center’s alumni database for the names and contact details of
current firm employees (preferably within the division to which you’re
applying). At the very least, contact the individuals who represented their
firms at the on-campus information sessions (analysts and associates,
please—firms may send VPs and the occasional MD to information session,
but bankers at this level aren’t likely to return your call—remember
our discussion of the hierarchical structure earlier in the guide?). Not only
can these individuals generally answer your most pressing queries, they can
typically put you in touch with other people at the bank who can provide
you with a broader perspective on what it’s like to work there. Not only will
this help you learn about the specifics of each firm’s culture, but it will give
you some real-life insight into the life of an analyst or associate.
Make no mistake about it: Preparing for interviews is a time-intensive process.
If your schedule is already filled to capacity with academic and extracurricular
obligations, it’s particularly tempting to gloss over interview preparation in favor
of the more immediate demands on your time and attention. This is a dangerous
trap, and one that you should avoid at all costs. In this case, it’s better to
take a long-term view. As one recently hired insider advises, “Take a light
course load that semester if you can. The time you spend researching
companies and talking to insiders is time well spent, and definitely worth the
investment in the end.”

EBITDA multiples | Morgan Stanley

2007-06-23T08:23:00.000-07:00

So far, we’ve talked a lot about multiples: You’ve mentioned EBITDA
multiples in your discussion of the analysis you did at Morgan Stanley,
you’ve talked about P/E multiples in your analysis of a common stock. I
wondered if you could tell me what a multiple really is—to say that a
company is trading at “8x.” How would I make sense of that? How is that
meaningful to you? What does it tell you about the company?
One surefire way to separate the recruiting wheat from the chaff is to ask a candidate to take a
step back and translate technical lingo into good old-fashioned English. Our recruiting insiders
report that they’re often staggered by the number of candidates who expect that their deft use of
financial terminology will itself win them the job. Particularly among MBA candidates,
questions often enable interviewers to distinguish those who simply interview well from those who
are intellectually challenged by (and interested in) financial analysis.
Bad Answer
Candidate: Well, EBITDA multiples are more widely used in some industries,
and P/E multiples are more prevalent in others. They’re both pretty subjective,
and sometimes it just comes down to whether the research analysts who cover
the sector use one or the other as their primary metric. But if someone’s trading
at “8x,” it just means the total enterprise value of the company is eight
times its EBITDA, obviously. I think in general, 8x EBITDA is pretty cheap.
There are plenty of companies with P/Es of 20x or 30x or more—think about
the valuations during the Internet boom.
This answer misses the point. Valuation is all relative, and you need to understand what information
is being conveyed by a given multiple. Again, this is a quantitative question—don’t answer
with a qualitative allusion to research analysts and their ability to move markets with their
insight. The notion that some industries focus on EBITDA multiples and others on P/E is also
naïve—theoretically, the markets have good reasons for focusing on one metric or the other. If
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anything, you should look at both the EBITDA multiple and the P/E multiple together when
comparing the valuations of two businesses. This process will tell you more than either one in
isolation. In any case, there is no way you can make a blanket statement that “8x” represents a
low valuation. It may or may not, depending on the company and industry in question.
Mediocre Answer
Candidate: Well, if a company is trading at 8x EBITDA (for example), you
would want to look at where other similar companies trade to figure out which
companies are better-liked by the markets. Also, you might figure out whether
8x constitutes a higher or lower multiple than where this company has traded
over time. It might be that at 8x EBITDA, a company is undervalued because it
normally trades at over 10x EBITDA, which would represent a buying opportunity.
In terms of EBITDA versus P/E multiples, P/E tends to be used more
for companies that actually have net income. In some industries, particularly
younger or growing sectors like technology, companies are still losing money
and so P/E multiples aren’t relevant or meaningful. In that case, you’d want to
look at cash flow and thus EBITDA multiples would be the best metric.
This is a better answer, in that it points out that multiples only provide information on a
relative basis. Where is a company trading today versus yesterday? Where does it trade
relative to its peers? Multiples are useful in assessing relative—as opposed to absolute—value.
The candidate’s point about P/E multiples, however, leaves a little bit to be desired. It’s all
well and good to point out that if you have no earnings (the “E” in P/E), then it’s no use
looking at P/E multiples. However, there are some critical distinctions between EBITDA
and P/E multiples for those companies who do have positive earnings. Most importantly, two
businesses in an industry with the same EBITDA might have different earnings because one
has more debt and thus pays more interest expense. Taking on more debt is a financing
decision, not an operating decision, and so the fact that the companies’ bottom-line earnings
differ doesn’t necessarily imply that one business is performing better or generating more real
operating profit than the other.
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Good Answer
Candidate: Fundamentally, a multiple is an indication of how an investor (or a
market) values the earning potential of a given enterprise. Mathematically, it’s a
ratio of a valuation metric (such as market capitalization or the purchase price
in an acquisition) divided by financial performance, whether measured by sales,
EBITDA, free cash flow, or net income. So breaking it down even further, the
ratio tells you that for every dollar of, say, earnings, an investor (or the public
markets) has assigned a particular value to that dollar of earnings.
Interviewer: That’s a good starting point, but what does that number tell you?
How do I make sense of that?
Candidate: In isolation, the multiple tells you very little. The multiple is most
useful when you are comparing the value of the company in question with the
value of similar businesses. As I mentioned earlier, a multiple gives you the
number of dollars an investor (or a public market, which is just a collection of
investors) would pay for a given unit of financial performance, however you’ve
chosen to define it. So when you compare two similar businesses in the same
industry, and one—we’ll call it Company A—trades for 10x earnings and the
other—Company B— trades for only 8x earnings, this tells you that the market
for whatever reason values each dollar of Company A’s earnings more than
Company B’s.
Interviewer: Okay, this is a good start, but to make it easier, why don’t we
discuss two specific companies rather than two hypothetical enterprises? Let’s
compare Lowe’s and Home Depot. These are both public companies, and they
operate in the same competitive space. However, Home Depot trades at 9x
EBITDA, and Lowe’s trades at 11x EBITDA. What does this tell you about
Lowe’s versus Home Depot?
Candidate: It tells you that the market values each dollar of Lowe’s earnings
more than Home Depot’s.
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Interviewer: Right—but we covered that when we talked about Company A
versus Company B. My question is why? Why might the market assign two
different values for these specific companies’ earnings, when they’re in the same
exact industry?
Candidate: Well, it should tell you something about the quality of those
earnings. The market may believe that Lowe’s is better positioned to grow its
earnings than Home Depot, or perhaps it believes that Lowe’s earnings are
likely to be less volatile or more predictable for some reason. In general, the
market will be willing to pay more for each dollar of a company’s earnings if it
believes that those earnings have either more growth potential or more stability
than those of its competitors.
Interviewer: So given that the markets value Lowe’s more highly today, which
stock represents the better buy? In other words, which would you choose if you
could buy either one?
Candidate: Wow, that’s a tough one. After all, if you believe in efficient
markets, then you would say both companies are valued fairly. In other words,
Lowe’s may be more expensive today, valued at 11x last year’s EBITDA, vs.
Home Depot at 9x last year’s EBITDA, but if both businesses grow as expected,
then today’s valuation might be exactly the same for both companies—as a
multiple of future EBITDA. So I don’t think the multiple differential today
necessarily tells you which company is a better value today.
But, if I had to answer your question, given that both companies are in the
same business fundamentally, I would question whether Lowe’s really will grow
measurably faster than Home Depot. In any event, that growth is completely
“on the come,” whereas last year’s (trailing) EBITDA is in the bag. I think
Home Depot is the market leader, and is a better value on actual trailing
EBITDA today, so I would probably go with them.
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The conclusion above is thoughtful and defensible, but the candidate could just have easily
defended selecting Lowe’s. You might conclude that Lowe’s is still building new stores and
expanding nationwide, and that you’d rather back a growing business, whereas a more mature
number-one player like Home Depot that already has stores everywhere might have a tougher
time finding ways to increase profits. If you really believe in efficient markets, there’s no right
answer to the question of which company is the better buy. The point is, have good reasons for
your point of view, and at a minimum, make sure to have a point of view!
Interviewer: But why EBITDA multiples? Is that the right metric for this
industry?
Candidate: Well, in this case I think it’s a safe bet that both businesses have
similar capital expenditure and working capital requirements, so EBITDA is
probably a fair back-of-the-envelope metric for comparing operating cash flow.
I don’t know whether one company has more debt (and thus more interest
expense) than the other, so I don’t know whether the P/E multiples are truly
comparable.
Interviewer: Can you think of a hypothetical scenario where EBITDA
wouldn’t be a good valuation metric for comparing two businesses in the same
industry?
Candidate: One example comes to mind. When I worked at Morgan Stanley, I
completed a comparable transaction analysis involving acquisitions in the food
industry. Two similarly sized companies that were equally profitable had been
purchased for 5x EBITDA. If you relied only on the EBITDA multiples, you’d
conclude that the two buyers paid similar purchase prices: after all, same
EBITDA, same purchase price multiple, same industry. But in this case, EBITDA
was misleading and not at all equivalent to cash flow. These were both food
companies, but one manufactured chilled dairy products—primarily milk and
ice cream—while the other company manufactured shelf-stable, canned foods.
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The first company required much higher annual capital expenditures because
chilled dairy products require more expensive equipment for their storage and
transportation. The canned food company had much lower capex because its
products could sit on a truck or in a warehouse for an eternity without spoiling.
The significant difference in capex wasn’t reflected in the EBITDA multiple.
Therefore, the buyer of the chilled dairy business paid a significantly higher
price than the buyer of the ambient food business, even though the EBITDA
multiples were the same.
It should be clear that this candidate clearly gets it. Multiples can be deceptive, and should not
be viewed in isolation, but they can provide a wealth of information about how the markets
value a business, and why. The key in the interview is to keep it quantitative—after all, a
multiple is a fraction!

If you had $10,000 to invest ? Which stock ?

2007-06-23T08:22:00.001-07:00

If you had $10,000 to invest—but you had to invest the money in a single
common stock—which company’s stock would you choose, and why?
While equity research analysts and equity sales professionals recommend specific stocks on a
daily basis, professionals in other areas of the bank—including corporate finance and
M&A—do not. Nonetheless, recruiters report that this question helps them evaluate
candidates on a number of criteria: the candidate’s general level of interest in the financial
markets, grasp of basic valuation concepts, and ability to speak intelligently on fundamental
investing principles. MBA associate candidates in particular will be expected to have a pretty
good answer for this question.
Bad Answers
Candidate 1: Probably Microsoft—they’re just completely dominant. Can you
seriously imagine every business in the country switching to a new operating
system? Bill Gates is the richest man in the world for a reason: huge barriers to
entry. The company has a complete monopoly on software that no one could
ever hope to replicate. They totally don’t seem to be hurt by all of the lawsuits
either, and in any case they have something like $100 billion in cash on the
books for a rainy day. I wish I had gotten in on that company from the
beginning.
It’s not necessarily the company you choose, but the rationale and detail that substantiate your
answer. In this case, Microsoft may be a perfectly legitimate investment choice, but the
candidate’s reasoning is almost wholly qualitative, and general and anecdotal at that. This
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candidate doesn’t know the first thing about how Microsoft is valued today, and this will be
painfully obvious to the interviewer.
Candidate 2: I would never invest $10,000 in a single common stock today.
Maybe someday, when I’m a managing director at this firm and I have $10,000
to just throw around, maybe then I would. The key to successful investing is
diversification! I would take the $10,000 and invest in a collection of mutual
funds—you can’t put all of your eggs in one basket. Right now, I don’t have the
time to do the research necessary to get comfortable with just one stock.
This candidate takes the approach of candor. She demonstrates that she understands a bit
about personal investing and isn’t a gambler. While diversification is an important investing
principle, this candidate has chosen the wrong opportunity to demonstrate her mastery of the
concept. Though you may certainly acknowledge that single-stock investing may not be your
preferred strategy, don’t evade the question that the interviewer asks. You can always lead with
this, but then answer the question.
Good Answer
Candidate: Well, I must admit that I don’t have a lot of practice choosing
single stocks to invest in. I’m still a novice investor, and so far, I’ve stuck with a
diversified portfolio of mutual funds that limit my risk exposure and provide a
decent return. But if I were fortunate enough to have $10,000 to invest in one
company, I would choose Target Corporation.
Here, the candidate takes a moment to acknowledge that single-stock investing is not an area
of expertise for the everyday investor. But by mentioning his own investing experience, he
demonstrates a basic level of interest in (and experience with) the fundamentals of investing
and the tradeoff between risk and return. He also offers an answer at the very beginning,
providing the interviewer an opportunity to shape the dialogue.
Interviewer: Fine. Why Target?
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Candidate: Well, you hear a lot about Wal-Mart, and it is a great company. But
as I see it, Target has largely the same business model but comes at a lower
valuation. But let’s start at the beginning: First thing’s first, I like the business. I
believe Wal-Mart and Target will continue to succeed because they offer the
customer a significant price savings on both everyday goods and smaller-ticket
consumer luxuries. I think specialty, niche retailers may be able to succeed selling
at a higher price point, but for the basics, I think the customer will continue to
gravitate toward the savings. Wal-Mart and Target have a sustainable competitive
advantage over smaller retailers and grocers through sheer scale; they’re able to
procure their inventory at a significant discount to competitors and can pass
much of this directly onto the consumer. This will translate into earnings growth
potential; I see the existing stores gaining market share and new stores opening
up across the country—and perhaps internationally, although I’m not that close to
their business model.
Interviewer: Let’s say that your assumptions about growth prospects are fairly
accurate. You mentioned valuation—how do you put a value on that growth?
Candidate: Well, first I would look at where Target trades today, relative to
Wal-Mart as well as the market as a whole. Target’s trading at 20x trailing
earnings today versus Wal-Mart at 24x. So on actual, “in the bag” earnings,
Target trades at more than a 15 percent discount to Wal-Mart today. But getting
back to growth, and looking forward, Target’s trading at 16x forward earnings,
versus Wal-Mart at 19x to 20x forward earnings—again, at a 20 percent
discount. Moreover, Target is actually projected to grow faster than Wal-Mart: 15
percent annual growth over the next 5 years, versus 14 percent for Wal-Mart
and 10 to 11 percent for the S&P 500. So when you asked about valuing
growth, you can look at the P/E multiples relative to the growth rate—the
PEG ratio—and see that Target’s trading at just over 1x its expected growth
rate, versus Wal-Mart at 1.4x and the S&P at 1.6x. So, for that money, you’re
getting growth at a good price.
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Interviewer: Warren Buffett has made a career of that. What else would you
consider before investing your money, other than the price/earnings multiple
and the growth rate, and the basic company strategy?
Candidate: Well, I would look at the company’s management.
Interviewer: What about management? As a small investor, how can you
accurately assess whether Target’s management is effective?
Candidate: Well, one measure would be the extent to which the company has
consistently hit its earnings estimates. I imagine Wall Street research analysts
base their earnings estimates on their discussions with top management at the
companies they cover; if management isn’t realistic about the sustainability of its
business plan or its future growth prospects, or if management doesn’t make
effective decisions, it’s not likely to meet its quarterly earnings. If there had been
a lot of change in the executive ranks recently, or if the company announced
that significant leadership changes were imminent, I might be concerned about
management’s ability to meet estimates. To be totally honest, I don’t know how
Target’s done relative to its earnings projections. If they’ve underperformed, I
guess that could be one reason they’re trading at a discount to Wal-Mart. If I
actually had $10,000 to invest, I’d probably want to look into that!
This candidate has clearly taken the time to develop a well-researched, well-articulated investment
thesis for a single stock. Our guess is that you may never have thought in any great
detail about PEG ratios, or where any one company traded versus the S&P 500. But as you
consider how to prepare for interviews, keep in mind that after all, this is Wall Street. Think
about how much better this candidate sounds (if a bit too bookish) than the loosey-goosey
would-be Microsoft buyer above. There are numerous free financial and investing websites out
there offering all the quantitative and qualitative information you’d need to develop a viewpoint
on any publicly traded stock. Regardless of your background, you can certainly learn
enough to be dangerous in an interview (and by dangerous, we mean armed with actual
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valuation metrics and numbers to back up your great stock picking idea). As a general rule,
when confronted with quantitative questions, try to ground your response in numbers and
analysis, and let the qualitative data add in color around the edges.

So I know why you want to be a banker, but why here specifically?

2007-06-23T08:20:00.000-07:00

So I know why you want to be a banker, but why here specifically? I
mean, if we at ABC Bank give you an offer, are you going to accept it
over your other offers?
This may be the toughest question out there. It’s tough for a number of reasons. First of all,
it’s fundamentally unfair. It’s a catch-22: We’ll give you an offer, but only if you promise to
accept it. Second, you probably don’t know enough about what makes one firm different from
another to make an accurate assessment. And even if you actually know that you desperately
want to work for ABC Bank and have a great reason for making them your favorite, you
can’t tell that to the other six firms you interview.
But it’s also an understandable question. Let’s say ABC Bank is in the bottom half of all
the recent league tables and has never in its history successfully hired an analyst who also got
an offer from Goldman Sachs or Morgan Stanley. ABC Bank still needs to hire three or
four analysts from your school, and they can’t just give dozens of offers in hopes that a few
souls will fall through the cracks. And by the way, ABC Bank knows that they can offer
analysts a great working experience, and that former ABC analysts are now CEOs, hedge
fund managers, and multimillionaire managing directors at ABC with houses in the
Hamptons. They have every right to know what analyst candidates actually want to work
there and are therefore likely to accept an offer if one is extended.
You need two strategies to get through this question unscathed. First, try to do the research to
come up with an answer that’s actually believable for every firm. Do your homework, read
articles about league tables, and talk to current analysts at different banks. Remember, as a
wise person once said, “The key is sincerity—if you can fake that, the rest is easy.” Second,
if you actually don’t want to work for ABC Bank, but you don’t yet have an offer from your
first-, second-, or third-choice banks, then try to create a believable diversion. Create points of
differentiation. Let’s look at these answers to show you what we mean—we’ve actually
included several examples of plausible good responses to this question.
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Bad Answer
Candidate 1: Well, honestly, I know I want to be an investment banker, for all
the reasons we just finished discussing in your last question. And at this point
in my job search, I haven’t gotten any other banking offers yet. So obviously I
would consider yours very strongly. I mean, after all, you’re a great firm, and my
friend Chip who you hired last year is having a great experience.
This is another of those candid, honest, sincere answers that won’t get you anywhere. Would
you want to give someone an offer if every other bank has passed her over? Of course not—
you’re just as smart and selective as every other bank! If they saw something they didn’t like
about this candidate, obviously I’m too smart to take the bait. Next, this answer doesn’t do
anything for the interviewer’s ego. The interviewer may work at ABC Bank, but he still
considers himself a real stud, because after all, he works on Wall Street on multimilliondollar
deals and he has a really great bachelor pad on the Upper East Side.
Candidate 2: Yes, I’ll definitely accept an offer with ABC. I have offers with
Lehman and Merrill, but honestly I didn’t like the people as much as the ABC
people I’ve met. The ABC people just seem really friendly and down-to-earth,
whereas some of the people I met at other firms—I honestly can’t imagine
working with for 100-hour weeks! Also, my offers at Lehman and Merrill are
both in industry groups, and I don’t want to work only on one industry; I’d
much rather work in a product group, so that I could gain experience across a
number of different industry sectors.
There are two problems with this answer, which could very well represent an honest assessment
of where this candidate stands vis-à-vis ABC Bank. First, although every bank invariably
thinks that its people collectively represent a superior brand of banking professional, you
should never highlight that there are some people you’ve met whom you didn’t like! Every
banker knows colleagues at their firm who are tough on junior people, and don’t want signs
that an analyst candidate has already met bankers with whom they would clash when the
Finding Your Way
going gets tough. Although every firm cites “The People” as the number-one thing that
attracted them to their particular bank, it’s not a good enough answer to this question.
Second, although we give some points to this candidate for trying to pick a relevant point of
differentiation between ABC Bank and his opportunity to join Lehman or Merrill, the fact
is that these days, most of the available job offers are in industry groups. It may be that this
interviewer works in an industry group himself and thinks it’s the only way to go. If you
honestly want to work in a product group, you can probably put a more positive spin on it
than “I don’t want to work on only one industry,” which suggests you might bore easily.
Good Answers
For an Investment Banking Job at a Large Commercial Bank
Candidate: Well, I would obviously be honored to get an offer from ABC
Bank, and I would be very inclined to accept it. For one thing, I know that
ABC Bank benefits from the full product offering it offers as one of the largest
commercial banks. The analysts I’ve talked to at ABC Bank have told me that
more and more, clients are awarding investment banking business based on
their ability to bundle commercial banking services that have historically been
unattractive to pure-play investment banks, who can’t lend money from their
own balance sheet as aggressively as ABC Bank can. The ability to be a onestop
shop in this regard will probably enable ABC Bank to gain market share in
M&A and equity underwriting over time, which in turn makes it a pretty
exciting place to grow professionally for a junior banker.
Do your homework and figure out which banks really offer this point of differentiation—you
don’t want to try this one when interviewing with Goldman Sachs or Morgan Stanley! But
since the wave of consolidation that swept through the financial services sector in the mid-
1990s, this is one of the few genuine points of differentiation between the traditional
investment banking powerhouses and their aggressive competitors that are affiliated with the
world’s leading commercial banks. Also, we think the interviewer will give the candidate
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kudos for ambition and for the ego-friendly theme that he would see ABC Bank as a place to
dig in his heels and carve out an entire career beyond the 2-year analyst commitment.
For a Firm that Isn’t Top of the League Tables, but Is Gaining Ground
Candidate: Yes, I would be thrilled to get an offer from ABC Bank, and I
would absolutely accept it. My understanding is that the firm has real momentum
right now, and that you’ve been steadily climbing in the league tables.
Didn’t you jump to like fourth in equity underwriting last year?
Note to candidate—get this right, or don’t try it at all!
Candidate: It’s my understanding that in banking, business tends to be
contagious, and that the more deals a firm does, the more likely they are to win
new business as a result. I think deals like the recent $10 billion acquisition of
SmallCo by BigCo that ABC advised on will generate enthusiasm among other
potential clients in the widget industry, while also signifying what a force ABC
Bank has become in the M&A business. I want to join a firm that’s moving
forward, and gaining share versus its competitors, because that’s the kind of
place that could really offer me opportunity going forward if I get in and prove
myself at the analyst level.
Have you ever wondered how different firms pitch themselves when they know they’re competing
for a big equity or M&A mandate against five or six other firms? While every firm
tries to cut the league tables to show that it actually is the number one firm in this industry for
this specific product, often firms have to get creative. More often than not, firms will use an
argument like this with clients: Instead of acknowledging outright that they aren’t number one
or even number three in the league tables, they’ll say, “Our firm has real momentum right
now, we are climbing in all the relevant league tables, our own stock price is up X percent this
year, and we recently advised on all these important offerings. . . .” The implication? Don’t
choose the firm of yesterday—go with the bank of tomorrow! You need to do your homework
to actually be credible spinning this answer in an interview, but we think this could be a very
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effective approach. Like the first good answer we presented above, this answer also demonstrates
the analyst’s humble but fervent ambition to get in the door, do a good job, and rise up
the ranks.
For Your First-Choice Firm
Candidate: I will absolutely accept this job if I get an offer. I’m obviously
ready to roll up my sleeves and work extremely hard, and I know that I’ll be
working on a fair number of pitchbooks and client service presentations no
matter what bank I choose. But I’d be lying if I didn’t admit I hope to work on
live deals, and ABC Bank’s reputation is unparalleled. My understanding from
my former classmates now at ABC Bank is that the firm’s ability to point to
their leading market share and history of relevant transaction experience is a
huge selling point when pitching for new business. I have friends at other firms
who say they have lost numerous pitches to ABC Bank, always for the same
reasons. From the firm’s initial presentations on campus to all of my interviews,
I’ve been extremely impressed by the people I’ve met from ABC Bank and I
strongly believe that I would fit in there. And I know from my friends at ABC
Bank that the firm gives analysts the opportunity to step up and take on a great
deal of responsibility if the analyst can prove him- or herself as being reliable,
hard-working, and effective in the trenches. I would love to get that shot.
This is pretty self-explanatory, and we probably don’t need to script an answer for you for
your first-choice bank in any case. But just saying “because you’re the best” would have been a
little bit arrogant, implying the candidate thinks he’s too good for anything but the best. This
candidate gives the real reason why being atop the league tables matters: It ultimately helps
generate more business, which is good for analysts seeking live deal experience. Also, this is a
great chance to shamelessly (but indirectly!) praise your interviewers by saying you really like
the people you’ve met at ABC Bank and believe you’d fit in there. They’ll ultimately make
that decision for you, but a little plug doesn’t hurt. And you may be sensing a theme with how
we end this sample answer—once again, sell, sell, sell. I recognize you’re the best, but if you
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hire me I won’t spend time wallowing in my glee over working for ABC Bank—I’m going to
dig in and make you glad you gave me the chance. Be humble and ambitious, no matter who
you’re interviewing with.
You probably note that in every single “Good Answer” above, the candidate utters some
version of the words, “Yes I will absolutely accept this job offer if I get it.” There is clearly a
moral issue here, and we are not advising that you say this if you don’t mean it. But consider
the alternative. Nobody wants to be told, “Well, I mean, I’d consider it, but I don’t know if
I would accept it. . . .” There’s no good way to spin that, considering the egos involved.

Why do you want to be an investment banker?

2007-06-23T08:18:00.000-07:00

Why do you want to be an investment banker? Explain how you arrived
at the decision to pursue an analyst position in investment banking.
If you only have enough time to prepare your response to one question outlined in this entire
guide, please make sure it’s this one. We’d be very surprised if you didn’t hear it in just about
every interview (in fact, we’d be inclined to think that you showed up at the wrong place if
you didn’t). One of the most popular variations of this question is, “Why don’t you take a
moment to briefly walk me through your resume and tell me how you arrived at the decision to
pursue an investment banking career.” As always, be sure to answer the question asked. If
you’re not asked to walk your interviewer through your resume, then you probably should dive
right into your reasons for pursuing an analyst or associate spot.
Bad Answers
Candidate 1: You know, I’ve always been interested in learning more about
the business world, and what better place to learn about business than on Wall
Street? I’ve always been fascinated by the world of finance, and I think that my
dynamic personality would really serve me well in such a fast-paced, highpressure
environment. I decided to pursue investment banking jobs because
I’m looking for a career where the learning curve is steep, with lots of opportunities
for personal and professional growth. Also, I’m hoping to start my
own business one day, and I really want to learn about how the world’s leading
companies run their businesses. In particular, I’m really interested in learning
about mergers, acquisitions, and the international aspects of business.
Here’s the problem: This answer is honest, enthusiastic, and well-intentioned, but it’s so incredibly
general. Remember: This question is one of the most important litmus tests of how serious
you really are. Use it as an opportunity to demonstrate that you genuinely understand the role of
an investment bank, the interrelationships among its various functions, and the specific requirements
of the particular job for which you are interviewing. Your answer should demonstrate not
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only that you’ve given some serious thought to why you want to be a banker, but also how your
past experiences—professional, personal, and academic—have prepared you to thrive in this
unique professional environment.
Candidate 2: Well, throughout most of my college career, I figured I would go
to law school after graduation. But after I talked to a lot of my college friends
who were in law school (or who had just graduated), I realized that while a lot of
them loved law school, few of them actually enjoyed practicing law. I didn’t want
to spend 3 years in law school only to enter one of the most overpopulated
professions—not to mention a profession with one of the highest rates of career
dissatisfaction—unless I was really sure that I wanted to go. So I decided that I’d
postpone the application decision for 2 years or so. That way, I can gain a few
years of work experience and decide during that time whether law school is for
me. Or maybe I’ll decide to go to business school instead. In either event, I’ll
have the opportunity to save a little bit of money in the process and figure out
what I want to do next. I figure that if I had gone to law school, I would have
worked really long hours as a law school student. In fact, I know that I’m going
to work hard at whatever job I decide to take for the next 2 years, so I might as
well work hard at a firm where I’ll be assured a top-notch learning experience.
If this answer actually is swirling around in your head, we need to level with you: You’re not
alone. Every single investment bank will hire analysts with exactly this career path in mind:
2 years as an analyst, back to law school, and on with an exciting career in law armed with a
prestigious first job on Wall Street, more than a little business acumen and some cold hard
cash picked up along the way. But this is the interview stage, and you’d be better off keeping
this little agenda to yourself until after you get the job.
Let’s take a step back and review our advice from the first half of this guide. While there
are many solid, credible reasons for pursuing investment banking analyst positions, that
doesn’t mean that there aren’t just as many illegitimate reasons for doing so. Untenable
responses to this question include those suggesting that you somehow stumbled across banking
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and thought you’d give it a shot, responses that frame the analyst experience as a steppingstone
to bigger and better things, and answers that reference the amount of money that you’re
likely to make if you land a banking job. This candidate mentions all three. Additionally,
his response is vague and noncommittal, so he won’t win any points for being enthusiastic,
interested, or focused on the industry. He doesn’t seem to have a clear idea of what he’d hope
to get out of an analyst program. And believe it or not, there’s more: It’s never a good idea to
advertise that you see the analyst program as a 2-year commitment only. Although it’s true
that banks expect a fair amount of attrition after analysts’ second year, you never want to
make it sound as though you’ve checked out before you’ve even checked in! The interviewer has
probably given him a mental “ding” already and has now turned his attention to what he’d
like for lunch.
Good Answer
Candidate: Well, I think there are a lot of desirable things about this job, but
I’ve focused primarily on three things. First, and perhaps most important, I
want a job where I’m going to learn a ton. Everyone I know in this profession
has emphasized that the learning curve is essentially vertical and that after 2
years analysts have earned a fantastic education on corporate finance, valuation,
the capital markets, and business strategy. Whether I am fortunate enough to
have the opportunity to make my entire career in banking, or even if I eventually
pursue a career elsewhere in industry, I know that 2 years as an analyst
will provide an outstanding foundation. Second, I want a job where I’m going
to work with extremely bright, motivated people. I have always thrived in
situations where my co-workers, classmates or friends have challenged me to
perform at my highest level, and I expect that I’ll learn as much from my
colleagues at an investment bank as I will from the day-to-day analytical
demands of the job. Finally, I want a job where I’ll be able to take a great deal
of responsibility right off the bat. I don’t mind working extremely hard if I
know that I’m making a significant, valuable contribution to a project that is of
critical importance to one of our clients. From everything I’ve heard about
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banking, analysts are part of two- or three-person teams who essentially run the
deal from start to finish. With that few people handling that much responsibility,
I know I’ll be in a position where I’ll be given as much responsibility as I
demonstrate I can handle, and that really excites me.
In the course of this answer, this analyst has identified not only three great reasons to join
this profession, but also a number of personal qualities likely to endear himself to the
interviewer and to his future senior colleagues at the bank. He demonstrates true humility in
his desire to learn and his recognition that his colleagues will be smarter and more experienced
than he. Yet he also demonstrates the ambition and hunger that characterize the very best
analysts.
On his fourth consecutive all-nighter, Red Bull and Mountain Dew coursing through his
veins, this analyst will be thinking not only about his desperate need for some sleep but also
about the importance of this upcoming presentation and about the potential payoff of
working on a live transaction of critical importance to the client. We’re not kidding—all of
that is conveyed in the answer above.
That said, a number of recruiting professionals shared with us that while there are right and
wrong answers to this famous question, it isn’t just about spitting out a robotic “right answer”
that you’ve memorized and rehearsed. At its core, you need passion, hunger, and determination
to be a good analyst; these should all come out in your interview, and particularly when
you answer this question. So whatever you say in response to this question, this is one
situation where you will be expected to look your interviewer in the eye and speak from the
heart. Even if your response is completely different (e.g., “I am absolutely passionate about
learning how the markets value companies,” or “I want to spend the rest of my career helping
companies execute transactions that will improve shareholder value”), it needs to be an honest
assessment of why you’re ready to jump into this demanding, challenging, and often-rewarding
profession.
Now, just in case you gave the exact answer above, it would also behoove you to prepare for
this little curveball . . .
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Interviewer: Those are all good reasons, but you can get all of those things
from a management consulting position, or even a career within a company.
What is it about banking specifically that appeals to you?
Candidate: Hmm . . . well, let me take those separately. I imagine you can get
many of the same experiences above in consulting, but I understand that
consultants tend to be more generalists in their interactions with clients, analyzing
big-picture strategic questions or very specific operational or IT-related
challenges. While I’m interested in business strategy, fundamentally, I do want
to work in finance, and I want to acquire a serious toolkit for financial analysis.
I don’t want to emerge from 2 years as a consultant with only a cursory understanding
of how to analyze financial statements, or how companies are valued.
And while I suppose a career in the finance arm of a company in industry
could provide such skills, my understanding is that the learning curve is just
much steeper in banking.
Good answer. Remember our point earlier that bankers (bless their hearts) tend to have big
egos. Ergo, finance = good, while consulting = bad. Also note the things this analyst didn’t
mention, such as the money you can make on Wall Street, the desire not to travel as much as
consultants, and so on. This follow-up answer dovetails perfectly with the initial response to
the question.
Interviewer: So in addition to that analytical toolkit, what specific things do
you think you’ll take away from the program?
Candidate: I think the next 2 or 3 years will allow me to fulfill very specific
personal and professional goals. While in the process of learning how to
analyze and value companies, I think a great side-benefit would be a unique and
first-hand exposure to the capital markets. My understanding is that when
bankers work on debt or equity offerings, they learn a great deal about what
drives the financial markets, and that’s something of real interest to me. In
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addition, I imagine the group I end up joining within the investment banking
division will shape my learning experience. If I were in an industry group, I
would probably learn a lot about different strategies and business models within
that sector. Or, if I end up in a product group like mergers and acquisitions, I
would probably get a first-hand education in some of the negotiating and deal
structuring skills involved in completing a deal. Finally, while I have no grand
expectations of flying on jets with CEOs, I do think it would be personally
rewarding and fascinating to work closely with the senior management of your
clients on occasion. I think it would contribute to my own professional maturity
and development to have to speak intelligently with a senior executive on the
technical aspects of the deal we’re working on together. I imagine that once
you’ve done that, it would be big boost to your self-confidence—nothing much
would scare you after that!
Again, remember that it’s about more than just the candidate’s particular reasons for pursuing
this career that make him stand out: the specificity, sincerity, and the well-informed job
expectations driving his response collectively make this an A+ answer.
We probably don’t have to tell you this, but we don’t recommend that you simply memorize
the “good” answer outlined here. There should be more than a kernel of truth and sincerity
behind your answer; the bigger the kernel, the more convincing you’ll be. If you can bolster the
credibility of your answer by personalizing it with the specific experiences that sparked your
interest in the first place, so much the better. There are lots of good reasons for wanting a
career in the industry; don’t feel compelled to limit your response to the ideas we’ve included in
our sample answer.

Describe what you think the role of an investment bank is.

2007-06-23T08:17:00.000-07:00

Describe what you think the role of an investment bank is.
Undergraduate analyst candidates—especially those with little evidence of prior exposure to
financial concepts—are more likely than MBA candidates to address this question. That
said, it’s an important one to get right. Not only should you know what an investment bank
does, but you should know the differences among its various functions. You should make clear,
for example, that you know the difference between investment banking, sales and trading,
equity research, and asset management—at the very least, make sure you know the specific
position for which you are interviewing.
Bad Answer
Candidate: Basically, investment banks are the dealmakers of the financial
world. When you think of the “deal of the year,” or that big IPO or merger on
the front page of the Wall Street Journal, there were investment bankers behind
that. Investment banks are the biggest securities firms in the world; they buy
and sell stocks and bonds, write research on companies for investors, and
provide corporate finance services.
There are two primary problems with this answer. First, the question asks what the role of
the bank is. To say that banks are out “doing deals” doesn’t really explain the advisory
services that they provide. In his enthusiasm to secure a job where he’ll be the analyst on the
deal of the year, the candidate gives a pretty vague, starry-eyed answer about IPOs and the
Wall Street Journal. Second, the candidate gives away that he does not fully understand the
distinction between investment banking, sales and trading, and equity research. These
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functions may reside under the same roof, but they are altogether separate jobs with different
client bases, daily routines, and job descriptions. This question is about the specific role of the
investment banking function within those large, global financial services and securities firms.
On this last point, we should take a moment to emphasize how the various arms of a global
securities firm differ in their job descriptions. Sales and trading professionals, generally speaking,
are in the business of working with institutional investors (their clients) to buy, sell, and
trade public debt and equity securities. They are market makers for the public financial
markets. The sales force explains to clients why they should buy newly issued securities
underwritten by their firm, while traders serve as intermediaries who can help public market
investors trade in and out of investments over time (for a nominal trading commission).
Contrast this role with equity research analysts, who provide independent analysis of publicly
traded companies that includes a forecast for a company’s future stock price and, thus, a
recommendation to investors as to whether the stock looks like a good buy today. Investment
bankers play an altogether different role, and their clients are the companies themselves.
Mediocre Answer
Candidate: Well, investment banks are the CEO’s closest financial advisor.
They advise on topics like M&A or IPO opportunities and are the ones who
execute their clients’ largest, most important deals. A bank is basically a consulting
firm that specializes in finance, and their job is to know everything there is
to know about mergers and financings so that they can step in when a transaction
arises.
Nothing about this answer is wrong, per se, but it’s a bit big picture and doesn’t delve into the
actual service provided by the bank. This answer implies that investment banks are financial
think tanks that wait for the phone to ring and then opine with CEOs on weighty matters in
the world of high finance. While CEOs do turn to their bankers for advice on big deals, and
while investment banks are surely hired largely for their expertise on mergers and financings,
this answer is a bit thin on the actual role or service that banks provide in such transactions.
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Good Answer
Candidate: As I understand it, an investment bank works with companies to
structure transactions that will enhance their value. This may include accessing
the capital markets in order to fund growth or expand operations or investing
in another company through a merger or acquisition. I think the value that
investment banks provide their clients is twofold. First, they function as intermediaries
between their clients (who need capital) and the financial markets
(who wish to invest capital). So in a way, investment banks are relationshipbuilders.
Second, and perhaps more important, the investment bankers provide
invaluable advisory services by structuring the transaction in a manner that best
meets the unique needs of its clients. Banks are not only the matchmaker
between the parties involved in a transaction, they are largely the architects of
the deal itself. So if I’m a client who wants to raise money, I would look to my
investment banker not only to introduce me to investors but also to design a
transaction structure that best meets my objectives.
Interviewer: I agree with all that. So what’s your role within the investment
bank? What do you expect to be doing day-to-day?
Obviously, you should tailor your response to the specific position—analyst or associate—for
which you are interviewing. Your answer should convince the interviewer that you have both
realistic expectations for the job, as well as an infectious enthusiasm for the work you’ll be
doing.
Candidate: Well, after I completed the analyst training program, I expect I’d be
assigned to one or more transaction teams within my group. On each of those
teams, I would work most closely with the associate on deal generation and
execution. I’d be responsible for collecting and analyzing company- and
industry-specific data relevant to the transactions I was working on and for
building detailed Excel models that forecast the company’s financials in a range
of different financing scenarios. If I were fortunate enough to work on live
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transactions (as opposed to just “pitches” for new deals), I would probably sit
in on organizational meetings and conference calls, where the team would
discuss the strategy and the timeline driving the deal. I’d also hope to participate
in meetings with the company to understand their business model and
strategize on the structure and timing of the transaction with the company’s
management. It’s this part of the job that I’m most looking forward to—really
understanding the company’s strategy and growth objectives, creating financial
models for a transaction that meets their needs, and then “selling” both the
company’s story and the merits of the transaction to potential investors.
Remember, you have two objectives when you’re answering this type of question: You’ve got to
convey realistic job expectations that prove that you’ve done your industry homework, and you
need to communicate a genuine enthusiasm for the role. This candidate weaves the two together
here. He knows what the analyst role entails, and he’s identified the components of the job he
finds most compelling.
Candidate: I’d probably also be expected to pay close attention to all of the
documentation involved with the deal (such as the prospectus and any internal
or external memos). As the junior-most team member, I’d probably be
responsible for a lot of the nuts and bolts of the deal: creating and editing
client presentations (under the supervision of associates), for example, and
coordinating the flow of information internally and externally among a lot of
different people (such as lawyers, accountants, and the other investment banks
involved in the transaction).
This level of detail is just icing on the cake: Without prior banking experience, you probably
wouldn’t be expected to know any of it, but as long as you’re not wildly off base, it doesn’t
hurt to demonstrate that you’re interested enough in the job to have learned a lot about its
specific responsibilities. In particular, this candidate makes it clear he doesn’t have any illfounded
delusions of grandeur regarding his likely role on the deal team. He knows that he
won’t be high on the investment banking food chain, and he’s probably scored points for that.

Describe your role in this group, focusing on the people management

2007-06-23T08:15:00.000-07:00

I noticed that here at Stanford Business School, you currently serve as
the co-president of the student association. I wondered if you could
describe your role in this group, focusing on the people management
(rather than the project management) component of your job. If I spent
some time here on campus and spoke to students who worked with you
in this organization, what would they say that they liked (and perhaps
disliked) about working with you? Do you think that you were an
effective manager?
This question is a hybrid between an interpersonal aptitude question and a self-awareness
question. As we mentioned earlier in the guide, interviewers often ask associate candidates to
describe and assess their own managerial style. If a candidate’s response suggests that he’s
either a rigid taskmaster or a spineless pushover, then the interviewer will probably question
his ability to assume an effective managerial role on a deal team. Unlike their analyst
counterparts, associate candidates must demonstrate the ability to manage both upward and
downward; in your responses, be sure to present yourself as someone who can effectively give—
as well as receive—direction, guidance, and both positive and negative feedback.
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Bad Answers
Candidate 1: Well, I think I would characterize my position as more of a
leadership role than a managerial position. I was elected by my peers into the
co-president spot, and as an elected student leader, I oversee eight committee
heads who plan and execute various student initiatives. They’re really the
“managers” of the organization, whereas the co-presidents are really responsible
for setting the overall vision of the association, speaking at various student
events, and basically representing the business school. That said, I think the
student association members would say that I’m a very effective leader. As an
organization, we’ve been very successful so far achieving all of the objectives
that we set for ourselves at the beginning of the academic year.
It’s unclear whether this candidate’s distinction between leadership and management is intended
to be self-congratulatory or self-deprecating. In either case, this response is ineffective. This
candidate doesn’t provide any insight into how he motivates and inspires people to be
productive; in fact, he doesn’t even really answer the question of how the association members
would describe him. His answer is so general and evasive that it almost undermines the value
of an otherwise impressive extracurricular achievement.
Candidate 2: If you spoke to any Student Association members, I’m pretty
sure they would tell you that I’m a very effective manager. As a manager, my
first priority is to recognize that I’m working with extremely competent people.
My management style is very straightforward: I tell the committee chairs what
needs to be done, and then I basically get out of their way. I don’t believe in
micromanaging people.
This candidate obviously doesn’t believe in providing a detailed response to the question asked,
either. We’ve said it before, and we’ll say it again; pay attention to the question that the
interviewer has posed. In this case, the candidate was asked both to characterize his management
style and assess whether his colleagues would consider it effective. Also, you should be
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wary of coming across as too hands-off; if you’re interviewing for an associate spot, you’ll be
entrusted with supervisory responsibilities over the analysts on each of your teams. As such,
it’s important to come across as a manager who’s truly invested in the success of his junior
colleagues.
Good Answer
Candidate: Well first, let me give you a little bit of background about the
organization. The Student Association (or SA) is the business school’s student
government. Students serve as officers, senators, and committee members on
the SA. Basically, the SA is organized around various committees that focus on
different areas of the business school experience: For example, there’s an
academic committee that focuses on interaction between professors and
students, as well as an alumni committee, social committee, and so on. In total,
there are eight committees, each with its own committee co-chairs and student
representation. Basically, my job as co-chair is to oversee the committee chairs,
ensuring that the association as a whole addresses students’ needs.
Unlike the first two candidates, this associate hopeful gives a brief overview of the organization
to give the interviewer some context. In addition, it’s clear that this is a high-profile
leadership position within her business school community. In a recruiting context, student
leaders are basically the number-one draft picks of the investment banking universe. If you’ve
assumed a meaningful leadership role on campus, don’t minimize its importance! Understating
your accomplishments won’t win you any points here.
Candidate: I think if you spoke to the committee chairs that I’m currently
working with, they would probably say that one of my strengths is my teambuilding
capability. So far, I think I’ve been able to create and maintain a team
dynamic in an organization that had previously been perceived as highly
fragmented—each committee chair basically did its own thing and provided
valuable services to students, but there was very little collaboration among the
various committees. When I took over as co-president, one of my goals was to
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create an environment where people were motivated by a strong sense of
affiliation, not just with their individual committee, but with the association.
Aside from introducing a team-oriented culture, I’ve also made a real effort to
be very approachable regardless of my own schedule or workload—I don’t
think any of my committee chairs would say that they don’t feel that they could
ask questions or look for guidance on the projects they’re working on.
These two managerial strengths—team-building and approachability—are certainly valuable
ones to highlight. Still, we might suggest that the candidate substantiate her claims with
specific examples. For instance, how did she go about encouraging collaboration among the
various committee leaders? When you’re preparing for interviews by considering how you’d
respond to questions like these, make sure you’re armed with specific details that will convince
the interviewer that you’re not all talk. Your interviewer may be satisfied with your general
overview, or he may just as easily probe for more detail—don’t let him call your credibility
into question by coming to the interview unprepared.
Interviewer: Okay, that’s what you think they would say about your managerial
strengths. What do you think they would suggest you improve about your
approach? In other words, if I asked your committee chairs for some constructive
feedback, what do you think that they would say?
This is an important point to remember: No interviewer is going to let you off the hook
without asking you to come clean on your managerial shortcomings.
Candidate: I think that some of the committee chairs think that I’m not
always specific enough when I provide my input on an event or initiative. When
we’re discussing an alumni dinner, for example, I’ll provide the alumni committee
chairs with very clear expectations about what the end result should look
like: the theme of the event, the types of student-alumni interaction we’re
trying to achieve, the number of people that attend the event, and so on. But
because my co-chair and I are overseeing eight different committees, my
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perspective necessarily has to be big-picture. I don’t go into too much detail
about the specifics of each event with each co-chair: how to recruit volunteers
for the event, what the invitations should look like, that sort of thing. I leave it
to them. I trust their judgment to make any event-specific decisions and resolve
any committee-level issues that come up.
But some people really want more guidance than that, and I think they sometimes
become frustrated that I give them so much latitude and don’t always give
them enough specific feedback. I think they’d say I needed to work on developing
a more detailed understanding of the particular issues that each committee
faces so that I’m better prepared to give the committee chairs actionable advice
if they need it.
This response is effective because it’s both credible and trainable. Remember, you can be honest
about your shortcomings as long as you demonstrate both an awareness of your development
areas and a commitment to continuous improvement (provided, of course, that the underlying
“development area” doesn’t suggest that you’d self destruct if you actually got the job).
Interviewer: It sounds as though you have a sort of “anything goes” approach
to management—unless they ask for help, you pretty much get out of people’s
way and are pretty hands off. Are there times where you’ve had to really roll up
your sleeves and pitch in so that a committee chair could accomplish a
particular task?
Keep this in mind: Although you should certainly highlight any leadership experience you
bring to the table, you don’t want to give the impression that you consider yourself too
important to do the truly unglamorous work behind the scenes. Interviewers definitely look for
evidence of leadership potential in associate candidates, but a willingness to slog through the
trenches of Excel models and pitchbooks will be equally important.
Candidate: Oh, absolutely. I get involved in the nitty-gritty details all the time.
For example, the career management committee (which acts as an intermediary
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between students and our career management office) recently planned to offer
a “mock interview day” here on campus. Because it’s been such a tough year
for recruiting, the career committee wanted to give students a chance to practice
their interview skills in advance of the recruiting season. They collaborated
with the alumni committee and contacted alumni at companies that regularly
recruit here, asking if they could take a day to come out and conduct oncampus
mock interviews with current students. This was a great idea, and one
that students were incredibly enthusiastic about, but the logistics were a little bit
difficult to execute. Basically, the project team underestimated the time it would
take to secure participants, and 3 weeks before the event, we still didn’t have
enough mock interviewers to accommodate student demand. So I came in over
the weekend with the rest of the project team and started making phone
calls—hundreds and hundreds of phone calls targeted to the alumni most
willing to participate in the event. Those types of things just happen
sometimes, and I try to help out wherever I can.
Good answer! Notice how much more effective this candidate’s response is as a result of the
example she provides. She’s probably resolved any lingering doubt the interviewer may have
about her ability to advance a collective effort as both a manager and an individual contributor.
As this dialogue illustrates, it’s not enough to simply assert your strength in a given area.
When you’re preparing for your interviews, think of specific instances in which you’ve
demonstrated those strengths in your professional, personal, or extracurricular pursuits.

How did you overcome personality differences to get your job done?

2007-06-23T08:14:00.000-07:00

Have you ever had to work with someone that you didn’t particularly like
or get along with? How did you overcome personality differences to get
your job done?
This is one of the great interpersonal aptitude questions that investment banking interviewers
love. One insider endured five consecutive two-on-one meetings in her final round of interviews
and encountered this question in every single meeting. There’s a good reason this question
arises so frequently: There are a lot of high-maintenance personalities in this profession and a
lot of potential interpersonal conflict as a result. Be sure that your response to this question
highlights your ability to build relationships despite initial differences in personality or
perspective.
Bad Answers
Candidate 1: Off the top of my head, I can’t think of a time when that’s
happened. I’m definitely a people person, and I make a real effort to get along
with everyone, especially people that I work with. I can’t really think of a time
that I’ve had difficulty getting along with anyone in a work context.
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Really? Not even someone in an MBA study group? Someone who you had to work with on
a college project? The chairman of the senior prom planning committee in high school? Surely,
there’s got to be someone out there who’s gotten under your skin just a little bit. You might
think that you’ll win points for declaring that no one—not even Dale Carnegie himself—is
better at winning friends and influencing people than you are. To the contrary, you’ll be better
off if you come clean and provide an example of a time where you’ve had to make a real
effort to overcome personality or opinion differences, as long as you can prove that you kept it
professional and learned something from the experience.
Candidate 2: Well, I didn’t get along with one of the associates that I worked
with at my consulting firm. Even though she was very good at her job, I didn’t
feel as though she was a good manager. She focused way too much on details,
whereas I consider myself much more of a “big picture” person. For example,
she would really get worked up about page formatting and font sizes and things
like that, and I just don’t believe that those types of things really add value.
Eventually, our manager just stopped putting us on teams with each other,
which I think was best considering that she was way more Type A than I was.
As this candidate demonstrates, you can take honesty a bit too far. Not only would you
effectively forfeit an offer if you gave this response, you may not even get a taxi ride back to
your hotel. We just can’t emphasize it enough: Few things are as important to a prospective
analyst or associate than a meticulous attention to detail coupled with a well-sharpened ability
to assuage demanding personalities. If you think that you’d have trouble doing either on a
daily basis, you may seriously wish to rethink your choice of career.
Good Answer
Candidate: I can definitely think of a time when I didn’t get along with
someone in a work setting. As it happens, I ended up getting along with this
individual very well on a personal level once we didn’t have to work together so
closely.
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Provided that you don’t take the same approach as the previous candidate, it may be easier to
describe someone you didn’t like working with rather than someone you didn’t like personally.
When you’re discussing someone you didn’t get along with at work, it’s a little bit easier to be
diplomatic since you can restrict your discussion to differences in work style or management
approach. Loose lips can get the best of you when you’re discussing someone you just don’t like
at all. Just remember: Never bad-mouth anyone, especially a previous employer!
Candidate: During my first 6 months with ABC Consulting, I worked with an
associate who I considered somewhat difficult to work with. When you’re a
business analyst at a consulting firm, the associate on each of your client teams
is effectively your manager, and it’s that individual with whom you work most
closely. As I soon figured out, each associate on each client team has their own
unique requirements for every deliverable, and their own preferred
communication style.
Nice introduction, and it’s no coincidence that the situation the candidate describes is highly
applicable to banking. Now, we’ll see whether or not the candidate can pinpoint the source of
friction without bad-mouthing a former colleague.
Candidate: Providing specific, actionable feedback was not this particular
associate’s strength. When I would submit either written or quantitative analysis
for her review, she would often return it to me with entire sections circled and
comments that read, “rework this section.” No specifics. No details. No idea
what particular aspect of the project she wanted me to rework, or what constituted
reworking. As a new business analyst, you can imagine that this would
have been particularly frustrating. If I had been a more tenured analyst at the
time, I may have had a better frame of reference for what I needed to do and
how best to do it, but I certainly didn’t have that kind of clarity 3 months into
the job.
Interviewer: So did you approach her and ask her to provide you with more
specific feedback?
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Candidate: Yes. When I asked for more specific feedback, it became clear that
she expected me to do things exactly the way she would have done them if she
were the analyst. To give you a little bit of background, this associate had been
one of those “star” analysts who was promoted early. She had been so successful
as an analyst that I think she may have had difficulty transitioning into a role
with more managerial responsibility.
Interviewer: I can definitely understand your frustration with her feedback, but
since she had been a particularly effective analyst—while you were brand new
on the job—shouldn’t you have done things the way she advised?
Candidate: Well, I definitely would have tried to produce work according to
her expectations if I understood exactly what those expectations were. But as I
mentioned before, that was part of the problem: She wasn’t specific enough in
her feedback. In addition, I don’t think she recognized that not every analyst
approaches the work process exactly the same way. She would usually insist that
you do things exactly the way she would have done them, regardless of whether
it was the most efficient way for you to get things done in that particular situation.
And sometimes, I just didn’t agree with the way she felt the information
should be organized in the final deliverables. As the analyst, you’re a lot closer
to the underlying data, and so you have a better sense of how it should fit
together. I just didn’t feel as though she trusted my judgment, which made it
difficult to work with her.
At this point, alarm bells are starting to sound in the interviewer’s head. The candidate
started off strong by describing a situation that’s highly relevant to the job for which she’s
interviewing, but now the interviewer is concerned about her ability to take direction. At the
associate level, she’ll be expected to follow the vice president’s lead on deal teams. (Remember
our discussion about the investment banking hierarchy?)
Interviewer: Okay. So you’ve explained how you didn’t completely agree with
her management style. But exactly how did that affect your working relationship?
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You can disagree with someone’s management style but still get along with that
person. How did your differences make it difficult to get the job done?
Candidate: We just went back and forth a lot with each other. It wasn’t emotional
or anything; it was just frustrating. She’d give me a round of comments,
and I wouldn’t understand them, so I would go into her office and ask her to
walk me through her edits. We’d sit down, and after a while, she’d tell me how
she thought I could organize the data into the final product. I’d suggest a
different way based on my understanding of the information, and she’d stand
her ground. It was clear that I wasn’t the only one who was frustrated. She was
a new associate, and I was a new analyst. I think that was the main problem.
Neither of us was comfortable in our new role.
Interviewer: So what did you do? How did you get past all of the frustrations
to do what you needed to do for the client?
The interviewer is still trying to probe whether or not the candidate is likely to be a loose
cannon on a transaction team.
Candidate: At the end of the day, she was the boss. If I provided solid reasons
for my approach and she disagreed, I just had to live with that. It was her name
going on the final document, and she was senior to me. I didn’t love working
with her, but in the end, it was a lot easier to just do what I was told.
Nice recovery. Exceptional junior bankers consistently demonstrate good judgment: They
know when to speak up and when to keep quiet and get the job done. You never want to give
the interviewer the impression that you inherently resent authority, or (even worse) and that
you’ve had trouble managing upward in other situations.
Interviewer: Did you ever have to work with her again?
Candidate: She wasn’t on any of my teams for another year. In the interim, we
got along great on a personal level. The next time we worked together, she had
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more managerial experience under her belt, and I was a more senior analyst. I
had a better sense of what I was doing, and she had more confidence in my
ability because I had developed a track record for producing quality work. Our
next project together went a lot more smoothly. And we’re still good friends;
we’ve actually kept in touch since I left ABC.
The candidate ties this up nicely; not only does she understand why the friction occurred
initially, but her responses confirm that she didn’t allow professional differences to become
personal ones. Remember, banking is a relationship business. When you respond to interpersonal
aptitude questions, it’s always best to present yourself as someone who builds
relationships, rather than someone who’s likely to burn bridges.

Overcome a weakness to achieve a personal or professional goal

2007-06-23T08:13:00.000-07:00

Tell me about a time that you had to overcome a weakness to achieve a
personal or professional goal.
This is either an easier or more difficult adaptation of the standard “What is your greatest
weakness?” question, depending on your perspective. It’s a more difficult question for candidates
who are determined to whip out the overused “I’m a perfectionist” answer, thinking that
it’s the only weakness that investment bankers are willing to accept. Why is the question more
difficult for these candidates? Because this question almost forces honesty out of you. Even if
your greatest weakness really is your insistence on perfection, it would be pretty difficult to cite
an example of a situation in which this personality trait seriously threatened your ability to
achieve a goal. Why do we actually think this version of the question is a little bit more
candidate-friendly? Because you can be relatively honest about your vulnerabilities while
demonstrating that you’ve successfully overcome them in the past. When it comes down to it,
that’s the issue that self-awareness questions are intended to address. Investment banking
recruiters aren’t looking for perfect people, but they are looking for people who intend to work
hard and learn from their mistakes.
Bad Answers
Take your pick.
• I can’t function on fewer than 8 hours of sleep a night.
• I’m easily intimidated and I tend to take things too personally.
• I tend to resent it when people tell me what to do.
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• I don’t look great in black, navy, or gray.
• Anything else that is fundamentally incompatible with a career in investment
banking.
• Mediocre (but clichéd) answers that your interviewer may not believe
(whether they’re honest or not):
- I’m a perfectionist.
- I have trouble saying “no.”
- I have a tendency to overcommit to projects at the expense of my
relationships with friends and family.
Good Answer
Candidate: To be honest, I’d say that one thing I’ve really had to work on has
been managing my time without external deadlines.
We know what you’re thinking: bad time management? Isn’t time management pretty important
to the analyst or associate role? Hold your horses—this candidate does a good job of
giving a candid answer without making her interviewer break out in hives. Believe us: It can
be done!
Candidate: I’ve never had a problem managing time when I had a lot of specific
things to get done: I never missed deadlines in college, for example. I
never turned in papers or assignments late, and I always knew the course material
by the time I had to take an exam. I’ve actually always preferred working in
deadline-intensive environments. Particularly in college, though, I wasn’t very
disciplined about managing my time in advance of the deadline. I did a lot of
things at the last minute—always to a high standard, but always at the 11th
hour. Maybe I liked the adrenaline rush; I always did better under tight time
frames, so I became really bad about putting this off until the last minute.
Okay, so she’s basically saying that she’s a chronic procrastinator. She puts things off and
puts things off until she can’t put them off anymore, and then she panics at the end but get
things done to a high standard (which her 3.7 GPA substantiates). Could procrastination be
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a problem in investment banking? Absolutely! But here’s the truth of the matter: Any
weakness that you name could be a problem in banking, or in any job that you’ll have over
the course of your career. That’s not the point. The point is, do you know yourself well
enough to know what your weaknesses are, and have you thought about how they may affect
your ability to succeed in a given role?
Candidate: These bad time-management habits presented an interesting challenge
during my senior year in college when I decided I wanted to do a thesis
project. You don’t have to do a thesis at my university to earn your degree, but
you do have to write one if you want to participate in the department’s Distinguished
Majors Program. I really felt strongly about writing a thesis; I wanted to
develop a very specific area of expertise, and it was important to me to have a
tangible product at the end of my 4 years that I could have a real sense of
ownership over.
Lovely! A perfectly legitimate, well-defined goal with solid, credible motivations behind it.
Plus, she’s mentioned that the thesis project wasn’t a degree requirement, so she’s probably
scored extra points for choosing to do more work than she has to.
Candidate: I knew it was going to be difficult for me to organize my time
without any sort of real deadlines. The thesis counted for three credits, but
there were no classes, no midterms—nothing other than a deadline looming at
the end. Plus, it was my last semester in college—so there were a lot of
distractions to keep putting off my thesis work.
Interviewer: So how did you overcome your tendency to procrastinate?
Candidate: I know it sounds obvious, but the first thing I did was choose a
topic that really fascinated me. That definitely made time management a little
bit easier—I could choose the subject that I was researching and writing about,
so I usually looked forward to working on it. If it had been a project that I
didn’t feel so strongly about, it definitely would have been harder.
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Aside from that, I basically created deadlines for myself, even though no one
else was creating them for me. At the beginning, I set a schedule that laid out
exactly what I had to accomplish each week. That was an accomplishment in
and of itself. I had never taken the time to organize a work schedule for myself
before—I’m generally too impatient to take that much time planning in advance,
so I usually just dive right in without always having a clear idea of where I’m
going. I gave a copy of the schedule to my thesis advisor, and I requested
biweekly meetings with him. Even though these meetings weren’t required, I
knew that they would keep me on track. My thesis advisor was a professor that
I really respected, and I would have never wanted to waste his time by coming
to a meeting with him unprepared.
This candidate proves that you don’t have to defer to the hackneyed “I’m a perfectionist”
response to create and sustain a favorable picture of yourself. She’s candid about her biggest
weaknesses, but her answer demonstrates that it’s a surmountable one; she anticipated that she
might have a problem managing her time from the outset, so she took active steps to ensure
that she stayed on track.
Candidate: Finally, I set myself up for success by removing distractions wherever
I could. I always used to write papers and study at home, but I knew I’d
have a harder time being disciplined if I had to deal with all of the distractions
at home. I worked at the law school library instead, where I wasn’t as likely to
run into people that I’d want to sit and catch up with. I worked on the thesis at
the same time every Monday, Wednesday, and Friday—just as though it were a
class—so that I’d treat it like any other commitment that I couldn’t just skip or
put off. I’ll admit it was a difficult transition to make. There were definitely
weeks that I started to get behind on the schedule, but creating a detailed,
written schedule for myself really helped. It was so much easier for me than it
was for classmates who ended up cramming all of the work into those last 5 or
6 weeks. Now, I’m considerably better about time management because I’ve
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learned what a huge difference it makes. It’s worth the extra time it takes in the
beginning to know you’re not going to have a heart attack at the end.

Questions in an Interview Part 2

2007-06-23T08:12:00.001-07:00

Question 3
Of the academic and work experiences listed on your resume, I wondered
if you could discuss the role that required the most juggling or
multitasking of complex projects.
This is a capacity question, pure and simple. As a junior banker, you’ll often be staffed on
several different deal teams simultaneously, so well-developed sensibilities regarding time
management (and expectations management) will serve you well, as will a knack for effective
prioritization. The type of multitasking involved in investment banking also requires a
relatively high stress management threshold: Given the inherent unpredictability and intensity
of the job, recruiters want to ensure that you’re not likely to self destruct the first time you’re
faced with an unexpected challenge.
Bad Answer
Candidate: Well, I’ve always taken the view that it’s better to do one thing
really well than to do a lot of different things halfway. So in college, for instance,
I really focused on my studies rather than trying to spread myself too thin.
While this is a perfectly legitimate point of view, you’d probably be better off being a little less
candid with your response. As an analyst or associate, you will be expected to carry a full
workload of multiple projects, and you typically won’t have the luxury of focusing on one
project at the expense of another. By definition, juggling requires you to keep a lot of balls in
the air at once; if you drop one, your reputation may not recover.
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Good Answer
Candidate: Before business school, I worked for 2 years as an assistant
account manager with an advertising firm, which required a lot of multitasking.
As an account manager, you’re essentially the liaison between the client and the
advertising firm. First and foremost, our job was to keep the customer happy
with the services that we provided; if the client wasn’t happy with our work, we
were expected to resolve the issue by going back to the internal team to figure
out what went wrong and propose solutions. A lot of that was setting realistic
expectations: sitting down with the client at the outset of a product launch, for
example, and listening to what they envisioned for the campaign. Then, we’d
have to translate that vision into a workable strategy that our team could
accommodate. It was always a tricky balance, because you never wanted to say
“no” to the client, or they’d think you were inflexible, but you couldn’t say
“yes” indiscriminately because you needed to be sure that your company had
the resources to meet those expectations. The job also required a tremendous
capacity for remembering lots of details—you were continuously making promises
to clients that you had to keep to sustain and build the relationship. If
you overlooked a detail or let something fall through the cracks, you jeopardized
the firm’s credibility.
This is a nice overview of the account manager’s role in an advertising firm, but our candidate
is starting to ramble a little bit and is straying from the question asked. You want to give
enough context to set up your answer, but keep it succinct. The candidate hasn’t yet addressed
the specific ways in which his role required juggling or multitasking, which was the question
the interviewer posed.
Interviewer: So how did your role involve a lot of juggling?
Candidate: It involved handling numerous individual clients, managing multiple
campaigns, and addressing a lot of individual tasks that required completely
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different skill sets. I needed to be reactive and proactive, analytical and creative,
customer-focused and business-minded.
For example, I might arrive at the office one morning, expecting to devote the
first few hours of my day to writing a competitive strategy brief for one of our
publishing clients planning a new magazine launch. When I would check my
voicemail, though, I’d realize that one of our other clients—one of our
consumer products clients, for example—was annoyed because they didn’t see
the TV spot that was supposed to air the night before. Rather than working on
the strategy brief, I’d have to switch gears from analytical mode to customer
service mode. I’d call the client back right away to tell them I was looking into
the issue. Then, I’d start an internal goose chase to find out what went on. I’d
call our media department to find the spot aired. Meanwhile, I would have
gotten three other internal voicemails about three other issues that require my
attention: One might be a budget issue, for example, and another might involve
a deadline that the research team doesn’t think it can meet . . .
Whoa, Nelly! He’s off and running. You don’t need to tell this kid twice to get right to the
point. What he lacks in brevity he makes up for in detail, but sometimes your interviewer
holds brevity in higher esteem. Don’t get flustered if your interviewer cuts you off midsentence.
She’s got a lot of material to cover in a relatively short period; so once she’s satisfied that
you’ve checked one item off her list, she’ll want to move immediately to the next one. He’s
proven that he’s done a lot of multitasking, but did he thrive in that environment?
Interviewer: Okay, okay. You’ve clearly had to do a lot of juggling before. Did
you thrive in that sort of environment where you had to constantly react to
changing circumstances, or was that an aspect of your job that you didn’t
particularly like?
Candidate: In general, I liked the uncertainty of the job. I liked that every day
was different, and that you never quite knew what was waiting for you when
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you walked into the office on a given day. But I did get frustrated from time to
time when I had to react to crises that were completely beyond by company’s
control. A retailer would be disappointed with a particular product’s sales, and
they’d attribute that to the advertising, when in actuality sales in luxury goods
were down everywhere. That used to get to me a little bit, but not the constant
juggling. Even though I’d often think that it would be nice to sit down at my
desk uninterrupted for an hour and get something done, I’d probably find it
really boring to sit for too long concentrating on one thing.
Hmmm, then how bored would you be working on a single Excel spreadsheet for an 8-hour
stretch that begins after you’ve finished your dinner? The candidate gets so caught up in
proving that he loves multitasking that he tips his hand a little bit at the end. The lesson
here? Don’t get too carried away telling the interviewer what you think she wants to hear.
Associate candidates should be very adept at multitasking, but it’s also probably best not to
suggest that you’re going to be bored out of your mind staring a spreadsheet for hours at a
time. The interview picks up on this and drills down a bit into his answer.
Interviewer: That’s interesting. It’s obvious to me that you thrive in a pretty
fast-paced and unpredictable environment, but if you’re accustomed to jumping
from one thing to the next all day long, I’m curious how you’d handle working
on a complicated analysis that consumed the vast majority of your time. Why
don’t you tell me about a time that you had to work on a single project for a
sustained period of time, perhaps doing a lot of data analysis or number
crunching?
This interviewer sure isn’t subtle, but then again, investment banking interviews often aren’t.
Now that she’s comfortable with this candidate’s multitasking capability, client interfacing
skills, customer service ethic, and ability to assume a high degree of client responsibility, she’s
in hot pursuit of demonstrated quantitative aptitude. Regardless of your academic or work
experience, this is an area you can always, always expect to arise in an investment banking
interview.
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Candidate: I didn’t do a lot of number crunching myself in that job, but the
position certainly required me to be comfortable drawing conclusions based on
market data analysis. When we’d work with a client on a given product, we’d be
responsible for reviewing spreadsheets of data and analysis that the company’s
internal strategic planners would typically provide. The client’s marketing strategists
would have crunched the numbers and done all of the trend forecasting
and market analysis, but we’d have to translate all of that data into practical
implications for our advertising strategy. In that sense, it was a good mix of
quantitative and qualitative rigor. The quantitative analysis was always interesting
to me, though, and through my MBA studies I’ve become even more
fascinated with the idea of using numbers to run a company.
Given the choice between honesty and embellishment, this candidate wisely opts for the former.
If possible, he may have decided to switch gears and cite a situation (perhaps during a summer
internship or undergraduate course) that required him to do a little bit of numerical
slicing and dicing. If he genuinely couldn’t point to a relevant example, he’s done a good job of
taking the “next best thing” approach; the ability to draw conclusions from raw data is
certainly a useful skill for an investment banking associate to possess. Depending on the
whimsies of this particular interviewer, she may probe his performance in his finance and
accounting classes, or she may throw a quantitative question his way to further test his facility
with numbers. Either way, he’ll certainly confront questions about the reasons behind his
career switch as the interview progresses.

How to answer in an Interview

2007-06-23T08:11:00.000-07:00

I see that before business school, you worked at Fix My Business Consulting
for 3 years. Since consulting firms are so focused on developing
their analysts and associates, I’m sure you participated in a fair number
of performance reviews during your tenure. What did your last performance
review say?
Associate candidates in MBA programs are almost sure to confront questions about their
performance reviews in their previous full-time jobs. At the undergraduate level, a likely
variation on this question would be, “If I were to call up your summer internship supervisor,
what do you think she would tell me about you?” Before your interviews, give some serious
thought to what your reviews said and whether your areas of improvement will be red flags to
an investment banker. As always, it’s best to be honest, but introduce a positive spin wherever
you can.
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Bad Answers
Candidate 1: It basically said that I just needed to keep doing what I was
doing—that I was a real asset to all of my teams and to the firm in general and
that they didn’t want to lose me. The only real area of improvement was that I
tended to work a little bit too hard and that I should try to spend more time
out of the office.
This answer doesn’t really tell your interviewer anything, other than that you’re determined to
evade the question. Even if you really were a consulting deity, you should at least be specific
and thoughtful about your particular areas of perceived strength.
Candidate 2: In my last review, my manager pointed out that my performance
was always exceptional, but they questioned my enthusiasm and my commitment
to the job. Candidly, my heart wasn’t really in consulting. I didn’t like the
fact that I never really got to see the results of my work. Once I spent a year on
the job, I knew that I’d be better suited to a career in investment banking. I prefer
the faster-paced environment, the collaboration and camaraderie with my
colleagues, and the transaction-oriented nature of the work.
This candidate is not only evasive, but is using one question as an opportunity to answer another
one. In addition, a response like this will leave your interviewer wondering whether you’re likely
to jump ship after a year of banking. There’s nothing wrong with having your sights set on a
career change, but address your reasons for pursuing it when you’re asked, not when you’re asked
to describe your last performance review.
Good Answer
Candidate: Let’s see. Well, at FMB, performance reviews centered around several
different competency areas. There were probably seven or eight competency
areas, and I’m not sure that I can remember them all, but the primary areas of
focus were insight generation, product creation, teamwork, project management,
and client engagement. I was a business analyst, so for me, those areas measured
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the quality of my analysis, research, and deliverables, as well as my ability to work
with each of my project teams, juggle several simultaneous projects, and interact
effectively with clients.
Well done! This candidate outlines exactly which metrics her performance assessments depended
on. Even if you can’t provide as detailed an overview as this candidate, try to give your
interviewer some sense of what constituted exceptional performance at your previous employer,
especially if your previous employer wasn’t an investment bank.
Candidate: In terms of my last performance review, it said that my strengths
were content mastery and work product quality. It also mentioned my strengths in
new analyst coaching and mentoring, which I was particularly pleased with.
So far, so good. She’s outlined her response in “bullets”—her response is pithy, concise, and
lets her interviewer know where she’s going. In addition, she starts by discussing her strengths—
remember that the question was not, “What constructive criticism did you receive on your last
performance review?” Take the opportunity to highlight your strengths as well as your areas of
improvement.
Candidate: I was fairly comfortable changing gears and moving from one
industry to the next—basically, I could immediately get smart on the company
and industry that each new project involved. By the end of each project, I
would generally feel as though I was an “expert” in that space, and my team
leader would often call on me to share that content expertise with teams on
subsequent engagements.
On the product side, my team leaders were typically pleased with the clientreadiness
of the analysis and written work I produced. I was intensely detailfocused,
which I think served me well in consulting. Senior consultants want
junior people to focus on the “micro” issues without a lot of guidance so that
they could focus on the more strategic, “macro” issues.
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Amen! Senior bankers do, too! Attention to detail and self-sufficiency are important
“capacity” data points to mention as areas of proven strength.
Interviewer: You mentioned that you were particularly happy with the positive
feedback you received on your coaching and mentoring efforts. Tell me more
about that.
Candidate: Well, everyone says it, but the learning curve is pretty steep when you
go to a top consulting firm right after college, especially if you have little prior
experience with the work. There’s just so much new material to learn, and you’re
expected to learn it quickly if you want to add value to your client teams. The
first couple of months on the job were pretty difficult for me—I was hearing a
lot of this material for the first time, and I had never really built an Excel model
before or used PowerPoint. During those first couple of months, I felt like I was
just trying to keep my head above water. I was always asking questions, and I
couldn’t really envision that I’d ever be the person answering them. By the time I
was a second year, though (and to an even greater extent during my third year), I
had a pretty good sense of what I was doing, and I was asked to do a lot more
coaching and mentoring. It was satisfying for two reasons: Being asked to mentor
or coach affirmed that I had navigated the learning curve fairly well and could be
entrusted with coaching responsibility. Second, I just liked the process of coaching
and mentoring. It was satisfying for me to help new consultants though their
first year, especially since I could relate to what they were going through.
Remember that particularly for associate candidates, interviewers are looking for people who have
demonstrated managerial aptitude and who are likely to be exceptional mentors and coaches. It’s
one of the key distinctions between associates and analysts. Associates are expected to manage
teams of analysts and provide coaching and mentoring (official and unofficial) when necessary.
Interviewer: Well, it sounds like in the end, you were able to add substantial
value to both teams and clients, even if those first few months were a little bit
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rough. But in addition to the areas of strength that you described, did your
performance review describe any “areas for opportunity”?
Candidate: The big “development area” for me was team leadership—my
manager thought that I could be more assertive and proactive sharing my
thoughts in internal and external meetings. I think this was a result of those first
few months on the job that I described. Because I was trying to find my footing
during the first half of my first year, I wouldn’t really speak up in internal client
teams and meetings. I was basically trying to learn by observing and absorbing,
and also trying not to make some sort of obvious rookie mistake. And then I
guess it became difficult to break the pattern; even though I was developing
content expertise and getting better at the technical and analytical parts of the
job, I had gotten into the habit of not taking as much of an explicit leadership
role in team meetings.
Interviewer: That’s understandable to some extent. I can understand how team
leadership might come up on your first performance review, but why do you
think it came up on your last performance review, after you had been at the
company for a few years and developed more technical expertise? What steps did
you take to address the feedback the first time you got it? What steps are you
taking now?
Investment bankers expect that you’re not only conscious of your development areas, but that
you’ll continually work to improve them. If you’ve gotten constructive criticism more than once,
be sure that you’re ready to provide a credible reason why and provide evidence that you’re
working on it.
Candidate: I think that in any profession, there will be elements of each job that
come naturally to some people and not to others. For me, I loved the process of
learning about companies and industries that I didn’t know a lot about—I really
enjoyed the research component, and I loved all of the interviews that I did with
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companies’ management. That’s probably part of the reason why my performance
reviews emphasized my ability to develop real expertise within a given company.
On the other hand, team leadership takes a little more effort for me. First of all,
I’m the type of person who learns by watching and observing and asking questions—
I tend not to speak up proactively unless I’m confident that I can add value.
Plus, it’s hard to remind yourself to speak up in a consulting scenario when you’re
an analyst—you’re the junior-most person, and your job involves so many details;
sometimes, the discussion is so “big picture” that you tend to speak up only when
asked.

Example of Interview Questions

2007-06-23T08:07:00.000-07:00

Remember the rules for self-awareness questions:
1. Predict, prepare, and practice.
2. Be honest, but emphasize the positive.
3. Keep your audience in mind.
As you prepare for self-awareness questions, ask yourself the following:
• What were the motivations and decision-making processes behind each of
the experiences summarized on my resume?
• What personal qualities do I possess that would make me a particularly
strong candidate for an investment banking analyst or associate role?
• How would other people (friends, colleagues, classmates) describe me?
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• What are my personal and professional weaknesses, limitations, and
vulnerabilities, and how might they impede my success in an investment
banking role?
• What have been my most significant failures and mistakes? What have I
learned from each of them, and how have I applied these lessons to other
endeavors?
Question 1
Why did you choose ABC University (or XYZ Business School)?
Question 2
I see that before business school, you worked at Fix My Business
Consulting for 3 years. Since consulting firms are so focused on
developing their analysts and associates, I’m sure you participated in a
fair number of performance reviews during your tenure. What did your
last performance review say?
Question 3
Tell me about a time that you had to overcome a weakness to achieve a
personal or professional goal.
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Capacity Questions
Remember the rules for capacity questions:
1. Be prepared for confrontation.
2. Imply—but don’t state directly—that your previous achievements prove
that you’re highly capable of doing the work.
3. Remember that capacity refers to more than just intellectual horsepower.
As you prepare for capacity questions, think of specific instances in which you
have demonstrated the following characteristics:
• Exceptionally high performance standards
• Considerable intellectual curiosity, quantitative aptitude, and analytical ability
• Willingness to work extraordinarily long (and often unpredictable) hours
• Willingness to do unglamorous and tedious grunt work
• Abilities to learn quickly and work efficiently
• Consistent attention to details, even under significant time constraints
• Ability to stay calm and productive under pressure
• Capacity for juggling several complex projects (at various stages of
development) simultaneously
Question 4
Of the academic and work experiences listed on your resume, I wondered
if you could discuss the role that required the most juggling or
multitasking of complex projects?
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Question 5
Describe a time when something that you worked on—whether in an
academic, extracurricular, or professional setting—required considerable
personal sacrifice. How did you stay motivated to achieve your goal
despite the sacrifices it required?
Interpersonal Aptitude
Questions
Remember the rules for interpersonal aptitude questions:
1. Where possible, highlight the team-based components of the pursuits
listed on your resume.
2. No bragging, blabbering, or bluffing.
3. Get comfortable, but not too comfortable.
As you prepare for interpersonal questions, think of specific anecdotes or
experiences that will help your interviewer assess the following:
• Whether you are extroverted, social, affable, and likely to thrive in a dynamic,
team-based environment
• Whether you are likely to be a consistently positive contributor to the teams,
especially in high-pressure, time-sensitive situations
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• Whether your communication skills will inspire confidence among colleagues
and clients (this includes both effective speaking and active listening)
• Whether you take direction and criticism well, that is, without taking things
personally and creating conflict (i.e., whether you have a “thick skin”)
• Whether you can successfully navigate intraoffice personality conflicts
(especially avoiding them in the first place!)
• Your ability to manage difficult and demanding personalities effectively,
particularly when faced with competing priorities from different deal teams
Question 6
Have you ever had to work with someone that you didn’t particularly like
or get along with? How did you overcome personality differences to get
your job done?
Question 7
I noticed that here at Stanford Business School, you currently serve as
the co-president of the student association. I wondered if you could
describe your role in this group, focusing on the people management
(rather than the project management) component of your job. If I spent
some time here on campus and spoke to the students who worked with
you in this organization, what would they say that they liked (and
perhaps disliked) about working with you? Do you think that you were
an effective manager?
Question 8
Have you ever worked on a team that didn’t achieve its objectives? Why
do you think the team wasn’t effective?
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Commitment Questions
Remember the rules for commitment questions:
1. Know exactly why you want to be an investment banker.
2. Examine your resume and transcript for anything your interviewer might
perceive as a gap or inconsistency.
3. Remember that investment banks love to be loved, just like the rest of us.
As you prepare for commitment questions, make sure you’ve given some
thought to the following questions:
• Why am I pursuing a job in this industry; specifically, why am I pursuing a
job at this firm, in this specific function?
• How will I walk my interviewer through my resume in a way that suggests a
logical progression to a career in investment banking?
• Are my reasons for pursuing the analyst/associate track thoughtful and
credible?
• How will this job advance my own personal and professional goals?
• Can I provide a realistic outline of the roles and responsibilities of an
analyst/associate? What does an analyst/associate do every day? What is
appealing to me about assuming those responsibilities?
• Do I understand the extent to which the profession requires personal
sacrifice? How can I convince my interviewer that I have thought this
through?
• If I secure an offer at this particular bank, will I accept it? Why? What makes
an offer from this bank more appealing than an offer from another?
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Question 9
Describe what you think the role of an investment bank is.
Question 10
Why do you want to be an investment banker? Explain how you arrived
at the decision to pursue an analyst position in investment banking.
Question 11
So I know why you want to be a banker, but why here specifically? I
mean, if we at ABC Bank give you an offer, are you going to accept it
over your other offers?
Question 12
Aside from the hours, what do you think you’ll like the least about
investment banking?
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Technical Questions
Remember the rules for technical questions:
1. Keep your answers short and sweet.
2. Think concepts, not formulas.
3. If you don’t know, then just say that you don’t know.
As you prepare for technical questions, keep the following things in mind:
• For finance, accounting, and economics majors: What was the most
complex or difficult concept you encountered in your quantitative studies?
Would you be able to explain this concept to your grandmother so that she
would understand it (or at least so that she wouldn’t lapse into a coma)?
• For nonquantitative majors: Can you use your common sense, analytical
reasoning, and business intuition to walk through a case-style interview
question on valuation? If faced with a technical question regarding valuation,
what top-line concepts will you draw on to craft an effective answer?
• For MBA candidates with banking experience: Do you know the deals
cited on your resume inside and out? Can you answer detailed questions
about the financial projections, transaction structure, and valuation behind
each transaction?
• For MBA candidates without banking experience: Have you reviewed
your graduate-level finance and accounting courses so that you know the
material cold? Can you demonstrate a strong enough foundation from these
classes to hit the ground running as an associate?
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Question 13
If you had $10,000 to invest—but you had to invest the money in a single
common stock—which company’s stock would you choose, and why?
Question 14
I see on your resume that you worked on the acquisition of Company B
by Company A. I wondered if you could tell how the buyer arrived at a
value for the seller, and tell us whether you think it was a good deal.
Question 15
So far, we’ve talked a lot about multiples: You’ve mentioned EBITDA
multiples in your discussion of the analysis you did at Morgan Stanley,
you’ve talked about P/E multiples in your analysis of a common stock. I
wondered if you could tell me what a multiple really is—to say that a
company is trading at “eight times.” How would I make sense of that?
How is that meaningful to you? What does it tell you about the
company?
Question 16
If I asked you to tell me what a skyscraper in Manhattan was worth—
let’s say the one we’re sitting in right now—how would you go about
valuing that skyscraper?

Example of Technical Questions

2007-06-23T07:15:00.000-07:00

Ostensibly, technical questions probe your familiarity with the fundamental
concepts behind valuation, corporate finance, financial market theory, economics,
or accounting. Unlike the questions in the other four categories
we’ve discussed, this category represents a virtual grab bag of questions for
which your interviewer often (but not always) has a single correct answer
in mind.
The specific technical questions that you’ll confront will probably reflect not
only the particular area for which you are interviewing, but any areas of technical
expertise—expressed or implied—that your interviewer expects you’ve
developed. For example, anyone interviewing for a corporate finance or M&A
analyst position should expect at least a few basic questions regarding valuation
techniques or discounted cash flow analysis, while candidates on the sales and
trading side may expect questions on options pricing or bond math. In addition,
interviewers may wish to test undergraduates majoring in relevant disciplines on
the topics that they’ve studied: For example, finance students may be asked
about portfolio theory, economics students about regression analysis, or accounting
students about working capital or deferred taxes. Analyst candidates who
have not been exposed to these disciplines in their undergraduate coursework
are generally expected to demonstrate an intuitive understanding—rather than a
granular level of technical detail—in their responses.
Of course, the bar is significantly higher for MBA-level associate candidates and
experienced hires, who should know their finance and accounting concepts
backward and forward, and who should come prepared to discuss the technical
details of any transaction cited on their resume.
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Examples
Examples of technical questions include the following:
• If I gave you $1 every year between now and 100 years from now, how much
would you have—in present value terms—at the end of the 100th year?
• How would you go about calculating a company’s free cash flow?
• Define beta.
• If interest rates rise, what happens to bond prices, and why?
• How much would you pay to receive a 15-year bond with a par value of
$1,000 and a 12 percent coupon rate?
• How would you go about valuing XYZ Company?
• If you had $10,000 to invest in a single stock, which would you choose and why?
• What is the relationship between the income statement and the statement of
cash flows?
• What is the Capital Asset Pricing Model?
• Walk me through the steps you would take to calculate the weighted average
cost of capital.
• What is the difference between the yield on a bond and the rate of return on
a bond?
• I noticed that you completed a substantial project in your finance class on
how Gateway Computers could improve its stock price. What did you
conclude, and what recommendations did you devise?
• I noticed on your resume that you worked on the AOL–Time Warner
merger. How did you value both parties’ contribution to the transaction
value?
What They Tell Your Interviewer
Here’s the bottom line: You will most likely encounter some form of technical
question in your investment banking interviews. If that makes you a little bit
uneasy, you should know that there are many banking-specific interview prep
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books out there that focus exclusively on quantitative and technical questions. If
you’re so inclined, you can sit down with one of these guides and memorize
formulas, financial ratios, pricing models, and valuation methods until your head
literally explodes. If you’re an art history major and you’re studying this stuff for
the first time, you may feel pressured to cram 4 years of business education into
a few short weeks, in the hopes that you’ll dazzle your interviewer with your
initiative and intuition. We genuinely believe this would be a waste of your time.
If you’ve never studied finance, chances are you won’t be asked about option
pricing or weighted average cost of capital calculations. If you did major in
finance, accounting, or economics, you may get a “pop quiz” question here or
there to test your knowledge, but the interviewer is probably just as concerned
with how you respond to pressure as he is with the accuracy of your response.
Take comfort in the fact that your interviewer is probably not trying to trip you
up, but is instead trying to determine the following:
• For finance, accounting, and economics majors: Did you grasp the material
you studied, and can you discuss it in an intelligent way? Are you simply
reciting formulas, or do you really understand the underlying concepts?
• For nonquantitative majors: Can you use your common sense, analytical
reasoning, and business intuition to walk through a case-style interview
question on valuation? Do your answers suggest that you’re interested enough
in finance to learn some of the basics on your own?
• For MBA candidates with banking experience: Do you know the deals cited
on your resume inside and out? Can you answer detailed questions about the
financial projections, transaction structure, and valuation behind each
transaction?
• For MBA candidates without banking experience: Can you demonstrate a
strong enough foundation from your MBA finance and accounting courses to
hit the ground running as an associate?
• For all candidates: Can you explain complex concepts clearly and concisely,
especially when responding to a question you didn’t expect?
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Why They Matter
As we’ve already mentioned, the thoroughness and accuracy of your responses
to these questions probably matters a lot less than you’d think—at least if
you’re vying for an analyst spot. When we spoke to insiders who currently hold
investment banking analyst positions, most of them said they confronted
significantly fewer technical questions than they expected. Of those who did
encounter technical questions, the vast majority had academic backgrounds in
finance, accounting, or economics at the time they interviewed. Some analyst
insiders even confessed that they completely botched technical questions and
still emerged successful at the end of the process. “I remember one of my
Super Saturday interviews with a bulge-bracket firm. In one interview, a senior
VP was grilling me on my understanding of statistical analysis because I was
taking a statistics class in the Economics department that semester. He asked
me to define r2. In hindsight, I realize he was referring to the correlation
coefficient used in regression analysis. But at the time of the interview, we
hadn’t gotten to that chapter yet, so I hadn’t heard the term before. So I
actually said, ‘You mean, like the radius?’ I had no idea why he was bringing up
a geometry formula when we were talking about statistics. I’m sure he thought I
was a complete idiot, but I got the offer anyway.”
While technical expertise certainly matters a great deal to bankers’ ultimate
career success, very few analyst candidates possess the requisite technical ability
at the time that they interview. In fact, bankers almost universally recognize that
incoming analysts—even those with undergraduate degrees in finance and
accounting—will develop their job-specific technical skills primarily through the
firm’s formal training program or (to an even greater extent) through continuous
on-the-job learning. So unless you’re applying for an associate spot with 2
or more years of analyst experience behind you, these types of questions tell
the interviewer very little about the technical aptitude that you’re likely to
demonstrate once on the job.
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So if technical aptitude isn’t expected of analyst candidates, why do interviewers
even bother asking technical questions? Well, as we’ve said before, a sincere
interest in investment banking is perhaps the single most important critical
success factor for new hires. Whether they’re quizzing the Wharton finance
major on how to unlever a beta or guiding the history major through an introductory
valuation case question, interviewers have a knack for determining the
candidate’s level of genuine interest in the job. If a candidate provides a textbook
answer but appears to be reading from a cue card as she does so, she
won’t necessarily advance in the process. Aside from enthusiasm, interviewers
pay close attention to how clearly candidates explain relatively complex or
obscure topics. Even junior bankers must often explain complicated concepts
and processes to junior colleagues or clients who are hearing them for the first
time, so your ability to do so comfortably—in a range of circumstances—
counts for a lot.
Rules of the Road
Rule 1: Keep your answers short and sweet.
Don’t go on and on, regardless of how well you understand the material being
covered. Investment banking interviewers will often cut candidates off midsentence
once it’s apparent they know how to solve a problem. Nonetheless, make
sure that your interviewer cuts you off because it’s obvious you know your
stuff, not because you’ve bored him to tears. Remember that interviewers can
and will ask follow-up questions if they want to know more.
Rule 2: Think concepts, not formulas.
Anyone can recite a formula. The real question is, can you explain to your
grandmother—or to the client’s CEO—what the concepts mean without
sending them into a coma? Even if you’re fortunate enough to remember the

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formula for the present value of an annuity, you can be sure that your interviewer
won’t find the formula alone sufficient—she’ll want to know whether
you understand the underlying logic behind the formula.
Rule 3: If you don’t know, say that you don’t know.
Don’t apologize. Don’t offer excuses. And no matter what, don’t ever pretend
you know the answer when you don’t. Keep your cool, maintain your sense of
humor, and move on.

Example of Commitment Questions in an Interview

2007-06-23T07:14:00.000-07:00

Whereas capacity questions are designed to determine whether you can do the
work, commitment questions are intended to figure out whether you genuinely
want to do the work. As one insider says, “At the end of the day, the people
who distinguish themselves in banking are the people who really want to be
bankers.” Interviewers will undoubtedly ask you to outline your specific reasons
for pursuing an analyst or associate position. Our insiders report that your
ability to provide credible, thoughtful answers—substantiated by a good deal of
legwork and realistic job expectations—will definitely advance your candidacy.
“Every year, I’m surprised by the number of people who come into this
process without really knowing why they’re there, or what distinguishes one
department or one firm from the next.”
To prove that your interest is more than just a fleeting fancy, use these questions
to showcase your meticulous firm-specific research, your fervent interest in the
financial markets, and your unwavering loyalty to not just the investment banking
vocation, but the specific firm to which you’re applying.
Examples
By far, the most commonly asked commitment question is, “Why do you want
to be an investment banker?” followed closely by, “Why do you want to be a
banker at this firm?” Carefully crafted and well-rehearsed responses to each of
these questions will serve you well. Here are a few of our other favorites in this
category:
• What other industries are you considering?
• Are you interviewing with consulting firms? Why/why not?
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• If you’re offered positions with multiple firms, how will you choose among
them?
• Why should we hire you? Why do you think you’d be good at this?
• What do you think you would like most/least about this job?
• With which other firms are you interviewing? Have any of them extended
offers yet?
• Where do you see yourself in 5 years?
• Walk me through what you think a typical day is at the office for an
analyst/associate.
• In which group (product, industry, function) do you see yourself. Why?
What They Tell Your Interviewer
Let’s face it: No one expects you to have known since the age of 6 that you
wanted to be an investment banker, or that you would have made every
significant decision over the subsequent two decades with Wall Street in your
sights. Still, you will be expected to describe your professional and personal
endeavors as a rational sequence in which this particular banking position at
this particular firm is the next logical step. You should be able to articulate
exactly what you hope to gain—both personally and professionally—from the
experience and to demonstrate your preparedness for the unique intellectual,
physical, and personal challenges of the job. As you respond to these questions,
your interviewer will be asking himself whether
• You’ve done your homework on the industry, the firm, and the specific
position for which you’re applying.
• You present thoughtful, credible reasons for wanting to pursue the
analyst/associate track.
• You have considered whether the program advances your own
personal/professional goals.
• You have realistic expectations about the roles and responsibilities of an
analyst/associate.
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• You understand the extent to which the profession requires personal
sacrifice.
• You’re likely to accept an offer at this particular bank if one is extended.
Why They Matter
Investment bankers are typically a pretty risk-averse bunch, at least when it
comes to recruiting. As such, recruiters interviewing analyst and associate
hopefuls (especially those with little or no experience in banking) may devote
much of the interview to assessing whether candidates genuinely grasp the
nature of the job and the personal sacrifices it requires. “People always act as
though they understand the long hours,” one recruiter says, “but sometimes,
you just know that the person doesn’t get it. I mean, they’ve heard all the stories
about the all-nighters, the working weekends, and the canceled vacations, but
they just don’t grasp how intense it is, and you sense that they’d absolutely hate
it.” Despite the reputation that sometimes precedes them, bankers aren’t
sadistic in this regard: They don’t want you to hate your job any more than you
do. If you don’t really understand the nature of the job going in, and you don’t
have well-articulated reasons for pursuing the job, recruiters (rightly) believe
that they should spare you the trouble of learning the hard way that banking
isn’t for you.
Not only are investment banking recruiters risk-averse (and significantly nicer
people than their interviewing personas might suggest), they’re also intensely
goal-oriented. They know exactly how many analyst and associate spots are
available, and they will take the necessary steps to ensure that those spots are
promptly filled. As such, they aren’t eager to extend offers to candidates who
will ultimately decline them. If a particular firm extends ten offers at a
particular school, only to have eight candidates take offers elsewhere, the
recruiting team at that bank (not to mention the business units that the team
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serves) will find itself in a real pickle. To avoid this
administrative nightmare, recruiters will work hard
to assess the likelihood that a candidate will accept
an offer if one is extended, giving preferential
treatment to candidates who have expressed a clear
preference for their firm. This is true even in a job
seeker’s market, but when hiring activity declines,
sincere interest in a given firm will make or often
break your chances.
Rules of the Road
Rule 1: Know exactly why you want to be an investment banker.
We cannot emphasize this enough—this is the single-most frequent question
you will face. There are a number of good reasons that you may include in your
response, but don’t even think about suggesting that you consider it a steppingstone
to something else, that you stumbled across it, that you generally think
finance and Wall Street are pretty cool, or that you really want to work with
CEOs. Remember, your answers to these questions should reflect both a commitment
to investment banking and your realistic expectations for the job. Once
you’ve written it down, rehearse it until you can deliver your spiel in your sleep!
Rule 2: Examine your resume and transcript for anything that your
interviewer may perceive as a gap or inconsistency.
Don’t be caught off guard by interviewers who ask you to explain your degree
in Renaissance Language & Literature or your summer internship with Greenpeace.
These are noble pursuits, but be sure you’re prepared to convince your
interviewer that they’re not inconsistent with your interest in investment banking.
Remember, it’s not that recruiters view off-the-beaten-path experiences as less
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People always act as
though they understand
the long hours,
but sometimes, you
just know that the
person doesn’t get it
. . . and you sense
that they’d absolutely
hate it.
“ ”
valuable than achievements of the buttoned-up, pinstripe variety, but they
want to ensure you’re really interested in the work and not just dabbling.
Investment banks have had far too many new hires jump ship exactly 6
months and 1 day from their start dates (1 day sooner, and the employee
would be contractually required to repay his signing bonus and relocation
expenses). Don’t expect that recruiters will make too great a leap on your
behalf; you’ve got to make it for them.
Rule 3: Remember that investment banks love to be loved,
just like the rest of us.
We can’t emphasize this point enough. If there’s one thing we hear over and
over again from recruiters, it’s that commitment to a specific bank—not just the
industry generally—always influences the choice between two (or more) otherwise
comparable candidates. If you’re interviewing for corporate finance and
M&A jobs while simultaneously exploring opportunities in equity research and
fixed-income sales, don’t volunteer this information. And we’ve said it before,
but mentioning that you’re also interested in management consulting won’t win
you many points either.
As one recruiter put it, “When people are interviewing all over the place, it
makes me think that they don’t really want this particular job that badly. If
someone tells me that he still doesn’t know whether he wants banking or
consulting, I have to remind myself not to tell him that I interviewed ten
people that morning that had already made up their minds.”

Capacity Questions in an interview

2007-06-23T07:13:00.000-07:00

Capacity questions seek to answer the question, “Can you do the work?” As a
general rule, recruiters ask fewer of these questions of associate candidates
who have already excelled in investment banking analyst programs before
business school. If this describes your background, interviewers will typically
assume that there is little need to probe your ability to do the job, and they’ll
instead focus on the areas of demonstrated strength (as well as opportunities
for professional development) that characterized your analyst performance
reviews.
If you don’t offer prior banking experience, however (and this is the case for
the vast majority of analyst candidates), be prepared to convince every prospective
employer that your achievements outside the world of investment banking
will translate into success within it.
Examples
The following are examples of capacity questions:
• Tell me about a time when you worked on a highly quantitative or analytical
project. Describe the context, the project, and the outcome.
• What is the greatest challenge you’ve faced to date? How did you overcome it?
• Describe a typical day for you.
• Describe a time when you achieved a goal that required significant personal
sacrifice. How did you stay motivated to achieve the goal, despite the
hardships that it involved?
• Judging from your resume, you must be extraordinarily busy. What do you
think is the key to successfully juggling so many different activities, all while
maintaining your high GPA?
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• I’m looking at your transcript, and I’m noticing that your two lowest grades
were in introductory accounting and intermediate economics. Why should I
be comfortable with your quantitative aptitude given your relatively low
grades in these classes?
• I noticed that you haven’t taken a single class involving numbers during your
first 3 years of college. How can you convince me that you’re good with
numbers?
• Give me an example of a project (either academic or work-related) that
required significant attention to detail. Do you consider yourself a detailoriented
person?
What They Tell Your Interviewer
With enough preparation and forethought, your answers will convince your
interviewers that you’re a good corporate athlete who can consistently produce
a quality work product regardless of the level of complexity or time pressure
involved. Whether you focus on the hundreds of statistical analyses you performed
while working at the Federal Reserve, or whether you spend more time
discussing your experience on your university’s rowing team, recruiters will
hone in on the extent to which you have demonstrated the following:
• Exceptionally high performance standards
• Considerable intellectual curiosity, quantitative aptitude, and analytical ability
• Willingness to work extraordinarily long (and often unpredictable) hours
• Willingness to do unglamorous and tedious grunt work
• Ability to learn quickly and work efficiently
• Consistent attention to details, even under significant time constraints
• Ability to stay calm and productive under pressure
• Capacity for juggling several complex projects (at various stages of
development) simultaneously
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Why They Matter
When we asked insiders what attributes make a successful banker, one phrase
came up again and again: a willingness to “run through walls.” There’s a reason
that this expression arises so frequently; it’s the sensation that most closely
approximates investment banking at its worst—unnecessarily harsh, physically
painful, seemingly impossible, and simply not worth it. Unfortunately for
recruiters (and fortunately for job-seekers), there is still no reliable way to
simulate the challenges that a junior banker faces in the context of a 30-minute
interview. There’s no good proxy for determining whether a prospective analyst
can consistently crunch perfect numbers regardless of the number of consecutive
sleepless nights he endured the previous week. To make recruiters’ jobs
especially difficult, relatively few candidates (particularly at the analyst level)
have extensive prior experience in investment banking when they apply.
With relatively few data points available to accurately predict your on-the-job
success, recruiters are left to infer your tolerance for hard work based on your
other endeavors. As a candidate, your job is to convince your interviewer that
you’ve demonstrated the same skills before—either in an investment banking
context or in other pursuits. Former athletes are particularly effective at
positioning themselves in this way, since they can credibly say that they’ve
devoted a considerable amount of time to a single endeavor, made significant
personal sacrifices to succeed, and endured substantial physical discomfort
along the way. Further, former athletes typically possess a competitive spirit and
a determination to excel, both of which translate well into investment banking.
Capacity questions test not only your willingness to work hard, but also your
ability to learn quickly. Although investment banks devote substantial resources
to training their incoming analysts and associates, training programs cover a
considerable amount of material in a relatively short period. Deal teams are
lean relative to the volume of work to be done, time frames are often tight, and
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there is little tolerance for missing deadlines. To add value to the transaction
team, junior bankers must learn quickly and work efficiently, often with little
supervision. Since senior bankers’ time is both valuable and limited, they
appreciate analysts and associates who only need things explained once.
Rules of the Road
Rule 1: Be prepared for confrontation.
Because your interviewers are assessing your fundamental ability to do the
work, questions in this category (along with commitment questions) tend to be
the most confrontational. Be prepared to discuss your C-plus in macroeconomics
or accounting, the curious absence of anything financial or quantitative
on your resume, or the three consecutive summers you spent lounging in the
Caribbean. (Even if you don’t have any low grades or low-key summers to
worry about, don’t be complacent: One of our insiders was asked about the
single A-minus among the sea of straight A’s on her transcript). Regardless of
your background, you may encounter a series of rapid-fire multiplication
questions or a wacky brainteaser designed to rattle your cage and test for an
allergic reaction to numbers. Come prepared and stay calm—the wrong answers
won’t disqualify you, but tears most certainly will.
Rule 2: Imply—but don’t state directly—that your previous achievements
prove that you’re highly capable of doing the work.
Recall our discussion above: The more directly comparable experience you
have, the more comfortable recruiters will be in your ability to do the analytical
heavy lifting on each of your teams. As you prepare for your interviews, keep
the profile of an analyst or associate’s responsibilities in mind. If you’ve worked
as a summer analyst for an investment bank, written highly analytical papers in
college, crunched numbers for a government agency during a high-profile
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internship, or excelled in athletic endeavors, be sure to discuss these topics
(enthusiastically) during your interview.
Conversely, don’t belabor the point for less relevant pursuits. Trying to convince
your interviewer—through excruciating detail—that the summer you spent
working on a Montana dude ranch is highly applicable to investment banking
may not achieve the desired outcome. Particularly in the case of seemingly
unrelated pursuits, it’s best to let your interviewer draw conclusions about your
capability (unless, of course, you’re asked). If you make this leap yourself, it’s
likely to come across as forced, canned, and presumptuous.
Rule 3: Remember that “capacity” refers to more
than just raw intellectual horsepower.
Particularly at the junior levels, a “can-do” attitude counts for as much as
analytical aptitude. Regardless of your academic training or work experience,
don’t forget to highlight experiences that suggest you can learn quickly (perhaps
you taught yourself Italian in your spare time and are now fully conversational),
work well under pressure (don’t forget the summer you worked as a short order
cook in Cape Cod), and have a healthy attitude toward grunt work. One insider
describes her interview with a senior VP and business unit manager at a leading
Wall Street firm: “This guy had the final say as to who was hired into the group,
and he had this thing about hiring people who had waited tables. He’d ask
everyone he interviewed —analysts, MBAs, lateral hires—whether they had ever
waited tables. If you hadn’t (and I hadn’t), you’d better be able to describe
something you had done that proved you weren’t opposed to doing tedious,
unglamorous work.” Investment banking may be a white-shoe kind of
profession, but as a group, bankers like people who aren’t afraid to get their
hands a little bit dirty.

Self-Awareness Questions in an Interview

2007-06-23T07:11:00.000-07:00

If you’ve read the title of this section and quickly checked the cover of this book
to ensure that you haven’t accidentally purchased Dr. Phil’s Guide to Investment
Banking Interviews, hear us out. Contrary to popular opinion, the number of
interview questions intended to test your knowledge of finance is significantly
smaller than the number of questions designed to test your knowledge of you—
not just your resume, but the choices, motivations, strengths, weaknesses, and
failures behind that resume. This surprises a number of candidates, especially
those who have spent the majority of their interview preparation time cramming
an undergraduate business degree—plus 6 months’ worth of the Wall Street
Journal—into their already frenetic schedules.
Don’t let yourself make this mistake. At their best, self-awareness questions
provide an opportunity to tell your own unique story and let the radiant light of
your personality shine through. The most straightforward self-awareness questions
ask you to describe why you decided to attend a particular university, pursue
your chosen field of study, or indulge your quirky intellectual interests through
extracurricular pursuits seemingly unrelated to investment banking. At the other
end of the self-awareness spectrum, self-awareness questions (typically those
encountered in later rounds of interviews) often require a significant degree of
judgment, diplomacy, and tact, as interviewers probe for motivations or personality
traits that would turn into vulnerabilities on the job.
Examples
Perhaps the most frequently used self-awareness question asks you to describe
your biggest weakness (or, perhaps, your three biggest weaknesses). Other
favorite self-awareness questions include the following:
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• Walk me through your resume and tell me how you decided to pursue a
banking career.
• Explain your role in the such-and-such job listed on your resume.
• If I were to call up your [most recent supervisor, best friend, older sister],
what would s/he say about you?
• If you could go back and complete your undergraduate education over again,
what would you do differently?
• What didn’t you like about [your last job, your college or university, your
MBA program]?
• What did your last performance review say?
• Tell me about a time you made a mistake. How did you handle it?
• Tell me about your biggest failure.
• Describe an ethical dilemma you have faced in the past. How did you
resolve it?
• What achievement are you most proud of?
• What are you passionate about?
• What motivates you?
• If you could have any job in the world other than banking, what would it be
and why?
• What is a common misconception that people may have about you after they
meet you for the first time?
What They Tell Your Interviewer
Self-awareness questions (along with interpersonal questions, described later)
allow your interviewer to become acquainted with the person behind the
resume. Through both the content and the delivery of your answers, these
types of questions allow you to showcase your maturity, thoughtfulness, and
humility and to prove that you are as comfortable describing your mistakes and
failures as you are your achievements.
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In addition, they give you an opportunity to explain any apparent gaps in your
resume or transcript and to tie seemingly disparate experiences and achievements
together with common threads and themes. With enough preparation, selfawareness
questions will allow you to prove that your decision to pursue a
banking career is not only well-thought-out, but completely consistent with
your past decisions and achievements. And by putting a positive (and honest)
spin on your story, you can paint a consistent picture of yourself as someone
destined to excel in investment banking. As you answer these questions, your
interviewers will be assessing the following:
• How well you understand (and how eloquently and convincingly you can
describe) the motivations and decisions leading up to the experiences
summarized on your resume
• To what extent you understand others’ perceptions of you
• Whether you are thoughtful, honest, and candid about your weaknesses,
limitations, and vulnerabilities (particularly as they pertain to a career in
banking)
• The thought process and motivations driving each of your important
decisions to date
• Whether you are honest about your past mistakes and actively seek to learn
from them
Why They Matter
If you think these questions come dangerously close to the touchy-feely, you’re
only partly right. Self-awareness is of critical importance to bankers for a
number of reasons. First, your responses to these questions offer the interviewer
insight into your motivations and decision-making processes, enabling
him to determine whether your motivations for seeking an analyst spot are
likely to be well thought-out and sincere. On Wall Street, there’s no shortage of
compelling reasons to throw your hat in the recruiting ring: attractive compensation
packages, the prestige of working among the elite of the financial world,
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and (for analysts) the opportunity to defer a longer-term career choice for at
least 2 more years. While none of these motivations is inherently wrong, none
is sufficient to justify the lifestyle sacrifices and the unique physical demands
that come with the territory.
The intensity of the work environment tends to exaggerate an individual’s
unique strengths and weaknesses: Interviewers know this all too well, and they
want to make sure they know the real person—not your interviewing alter
ego—before they bring you on board.
In particular, questions regarding your mistakes and failures tap into your ability
to learn from past experiences and continuously improve your performance.
They also reveal whether you’re honest and accountable when it comes to your
mistakes. In banking, the volume and pace of the work (and the sleep deprivation
that’s an unavoidable part of the job) mean that in all likelihood, you’re going
to make a few mistakes along the way. Recruiters want to know whether you’ll
assume responsibility for the wrong number in the pitchbook as readily as you’ll
take credit for the flawless LBO model you built from scratch. They want to
assess whether you’ll readily bounce back when you oversleep and arrive late to
a roadshow presentation, or whether you’re likely to make excuses and assign
responsibility to external circumstances (or, even worse, to another team
member). As a junior banker, knowing when to admit you’ve screwed up (and
knowing how to mitigate the damage) is key.
Finally, self-awareness is closely linked to interpersonal effectiveness, which
we’ll discuss in later sections. People who are self-aware have a leg up in
interpersonal relationships, because they are conscious of how others perceive
them. They are (typically, but not always) sensitive to the ways in which people
may react to them and cognizant of how their particular audience may require
them to tailor their communication style. The candidate who can deftly address
his most notable weakness without coming across as evasive, dishonest, or
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completely unsuited to banking usually wins points for forethought, diplomacy,
and good judgment. In a profession in which client interaction (even at the
junior levels) is not uncommon, these skills are absolutely critical.
Rules of the Road
Rule 1: Predict, prepare, and practice!
Some questions arise so frequently in one form or another that you’d be foolish
not to take the time to outline your response well before your interview. Questions
regarding your choices, motivations, and everything on your resume are
fair game and should be prepared well in advance. Give some serious thought
to how you’ll attack those gnarly weakness questions, and make sure you’re
armed with two or three talking points about each line item on your resume. If
there’s something particularly unusual on your resume (e.g., you ran the New
York Marathon, you went to medical school before you completed your MBA),
you can be sure that it will come up again and again. Consider the points you’d
most like to convey, and then practice your spiel.
Rule 2: Be honest, but emphasize the positive.
We all like to present the best possible image of ourselves during job interviews,
so it stands to reason that none of us particularly enjoys talking about our
faults. Still, these questions are an opportunity for you to really shine. No one
likes perfect people anyway. If you can demonstrate your maturity, humility,
and sense of humor about your foibles, your likeability (and credibility) will
skyrocket. Be honest about your screw-ups, but end on a positive note; emphasize
what you learned from each experience. Use the infamous weakness
question to prove that you acknowledge your Achilles heel and that you’re
constantly working to improve it (or, better yet, give a specific example of an
instance in which you overcame it).
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Rule 3: Keep your audience in mind.
This is an interview, not a confessional. Selfawareness
questions are not an invitation to inappropriate
self-disclosure. Don’t delve into anything
you wouldn’t (or at least shouldn’t) discuss on a
first date: your political views, religious beliefs, or
anything else known to spark controversy. (Cats
and lawyers are less obvious—but equally
dangerous—examples of topics that tend to
polarize people. You never know who your
interviewer’s got waiting for her at home. Maybe a
cat and a lawyer!) Your objective is to highlight motivations and strengths that
are compatible with a career in banking. Along these lines, remember to temper
your honesty with a healthy dose of good judgment when addressing your
strengths and weaknesses—try to steer clear of anything so incompatible with
banking that you’ll send your interviewer headed for the hills.
Just because you can be honest doesn’t mean that there are no wrong answers:
“I tend to take things personally,” “I’m not very detail-oriented,” and “I get
nervous when I have to interact with others,” for example, are bad answers to
the weakness questions.

Dos and Don’ts in an Interview

2007-06-23T07:10:00.000-07:00

Don’t Ramble
If you do, you’re considerably more likely to lose your way—and more likely to
exhaust your interviewer in the process! One insider recalled his very first Super
Saturday interview with two senior vice presidents of Goldman Sachs’ M&A
group. After the 30-minute interview was over, one of the bankers followed the
candidate out of the interview room, closed the door behind her, and said,
“Listen, you’re going to do great here. But in your next few interviews, you have
got to be more concise!” This candidate only needed to hear this well-intentioned
advice once: He took a less-is-more approach in subsequent interviews, secured
an offer, and spent his next 3 years as a Goldman analyst. Remember, it’s easier
for a recruiter to ask follow-up questions than it is for her to rein you back in
after you’ve gone off on a tangent.
Learn How to Read Your Interviewer
Along similar lines, some interviews find long-winded answers particularly
repugnant, while others may as well have a therapist’s couch in their office for
you to lie on during the interview (the former group is far more prevalent than
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Interview Roadmap
the latter, however). Some are more intense, while others treat the interview as
a relaxed, get-to-know-you session. The more promptly you can pick up on
your interviewer’s particular style, the better off you’ll be.
Don’t Ever Bad-Mouth a Previous Employer or Colleague
In fact, you should be wary of sounding even the slightest bit sour on your
previous work experiences. Not only would doing so suggest that you’re generally
negative and cynical, but it would not go over well at all with notoriously imageconscious
investment bankers. If you use the interview as an opportunity to vent
about a previous employer, your interviewer will wonder how you’ll talk about
this company when you’re given the opportunity at an interview, a cocktail party,
or in the dentist’s office for that matter.
Recruiters know that it’s a small world, and the last thing they need is a former
employee griping about their beloved firm.
Keep an Interview Journal
It doesn’t have to be a glossy leather cover embossed with your initials, and you
don’t even have to keep it on your bedside table. Our point is this: If a question
comes up once, it’s quite likely it will come up again. Particularly if you feel you
haven’t answered a question effectively, take a minute or two after the interview
to jot down the question and outline what you would say if given a second
chance. You’ll be glad you did when you hear the same question again in subsequent
rounds.
Answer the Question Asked
We know it sounds obvious, but it’s easier said than done (particularly if you’re
a rambler). If you’re really set on a banking career, chances are you’ll have more
interviews than you’d care to remember. Some candidates get so accustomed to
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Interview Roadmap
fielding questions, they become robotic: They hear a few key words, and they’re
off on their unintentionally well-rehearsed spiel. Interviews will indeed begin to
sound the same, but don’t forget to listen to the question!
Think in Bullet Points and Key Takeaways
Not only will this type of thinking in your interview preparation stages keep
you focused and concise, but framing your responses this way in the actual
interview will endear you to your investment banker-turned-recruiter. Bankers
love bullet points and key takeaways: If you can speak their language, they’ll see
you as one of their own!
Don’t Lie, Embellish, or Exaggerate
Remember what your mama said: When you tell one lie, you have to tell five
more lies to cover up the first one. For each of those lies, you have to tell five
more, and so on. Mom was right about this one; it’s hard enough to keep your
stories straight through countless rounds of two-on-one interviews when you’re
actually telling the truth, so don’t make it harder on yourself. Plus, Wall Street is
a small town. Analysts at one bank are often roommates with analysts at
another. Word gets around, and the truth almost always prevails in the end.
Don’t tempt fate.
Act Happy and Excited to Be There
We know that interviews are inherently stressful, but interviewers simply won’t
rally behind a candidate who seems uncontrollably nervous or just plain
miserable. Keep reminding yourself that interviews are fun—when else do you
have the opportunity do talk about yourself for 30 minutes straight?

How do undergraduate analyst interviews differ from MBA associate interviews?

2007-06-23T07:09:00.000-07:00

How do undergraduate analyst interviews differ from MBA associate interviews?
According to our insiders, the questions themselves aren’t significantly different
between the two groups (with the possible exception of the technical category,
which we’ll explain in greater detail later). Whether you’re interviewing as an
analyst or an associate hopeful, the general interviewing philosophy is the same:
Your interviewers will be examining your past performance for indicators of
future success.
Nonetheless, associate interviews definitely reflect the higher level of professional
responsibility and longer time horizon inherent in the associate role. Even
though “direct promotes” (i.e., analysts promoted to associate positions without
an MBA) are perhaps more common now than they’ve been in the past, banks
still expect that the vast majority of analysts will “graduate” from their 2- or
3-year program and go on to business school or pursue career opportunities
outside of banking. Associate candidates, on the other hand, are expected to
become long-term bankers. Though they often work the same grueling hours as
their analyst counterparts, associates typically make proportionally greater lifestyle
sacrifices since they’re more likely to be juggling professional commitments
and family obligations simultaneously.
Technical accuracy, attention to detail, and quantitative aptitude are of critical
importance to both analysts and associates, but associates are also expected to
develop a big-picture perspective on their work, as well as a comprehensive
understanding of how the analysis being performed addresses the client’s most
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Interview Roadmap
pressing strategic and corporate financial needs. While analysts spend much of
their time building presentations, associates spend a greater proportion of their
time determining what materials should go into the presentation to begin with,
and how the “story” of the presentation should flow. Unlike analysts, associates
will often speak at client meetings and will be expected to build relationships
with the client’s senior management.
Undergraduates
When you’re interviewing for an analyst spot, your interviewers have relatively
few data points to consider when they’re assessing how well you’re likely to
perform on the job. Because analyst candidates have little to no full-time work
experience on their resumes, recruiters focus on academic achievement,
extracurricular involvement, and the quality of candidates’ part-time work or
summer internships. It’s also important to remember that getting hired as an
undergraduate analyst is based more on intangibles than any other position in
the bank. Those of you who can demonstrate an understanding and real
enthusiasm for the job, attention to detail, a team-oriented sensibility, and a
humble eagerness to follow directions may be way ahead of your peers who
took accounting 4 years straight. In short, attitude counts for far more than
aptitude at the analyst level, and your proven ability to handle a considerable
amount and high standard of work is more important than the direct relevance
of your internship or academic major.
That said, recruiters know all too well that many undergraduate candidates
don’t have a clue what investment banks do and have a smaller network of
former classmates and colleagues to consult about the job than their counterparts
in MBA programs. As such, undergraduates (particularly those without a
summer banking internship under their belts) are much more likely to confront
questions about the role of an investment bank and the specific responsibilities
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Interview Roadmap
of an analyst. Likewise, interviewers are much more likely to hone in on
whether candidates truly understand the lifestyle sacrifices that the job requires
and whether they are prepared to prioritize career demands over personal
commitments. Interviewers focus primarily on time management and multitasking
ability rather than people management, since investment banking
analysts must manage hefty workloads on multiple transactions but rarely
assume team leadership responsibility.
Although many senior bankers generally believe that analysts should be “seen
and not heard” (and many live in perpetual fear of what an analyst might say to
a CEO if left unsupervised), interviewers will still place a premium on candidates’
ability to demonstrate a high level of maturity and to speak clearly and
articulately on a range of topics.
MBAs and Experienced Candidates
From a recruiter’s perspective, associate-level hiring decisions are considerably
more difficult than those at the analyst level because MBA candidates are typically
more polished and sophisticated than undergraduate hopefuls. As one insider says,
“It’s substantially more difficult to distinguish between the person who’s really
committed to becoming a banker and the person who just interviews really well.”
If you’re an associate candidate, your past academic experience is still relevant, but
less important than past work experience. While your undergraduate studies, GPA,
GMATs, and SATs matter, your work experience, the reputation of the business
school you attended, and your potential to become a long-term asset to the firm
are far more important. If you’re enrolled in a top MBA program, recruiters know
that you have unlimited access to classmates and business school alumni who can
give you first-hand accounts of both the job in general and the culture of
individual firms. As such, they expect that you’ll be reasonably well informed
about the nature of the associate role and the lifestyle sacrifices required.
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Interview Roadmap
Instead of asking you to describe the role of an investment bank or outline
what you think your day-to-day responsibilities will include, interviewers will
generally zero in on your past work experience. For former analysts, this may
include a granular discussion of the transactions you’ve worked on in the past:
the underlying assumptions, valuation techniques, and the outcome of each deal
on which you worked. For career changers, this means describing your professional
experience in a way that implies you’d flourish in banking and offering
credible reasons for pursuing a banking career instead of returning to your
former career path.
Regardless of your professional background, you should expect questions
about your management style and leadership aptitude. As an associate, you’ll
be expected to manage not only projects and processes, but people as well:
internal and external team members, clients, and analysts on each of your deal
teams. Therefore, interviewers will be assessing whether you can inspire
confidence among clients and productivity among junior bankers. If you’ve
historically managed people through brute intimidation tactics and a series of
to-do lists, recruiters will be wary of your ability to adapt to an intensely teamdriven
work environment. Come prepared to discuss the performance reviews
you’ve garnered in the past and the specific steps you’ve taken toward professional
self-improvement. In addition, you should be ready to demonstrate that
you’re a virtual paragon of self-sufficiency, excellent judgment, and good
common sense. Associates are expected to manage transaction processes with
little direct supervision or senior-level hand-holding; the more you can
convince your interviewer that you’ve worked independently in the past, the
better your chances of securing an offer

What Are Interviewers Seeking?

2007-06-23T07:07:00.000-07:00

Similar to their counterparts in virtually every other industry, investment banking
interviewers can take an interview in a number of directions depending on the
candidate’s unique background, his or her own style, personality, and (often
times) mood on the particular day. Nonetheless, seasoned interviewers (often
senior bankers or recruiters who have watched generations of junior bankers
come and go) mention the same “critical success factors” over and over again.
Not surprisingly, demonstrated excellence in one area can often compensate for
apparent gaps or deficiencies in others. For example, if your resume, transcript,
and work experience suggest that you’ve never met a number you didn’t like,
you can expect your interviewer to place less emphasis on your quantitative
ability in the interview. Also keep in mind that certain firms, groups, and
individual interviewers assign greater relative importance to some attributes
than others.
However your interviewers choose to slice and dice them, these are the qualities
they’re looking for:
• Interest in (and commitment to) investment banking
• Intelligence
• Energy
• Exceptional stamina and drive
• Quantitative/analytical ability
• Interest in financial markets
• Enthusiasm
• Poise
• Attention to detail
• Humility
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Interview Roadmap
• Self-awareness
• Judgment
• Maturity
• Multitasking ability
• Can-do attitude
• Resilience
• Confidence
• Teamworking ability
• Interpersonal skills
• Cultural fit with firm/group
The Shortest Distance?
If the list of attributes above seems like a lot to remember as you try to navigate
your way through EBITDA and DCFs (all the while minding your Ps and
Qs), take heart. We’re not suggesting that you try to convince your interviewer
that you possess all of these qualities in the course of a 30-minute interview.
Your task is much more straightforward: Regardless of the way these characteristics
add up in each candidate, all recruiters are looking for three basic things
when they interview you:
• Whether you’re capable of doing the work
• Whether you really want to do the work
• Whether they think your prospective colleagues would enjoy working with you
As a general rule, the early rounds of interviews will focus on the first two
questions, while later rounds will devote proportionally more time to answering
the third. Through our conversations with recruiters and recently hired insiders
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Interview Roadmap
alike, we’ve identified five primary categories of question on which interviewers
rely to make these assessments:
1. Self-awareness questions
2. Capacity questions
3. Interpersonal aptitude questions
4. Commitment questions
5. Technical questions
Our insiders report that interviewers typically have a top-ten list (or, perhaps
more realistically, a top-three or -four list) of all-time favorites in each of the
categories listed above. We’ve compiled those favorites into a master list for
each of the five categories. But we haven’t stopped there. In each of the five
sections, we’ll also tell you what these types of questions really tell your
interviewer about you, and (in case you were wondering) how on earth they
relate to your ability to succeed on the job.
In addition to the specific attributes that these questions are intended to assess,
recruiters will be on the lookout for evidence of other qualities—otherwise
known as intangibles—throughout the entire interview. For example, do your
eyes light up with enthusiasm when you talk about discounted cash flow? Do
your answers sound heartfelt and impassioned, or is it blatantly obvious that
you’ve answered these questions hundreds of times and could probably recite
them in your sleep? Are you comfortable and self-assured talking about your
background and accomplishments, or does self-confidence quickly disintegrate
into self-consciousness as soon as you step into the interview room? Interviewers
don’t measure these intangibles through specific questions, but rather
through their well-honed intuition. Whether they admit it or not (or whether
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Interview Roadmap
they’re conscious of it or not), recruiters subject you to two “tests” as you
navigate the interview:
The CEO Test
As we’ll discuss later, recruiters quickly dismiss candidates who assume that
they’ll be advising CEOs on their first day of the job or who cite CEO
interaction as the primary reason for pursuing a banking career. Nonetheless,
associate candidates will ultimately be expected to build strong relationships
with their clients, and even junior bankers are highly likely to interact closely
with the CEO or CFO of one or more clients over the course of their 2- or 3-
year analyst tenure. As such, your interviewer will want to ensure that you
wouldn’t embarrass the team or tarnish the firm’s good name if you had the
opportunity to interact with a client’s senior executives. As you answer each of
his questions, the recruiter will be looking for evidence of maturity, credibility,
judgment, tact, and diplomacy. Of course, he’ll also be assessing whether your
presentation style is polished, the extent to which you are both articulate and
thoughtful, and whether you mind your manners and observe the rules
governing interview etiquette.
The Cubicle Test
If you’ve done a fair bit of research before picking up this guide, we probably
don’t need to elaborate on this one. As we described in Beat the Street, every firm
has its own version of the Could I Get Along With This Person? test. Our
counterparts in the world of management consulting, for example, refer to this
as the “airplane test.” It goes something like this: If your interviewer were
seated next to you on an airplane for hours on end, what would happen by the
time you reached your destination? Would your interviewer want to adopt you,
or enroll in a witness protection program to avoid you? In the investment
banking ranks, the confined space in which you’re more likely (in fact, certain)
to find yourself is the cubicle, but the underlying principle remains the same.
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Interview Roadmap
Even if you convince the interviewer that you possess every other attribute
critical to success at his firm, you probably won’t secure an offer if prospective
colleagues can’t imagine that they’d enjoy working with you. Investment bankers
know all too well that their colleagues—to a greater extent than deal flow,
exposure to senior management, or their firm’s “brand name”—will drive their
experience at the firm. Because of this, your interviewer will be on the lookout
for humility, generosity, approachability, friendliness, and a well-developed sense
of humor. Would you be an entertaining and sympathetic office-mate for 100-
plus hours per week? If the analyst in an adjacent cubicle broke down at 3 a.m.,
just as you were packing up to go home, what would you do? Would you stay
the extra 2 hours to help him out, even if it means sacrificing precious sleep? A
strong team orientation (and a generally positive attitude) is of critical importance
in banking, and recruiters have a sixth sense for detecting it during
interviews.

investment banking interviews are considerably different from other interviews

2007-06-23T07:06:00.000-07:00

Here’s the truth: It’s a little bit of both. Despite recruiters’ fervent insistence
that they’re just looking for bright, motivated people, the fact of the matter is
that investment banking interviews are considerably different from other interviews
you’ll encounter. Why? Because the job itself is substantially different
from other jobs (we’re not saying it’s necessarily better or worse, mind you—
it’s just different). As one insider said, “No single component of the analyst or
associate job is necessarily all that difficult: You have to be good with numbers,
good with people, capable of producing a lot of work—perfectly—in a short
amount of time, willing to sacrifice a lot for the job, and you’ve got to consistently
demonstrate good judgment. In other professional contexts, you might
be fine if you get four out of the five right. But in banking, you’ve got to
demonstrate all five, and there are actually relatively few people out there who
possess all of these characteristics.”
We couldn’t have said it better ourselves. Investment banking careers offer
extraordinary rewards (tangible and intangible) to those who pursue them, but
they also require extraordinary demands. The better you understand this
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Interview Roadmap
fundamental truth—and the way it drives the direction of your interviews—the
more successful you’ll be in your job search.
What’s So Special About Investment Banking?
So how exactly is investment banking different? We’ve summarized the five
primary distinguishing characteristics here. Many of them will sound familiar
(particularly if you’ve read WetFeet’s Insider Guide to Careers in Investment
Banking), but we’ve pared it down here to those factors most likely to affect
your interview.
Lifestyle Sacrifices
You’ve heard it a million times before, but it bears repeating: This is not a
profession for the faint of heart. Corporate finance and M&A bankers may
clock 80 to 90 hours in a typical week, breaking the 100-hour mark (or, put a
different way, 2½ times the standard 40-hour workweek) during critical stages
of a deal.
Aside from the unique physical demands of the job, its inherent unpredictability
can be particularly frustrating. Canceled dinners and postponed vacations are
par for the course for investment bankers. In sales and trading, hours are
somewhat more moderate and predictable. “People in sales and trading work
very hard but rarely have the all-nighters that people on the investment banking
side do. It’s less of a 24/7 job,” says one insider who heads global recruiting for
a bulge-bracket firm.
Because the profession (at least at the junior levels) requires extraordinary
energy, stamina, and a willingness to prioritize work commitments above
personal ones, recruiters are on the lookout for individuals who have
demonstrated a comparable degree of dedication to other endeavors.
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Interview Roadmap
Quantitative Aptitude
You’ll often hear recruiters insist that the work of a financial analyst or
associate isn’t rocket science and that the mechanics of financial analysis can
readily be taught to someone who’s willing to learn them. Why, then, must you
often go to great lengths to prove that you’re comfortable with numbers over
the course of the interview? Because even though banks can teach you basic
finance, accounting, and valuation principles, they can’t teach you the baseline
level of quantitative aptitude necessary to learn the required skills quickly.
Perhaps more importantly, only you know whether you find financial analysis to
be interesting (or even fascinating); that can’t be taught, but it makes a big
difference when you’re running a spreadsheet model at 3 in the morning.
The job is demanding enough; it will be especially miserable—not to mention
unfulfilling—if you’re the type of person who would prefer invasive dental
surgery over a lively debate about free cash flows. You don’t need to prove that
you’ve devised new quadratic formulae during your off hours, but those who
can best endure the demands of the job are those who are intellectually
stimulated by the challenge of making decisions and implementing corporate
strategy largely through quantitative analysis.
If your resume and transcript suggest little prior exposure to this type of
analysis (or little academic training in math), recruiters will undoubtedly dig for
evidence that you’re capable of (and interested in) learning the tools of the
trade. “It’s not that the English major isn’t smart enough,” says one recruiter,
“but if they’ve never taken a single accounting, economics, or finance class, we
question whether or not they’d really thrive in this environment. And quite
frankly, the job is tough enough for people who have had training in these
disciplines and know they enjoy this type of work. If you aren’t all that
interested in finance, it just wouldn’t be worth it.”
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Interview Roadmap
Little Margin for Error
Compared to other jobs available to newly minted college graduates or MBAs,
junior-level investment banking positions offer the opportunity to assume a
tremendous amount of responsibility relatively early in your career. While this is
an attractive feature from a personal and professional development standpoint,
it also means that expectations are high and the margin for error low. Despite
the tremendous learning curve, there is little tolerance for mistakes—even the
smallest miscalculation or typo can seriously damage the team’s credibility with
clients. Those who succeed in banking over the long-term demonstrate far
more than an appreciation for big-picture issues; to the contrary, they attribute
the same life-or-death importance to the smallest of details. To ensure that they
can entrust new hires with a considerable level of responsibility from (literally)
day 1, investment banking recruiters target those candidates who have consistently
upheld exceptionally high performance standards—and developed a
particularly keen eye for detail—in other areas.
Intensely Team-Driven Environment
It’s definitely no coincidence that many current investment banking analysts and
associates were once college athletes. In corporate finance and M&A, project
teams typically consist of three or four bankers who work closely over the
course of the transaction. Team members rely heavily on each other not only to
complete their specific assigned tasks, but also to pick up the slack whenever
and however necessary to get the job done right. Successful junior bankers
prioritize collective priorities over individual ones, adapt their working styles to
the needs of the group, and eagerly share their expertise with other team
members.
This team focus extends well beyond the cubicle walls: Banks devote significant
resources to team-building events within departments and analyst/associate
classes in order to foster a strong sense of camaraderie and group affiliation at
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Interview Roadmap
every level. Every banker tells tales of the analysts in their class who would
routinely drop whatever they themselves were working on to help out an
analyst classmate who was struggling to keep all the balls in the air at 3 in the
morning. To preserve this unique environment, recruiters look for candidates
with well-honed team sensibilities and a genuine preference for team-based
activities over solitary ones.
Hierarchical Structure
Though some banks pride themselves on their “entrepreneurial spirit” or “flat
organizational structure,” few industries are as rigidly hierarchical as investment
banking. While there are only four rungs on the promotion ladder at most
banks (analyst, associate, vice president, and managing director), the differences
among these levels are pronounced. Further, the work environment within
most firms is fraught with protocol, and failure to observe the unwritten rules
of conduct does not go unnoticed. Even at banks that trumpet their team
spirit, senior bankers routinely delegate tasks to junior bankers simply because
they can, regardless of whether it represents the most efficient way of getting
things done.
The concentration of larger-than-life egos and type-A personalities means that
junior bankers must fit a very specific profile; recruiters want to ensure that
analysts and associates can take direction well, manage demanding and often
difficult personalities, maintain a healthy appetite for grunt work, and cultivate
an appreciation for life at the bottom of the totem pole.
In addition, banking can be a highly political environment, rewarding those who
develop not only technical expertise but interpersonal savvy. As such, recruiters
will typically favor candidates with a proven track record of building relationships
in a number of different environments—academic, professional, and
extracurricular pursuits—who are comfortable managing both upward and
downward.

About Investment banking recruiters

2007-06-23T07:05:00.000-07:00

Investment banking recruiters tend to explore relatively consistent themes from
one interview to the next, although the interviewer’s particular style can vary
considerably—conversational versus confrontational, technically intense versus
personality focused, and so on. Generally speaking, however, insiders have
observed an unmistakable trend toward the behavioral interview, in which
candidates are asked to cite experiences—professional, academic, and personal—
in which they’ve actively demonstrated specific attributes. Behavioral
interviewing is based on the premise that patterns of past behavior most
accurately predict future performance. Advocates of behavioral interviewing
report that the technique enables interviewers to most accurately assess whether
a candidate possesses the requisite skills and personality for on-the-job success.
The logic is appealing: Anyone can rattle off a list of attributes commonly
sought by investment banks, but successful candidates can readily substantiate
these claims with examples that demonstrate competency in a given area. For
example, it’s fairly easy for a candidate to claim exceptional quantitative skills,
knowing that investment bankers assign a great deal of importance to analytical
abilities. In a behavioral interview, however, the interviewer might ask the
candidate to describe a particular project—completed during a summer job,
perhaps, or in an academic context—that required a great deal of quantitative
or analytical rigor.
What does all of this mean for you, the job seeker? It means that knowing the job
for which you are applying—and knowing exactly how your experiences and achievements
relate to that job—is the single most important thing you can do to prepare for investment
banking interviews. You may be accustomed to preparing for interviews through a
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Interview Roadmap
line-item audit of each individual bullet point on your resume. In some
interviews, this is a sound approach. An interviewer may very well ask, “I see
you worked at XYZ Corporation over the summer. What were your responsibilities
there?” Questions like this will certainly arise in banking interviews, but
perhaps more prevalent are the questions like, “Tell me about a time that you
took on a responsibility that perhaps wasn’t part of your official job description.”
You could choose to point out that at your previous job you designed a
comprehensive training program for new employees, organized guest speakers,
and designed metrics to track the program’s efficacy. Alternatively, you might
choose to highlight your involvement in a particular B-school study group, in
which you took up the flag for an ailing team member and wrote a presentation
that technically fell outside the scope of your assigned duties. Either example
works, as long as it shows that you’ve taken initiative in the past.
With this in mind, don’t compartmentalize your achievements into “work
experiences,” “educational background,” “extracurricular activities,” and
“personal traits” as you’re preparing for investment banking interviews. Instead,
think about each of your endeavors in terms of the skills, abilities, and attributes
it enables you to demonstrate. To make this process even easier for you,
we’ve already grouped the qualities you should seek to emphasize with the
questions most frequently used to assess them. We describe the categories,
questions, and selection criteria in detail in the following pages.
To put your anxious mind more at ease, we’ll let you in on some candidatefriendly
news: Some insiders have noticed that their firms now place greater
emphasis on effective interviewing than they have in years past. As we’ve
learned from our insider interviews, several investment banking powerhouses
now require all of their employees to participate in standardized interview
training, designed to help bankers-turned-recruiters become more effective
talent scouts. Why such a renewed focus on interviewing aptitude? To a greater
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Interview Roadmap
extent than ever, Wall Street firms now realize that candidates’ experiences with
the recruiting process—either positive or negative—effectively shape their (and
their classmates’) perceptions of the company. At long last, many interviewers
now recognize that staring silently at a Super Saturday candidate for the first 15
minutes of the interview, or bombarding unsuspecting candidates with incessant
rounds of long multiplication, is more likely to create a negative impression of
the firm than it is to assess whether the candidate will succeed in a given role.
This is good news for you, the job seeker, particularly if you’ve been agonizing
over how much time you should spend preparing for the famous “brainteaser”
questions known to have occasionally flummoxed even the most die-hard
investment banking prospect. There are fewer wildcards in investment banking
than there once were and fewer than you’ll find in management consulting
interviews (where the infamous case interview may account for more than 50
percent of your evaluation). In fact, there’s little mystery surrounding the
content of investment banking interviews, and the format lends itself well to
rehearsing your pitch so that you will know it cold before the interview process
even begins. Plus, because interviews are relatively consistent, you’ll have the
opportunity to refine and perfect your spiel as you progress from one firm’s
process to the next, and—with your solid preparation and research—from one
round to the next as well.

Graduating with your undergraduate or MBA program

2007-06-23T07:03:00.000-07:00

Does this sound familiar?
You’re heading into the final stretch of your undergraduate or MBA program at a
top school, and you’re excited about the vast stretch of open road that lies ahead.
You’ve heard strange but wonderful stories about the world of investment
banking, and you’re intrigued by the prospect of checking out this extraordinary
universe for yourself. You’ve never been one to look before you leap, so you do a
little bit of research before you set off. You’ve read WetFeet’s Insider Guide to
Careers in Investment Banking, followed by Beat the Street: Investment Banking Interviews.
Armed with the sage advice in each of these guides, you’ve attended company
information sessions, trawled through banks’ websites, and spoken to friends who
currently hold the highly coveted banking roles that you’ve heard so much about.
You feel as though you genuinely understand what you’ll be doing on a daily basis,
the sacrifices the job demands, and the opportunities it affords.
You feel certain that you’re well on way to securing your spot. All of the recruiting
media that you’ve seen so far suggest that every investment bank is literally steps
away from world domination (e.g., “We are a global, multi-trillion dollar corporation
whose rapid growth and international presence are unmatched by any of our
competitors.”) and suggests that you, the candidate, are crucial to its very survival
(e.g., “We depend on people for our success—people like you—smart people with
ideas—ideas that can change the world.”). On-campus information sessions that
you’ve attended seem to confirm this belief; the recruiters representing each
company insist that they are simply looking for bright, motivated people. Buoyed
by recruiters’ encouraging words, you’re ecstatic when you’re invited to interview.
You arrive at the career center—well prepared to discuss how your experience in
4
Interview Roadmap
pizza delivery relates to investment banking—and bang: You’re deluged with
questions about how you’d value a Manhattan skyscraper and what exactly you
think you’d be doing as an investment banker anyway. As you leave the meeting
with the image of the interviewer’s derisive sneer etched in your memory, you can
only wonder what happened to their insistence that they were only looking for
“bright, motivated people”?
Now, take a deep breath and relax! Chances are, none of this has even happened
to you yet, and even if you’re terrified that it might, WetFeet is here to help! The
good news is that although investment banking interviews have been known to
catch the unprepared candidate off guard, they’re perfectly manageable for people
like you (smart people—people who do their homework, people who want to do
fascinating work). For all the tall tales they’ve engendered, investment banking
interviews tend to be fairly predictable and relatively consistent from one interview
to the next. As one insider put it, “Two hundred thousand people have had this
job over the past 10 years. There’s no secret to what it takes to be successful or the
issues that interviews are likely to focus on.”
Beat the Street II is a companion volume to Beat the Street. It provides more detailed
explanations of the types of questions you’re likely to encounter, along with a list
of recruiters’ all-time favorite questions in each category. At WetFeet, we believe
that you’ll respond to tough questions more effectively if you know what your
interviewer is really getting at with each one. For each category of question, we’ve
compiled a list of specific skills and attributes that the interviewer will be seeking
in your response, as well as a brief review of why those characteristics are so
important for a successful investment banking career. Finally, we’ve prepared some
sample questions that will almost certainly arise in your interviews, along with
guidance on how you can answer them as effectively as our hypothetical
candidates.
5
Interview Roadmap
For those of you who haven’t seen this volume’s predecessor guide, Beat the Street
provides an overview of the different areas within a securities firm that typically
hire external candidates each year: investment banking (corporate finance and
M&A), sales and trading, and equity research. It outlines the most effective ways to
conduct company-specific research, prepare your answers for the questions most
likely to arise, and anticipate differences among the first-round, second-round, and
final interviews. The guide includes a broad overview of the basic accounting and
finance principles most likely to creep up in your interviews. Finally, Beat the Street
offers examples of the most frequently posed interview questions, along with
worksheets designed to help you design effective, personalized responses.
A word about how to use this guide: As we discuss later, investment banking
interviews vary significantly depending on the background of the candidate and the
often capricious whims of the particular interviewer. Although we’ll give you the
tools you’ll need to anticipate the questions most likely to arise and we’ll advise you
on how best to formulate an effective answer, only you can craft a response that
truly highlights the particular strengths and experiences that you bring to the table.
As such, don’t get too distracted by the specific work or extracurricular experience
described by the candidates we’ve profiled (and under no circumstances should you
panic if you don’t offer the same range of experiences that they do). More important
than these candidates’ qualifications is their ability to navigate potentially tricky
questions by framing their experiences effectively. And finally, keep in mind that no
written guide can capture the intangibles like enthusiasm, conviction, confidence,
poise, and presence—all of the factors that often distinguish an extraordinary
response from a mediocre one.
With that in mind, get behind the wheel, fasten your seatbelt, and start your engine:
You’re ready to hit the road.

Rules of the Road at a Glance

2007-06-23T07:01:00.000-07:00

Self-Awareness Questions
Do you know where you’re going and where you’ve been?
Remember:
• Predict, prepare, and practice.
• Be honest, but emphasize the positive.
• Keep your audience in mind.
Capacity Questions
Do you have the necessary horsepower?
Remember:
• Be prepared for confrontation.
• Imply—but don’t state directly—that your previous achievements prove that
you’re highly capable of doing the work.
• Remember that capacity refers to more than just intellectual horsepower.
Interpersonal Aptitude Questions
Are you prone to road rage?
Remember:
• Where possible, highlight the team-based components of the pursuits listed
on your resume.
• No bragging, blabbering, or bluffing.
• Get comfortable, but not too comfortable.
1
At a Glance
Commitment Questions
Are you in it for the long haul?
Remember:
• Know exactly why you want to be an investment banker.
• Examine your resume and transcript for anything your interviewer might
perceive as a gap or inconsistency.
• Remember that investment banks love to be loved, just like the rest of us.
Technical Questions
Do you know what’s under the hood?
Remember:
• Keep your answers short, sweet, and simple.
• Think concepts, not formulas.
• If you don’t know, then just say that you don’t know.
Unasked Questions
. . . and throughout, your interviewers will be asking themselves:
• Can we put you in front of a CEO?
• Will you be fun to work with at 3 in the morning?