IBD Summer Analyst Technical Interviews - Introduction

[ib_coach1]

Introduction

In the fiercely competitive world of investment banking, securing a summer analyst position can be a significant step towards a successful career. One crucial aspect of the interview process for such roles is the technical question round. Investment banks expect candidates to demonstrate a strong understanding of financial concepts, analytical skills, and the ability to apply them to real-world scenarios. To excel in this segment of the interview, aspiring candidates must prepare thoroughly and approach technical questions with confidence and clarity. This article provides valuable insights and tips on how to ace technical questions for investment banking summer analyst interviews.

General tips

• Prepare in advance - you need to start preparing your interview well in advance as you must be able to contribute to financial discussions and show off your knowledge and capabilities to make a positive impact on the people sitting across the table from you.

• Strengthen your foundation - before delving into complex financial topics, it is essential to have a solid grasp of the fundamentals. Review the basic concepts of accounting, financial statements, valuation techniques, and corporate finance principles.

• Practice out loud - put together a list of potential questions you’re likely to be asked, then write an outline for your answer to each one, and practice them in front of a mirror, your friends, or parents. Do not memorize full sentences, otherwise you’ll end up sounding like you’re reciting a script.

• Develop a structured approach - interviews tends to be like a game as interviewers usually start with basic questions and then drill down to see how far you can go, as they want to observe your analytical aptitude, how you react under pressure, and your ability to think on your feet. Thus, when studying your questions, bear in mind that you cannot prepare for everything your interviewers may ask, so it is crucial that you know and understand the theory behind the answers, rather than just memorizing them.

• Communicate effectively - Most answers to questions should not take more than 30 to 60 seconds. In this regard, keep editing your outlines, ask yourself “Which details could be left out?” and delete them. Then practice saying your concise answers aloud until they flow easily.

• Practice problem-solving - solve case studies, work with financial models, and simulate scenarios. Utilize online resources, such as investment banking interview guides and financial modelling courses, to sharpen your skills and gain exposure to real-world scenarios.

• Do not guess - If you are asked a question during the interview and you don’t know the answer, don’t waste your interviewer’s time. Just say you don’t know and ask for an explanation. There is no shame in not know what a dividend recap is if you don’t have any prior finance experience.

• Ask for feedback – pay attention to areas where you can improve and learn from mistakes. Constructive criticism will help you identify gaps in your knowledge and enhance your overall performance. In this regard, participating in mock interviews will give you the experience, practice, and feedback that will help you do well in a real interview.

• Seek guidance – search for mentors, career services professionals, or individuals working in investment banking to help you navigate the interview process effectively. They can provide you with valuable tips and strategies on how to handle different types of interview questions, personalized feedback on your performance and help you identifying areas for improvement.

Key topics

• Corporate valuation – these types of questions are at the core of the interview process as these relate to banker’s everyday activities. Some examples below:
  • What are the ways of valuing a company?
  • What are pros and cons of each valuation methods?
  • Which one will result in the highest valuation?
  • What’s the difference between Enterprise Value and Equity Value?
  • Walk me through a DCF.

• Accounting – technical interviews are not only about valuation, but a high relevance is given to the knowledge of accountancy principles, more specifically the links between the three primary financial statements, such as income statement, balance sheet and cash flow statement. Understanding these links is of extreme importance when it comes to build a 3-statement model, which is the basis for any type of valuation exercise, such as DCF, LBO, etc. Sample questions below:
  • Walk me through the three financial statements.
  • What are the main links between the three statements?
  • What happens to the three statements if depreciation/inventory/PPE goes up by x amount?

• Department-specific – investment banks are organized in different entities or divisions that work together for the whole, but they engage in different activities. Assuming some candidates have expressed particular interest for M&A, the recruiters can take the opportunity to test their knowledge by asking them specific questions relating to this topic. Some examples below:
  • What are some reasons that two companies would want to merge?
  • How do you figure out if a merger is accretive or dilutive?
  • Walk me through a typical sell-side / buy-side M&A deal.

• Brainteasers – there is no specific way to prepare for brainteasers. There are many that are commonly used in interviews, and you can prepare for those beforehand, but remember that showing your ability to think critically and communicate your thought process effectively is more important than actually getting the answer correct. A typical Q&A example below:
  • What is the sum of all the numbers from 1 to 100?
    • Do NOT answer saying 1+2+3, etc. That is extremely inefficient.
    • Try breaking down the problem into smaller steps. For example you can say between 1 and 100 there are 50 sets of 101, for example, 1 and 100, 99 and 2, 98 and 3, and so on. 50 sets of 101 is 5,050, thus the sum of 1 to 100 would be 5,050.

Conclusion

Mastering the technical questions in investment banking interviews is a critical component of your overall preparation, as these relate to topics that you are going to face constantly in your daily work activities.

By following the tips and strategies outlined in this article, you can increase your chances of success, stand out as a competent candidate and hopefully landing your dream job in investment banking.

 

[JustAnotherHuman1]

Solid advice here, thanks.

 

[zhulik881]

Great post! Question: how would you advise to deal with the emotional factor when the interviewer acts like an asshole? I've been in numerous situations where they would start to grill me and I'd freeze like a deer in headlights, realize I was freezing, freeze harder, and then finally blurt out something stupid to break the awkward silence, miss the opportunity, only to realize a few hours later how easy the answer was.

 

[ib_coach1]

Solid advice here, thanks.

You're welcome. Glad you enjoyed it!

 

[ib_coach1]

Great post! Question: how would you advise to deal with the emotional factor when the interviewer acts like an asshole? I've been in numerous situations where they would start to grill me and I'd freeze like a deer in headlights, realize I was freezing, freeze harder, and then finally blurt out something stupid to break the awkward silence, miss the opportunity, only to realize a few hours later how easy the answer was.

Thanks for your feedback. Much appreciated! Regarding your question, I think that comes with time and experience. More interviews you do, more confidence you get, just like any other learned skill. You'll understand the importance of being more focused on the purpose of the interview, which is to showcase your skills and qualifications, and won't let the interviewer's attitude distract you from presenting your best self.

 

[magellan1]

I would add - do not overthink and overprepare. In the early days of my professional life, I used to spend many hours preparing for each interview (reading about the company, researching the team, interviewer, etc). Many times, the interviews turned out to be much easier than I expected and I wasted too much time in preparation.