Investment Banking Associate MBA Interview

Investment Banking Associate Interview Experience

This is a detailed breakdown of the actual interview questions for an investment banking Associate position at a global investment bank. Any references to names of people, universities, banks, or cities have been removed to keep the information anonymous.  This individual’s investment bankingValuationFree valuation guides to learn the most important concepts at your own pace. These articles will teach you business valuation best practices and how to value a company using comparable company analysis, discounted cash flow (DCF) modeling, and precedent transactions, as used in investment banking, equity research, associate interview experience went down as follows…

First round interview at the regional office

This is how the first round of my investment banking Associate interview started. I was asked to wait in the boardroom for the two individuals who were interviewing me to show up. They showed up right on time, and the interview was a series of questions as follows:

• Tell us a little bit about your background and yourself
• Do you invest in the stock market?
• If I was valuing a real estate business, what are the key drivers I would pay attention to
• How big would the tax shield for a company be with $1,000 of depreciation and a tax rate of 35%?
• How does depreciation expense flow through all three financial statements?
• What is the formula for WACCWACCWACC is a firm’s Weighted Average Cost of Capital and represents its blended cost of capital including equity and debt. The WACC formula  is = (E/V x Re) + ((D/V x Rd)  x  (1-T)). This guide will provide an overview of what it is, why its used, how to calculate it, and also provides a downloadable WACC calculator?
• What is the formula for cost of equity?
• What are the three most common valuation methodsValuation MethodsWhen valuing a company as a going concern there are three main valuation methods used: DCF analysis, comparable companies, and precedent transactions. These methods of valuation are used in investment banking, equity research, private equity, corporate development, mergers & acquisitions, leveraged buyouts and finance used in investment banking?
• Which method would you recommend and why?
• What is the total number of weddings that occur in China per year?
• There is an apple tree in the backyard – sell that tree and the apples that fall from it
• Then they gave me a couple of minutes to ask questions of them

Second round investment banking Associate interview at head office

I was told my interview was at 2:00 pm and I arrived at 1:49, and the individual in charge of organizing said they thought I was going to be late or a no show, which seemed like a tactic to throw me off.

I was asked to hang up my jacket and leave all of my belongings in a particular room – and then they asked me to go to a “holding room”.  This room was right in between the two rooms that were being used for the interview panels.

I was waiting for my interview to begin and two individuals – a VP and Director – came into the room and started speaking about how they planned to be intimidating to the students being interviewed (knowing I could obviously hear them).

I was then taken before the first panel by one of the individuals who was interviewing me – he was an Associate.

I was seated around a round table and interviewed by three bankers – two Associates and a VP who moved over recently from a bulge bracket bank.

I was then asked the following interview questions:

• Tell us a little bit about yourself
• Why investment banking?Why Investment Banking?Almost every investment banking interviewer will ask the question: why investment banking? I want to work in investment banking because it's the fastest way to learn financial modeling, valuation, Excel, and understand the nature of large corporate transactions. I'm aware the job has a strict hierarchy, very long hours
• What do you think IB does, and what kind of hours does it require?
• Why did you apply for this position?
• What do you think the toughest aspect of the job will be?
• Why did you apply for a position at this investment bank?
• Tell us something about the market
• Why did the university career center not better prepare you for the interview?

I was then asked to leave that panel and to go down the hall to the other panel. I was asked to take a seat directly in front of three bankers – an Associate and two Directors.

They asked the following interview questions:

• Tell us a little bit about yourself
• Why are you interested in IB?
• If you switched careers once before, how can you be sure you won’t again?
• What are the top three characteristics you think a successful Associate has?
• What do you expect from the job?
• Tell us something about the market
• One Director then started down a hypothetical scenario where a factory that currently manufactured cars in Mexico had to do so in the US and I was asked a series of questions regarding the repercussions of doing so
• If you had a million dollars, where would you invest?
• I wanted to pitch a couple of stocks, but I was cut off and asked a series of questions on valuation multiples – P/E ratio, EV/EBITDA multipleEBITDA MultipleThe EBITDA multiple is a financial ratio that compares a company's Enterprise Value to its annual EBITDA.  This multiple is used to determine the value of a company and compare it to the value of other, similar businesses. A company's EBITDA multiple provides a normalized ratio for differences in capital structure,, and what exactly these multiples meant

I went to a cocktail reception later that night, but I wasn’t asked any questions.  I mingled with undergrads who were applying for Analyst roles and I spoke with a few different individuals who worked at the bank, including two of the people that interviewed me.

More interview prep

The above experience is very typical of an investment banking associate interview experience.  The questions that were asked of this candidate also reflect those covered in our other interview guides, which we encourage you to explore.

Here are CFI’s most popular resources to help you prepare for a career in investment banking:

• How to get a job in investment bankingHow to get a job in investment bankingThis guide will outline how to get a job in investment banking using out top three tactics: networking and resume, interview prep, and technical skills. This guide is based on my firsthand experience of what is the most effective way of how to get a job in investment banking.
• Investment banking salariesInvestment Banker SalaryAn investment banker salary is among the highest in the world. They are paid a base salary and a bonus for their compensation. Find out how much they make. An analyst straight out of university can expect to earn over USD $100,000, but per hour it could be as low as $20-35 when working 100 hr/wk
• Resume templateInvestment Banking ResumeInvestment banking resume template. Learn how to write an investment banking resume (Analyst or Associate) with CFI's free guide and resume template. The IB resume is unique.  It’s important to tailor your resume to the industry standard to avoid being immediately deleted
• Investment banking interview questions
• Investment banking trainingInvestment Banking TrainingInvestment banking training - CFI financial modeling & valuation courses for training new analysts & associates in the Investment Banking Division (IBD). Training programs typically start in the summer and last about 6 weeks. Analysts are given the opportunity to develop their technical skills in Excel, finance,
• All career resourcesCareersSearch CFI's career resources library. We've compiled the most important career resources for any job in corporate finance. From interview prep to resumes and job descriptions, we've got you covered to land your dream job. Explore guides, templates, and a wide range of free resources and tools