The 8 Investment Banking Technical Topics to Expect

Investment banking technical interviews often separate those who simply have an interest in investment banking and those who are actually a good fit for the role. They often are the deciding factor for who ends up getting the internship or job offer and who doesn't. I used to work in investment banking at a bulge bracket bank and help out with recruitment. And in my opinion, these are the eight core topics you need to know to go in there and ace your technical interviews. Number one is finance fundamentals. So being able to answer questions like explain what the time value of money means and how it factors in the investment decisions. What is leverage? How does it impact our way in returns? Number two is valuation. So be able to answer questions like walk me through the four valuation methods and rank them in terms of which one gives the highest valuation and what are the advantages and disadvantages of each major valuation method. So we're talking DCF, LBO, precedent and comparable. Number three is discounted cash flow valuation. To be able to answer questions like how do you calculate a number of free cash flow? And why do we need to make adjustments to Ebit to do so? Walking through the process of building at DCF and explain all the assumptions regarding the discount rate, terminal value, cash flow projection, things like that. Number four is Enterprise value versus equity value questions. So be able to walk through the bridge between EV and EV and vice versa and explaining how different corporate decisions like issuing debt or equity impact both EV and EV. Five is accounting fundamentals. This is the language of business and it's so important to know for these interviews. Questions like walk into the three statements and how they link together. So income statement, balance sheet, cash flow statement. Focus on that income less dividends and the income statement flows right into retaining earnings on the balance sheet and also net income service as the basis for the start of operating cash the cash flow statement. Also questions like if a company has 200 in inventory that they sell, but it cost some 100 to produce, walking through that that affects all three financial statements. Six is M&A. So focus on questions like why do companies engage in M&A or why do companies pay control premium in transactions? Or what form of consideration would a company prefer to use for a transaction, cash, stock or debt and what? Seven is LBO. So questions like what makes a company good LBO candidate, what are the main sources and uses in LBO transaction? Last but not least, we have mental math and brain . So think of the classic, you know, 3:15 on a clock, what's the angle between the hour and the minute hands? You know, why are manhole covers round and not square, things like that. Or the estimation question where you're supposed to use reasonable approximations to derive an answer for an unreasonable question like how many pizzas are sold in New York City weekly or how many golf balls fit in the bowling 767? Investment banking recruitment is right around the corner. I'll be dropping everything I know about the process here in my page, so be sure to follow along for more.