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Wall Street 400 Q's (Non-technical)
Terms in this set (48)
I realize it's still early in your career - you haven't even graduated yet - but have you given any thought to your long-term plans? Do you think you'll stick with investment banking?
If you're interviewing for an Analyst position, you can be more uncertain about your future and just state you don't know 100% where you'll be yet, but banking is what excites you most and is what will give you the skills you need to succeed. For prospective Associates, you need to be more certain about your career path and show some commitment - indicate you've done your homework, spoken with many people and really want to make a career out of it.
What were a few areas that your team said you should try to improve upon?
The 2 most important points to remember with the "weaknesses" / "failure" question:
1. Give a real weakness rather than saying you "work too hard."
2. Show how you improved on it, using specific examples.
What are "real" weaknesses you could give? Maybe you weren't as communicative with the team as you should have been at the start; maybe you got lost in the details sometimes and failed to see the big picture; maybe you were too impatient with others or did not delegate tasks appropriately.
The point is to say something that is a real weakness but which is also not a "deal- breaker" - like saying you don't like to work hard or can't stand working in teams.
After that, state how you're working to improve your weakness. Perhaps you gave more regular updates to your superiors; or maybe you started leveraging other peoples' knowledge or the administrative staff at your work more often.
Let's imagine that your best friend is describing you in 3 words - which words would he/she use and why?
This is just, "Tell me your strengths" in disguise, but you need to narrow it down to 3 words. Since it's your friend describing you, you don't want to say, "Driven, attentive to detail and a team player!"
You do want to convey the same ideas - that you can work hard, play well in teams, and get things done no matter what obstacles you face - but you should pick your own language to get this across.
For each word you list you should also give 1-2 sentences to back up what you say, using a specific example for each one.
Imagine that I'm speaking to someone with whom you have not gotten along in the past - what would he/she say about you?
This is just a disguised "weaknesses" question. However, since it involves someone else this time, it's better to give a weakness such as being stubborn and holding too rigidly to your own views rather than some of the other faults you could state. Weaknesses related to team/group settings are better here.
And once again, you need to emphasize how you've worked to improve whatever it is that you did not do well at the time.
Don't say something like, "I get along with everyone!" as that sounds unrealistic.
Why would we decide not to give you an offer today?
This one is a bit tricky because it's so direct. You could attempt to make a joke out of this one and say something like, "If you decided you weren't hiring at all!" but that may not go well if your interviewer doesn't appreciate humor.
Otherwise, the best response may be to turn this around and say, "I see no reason why you wouldn't - I'm your best choice because...." and then give your strengths instead.
Tell me why we should hire you in 3 sentences.
This is yet another variation of the "strengths" question. But rather than giving generic strengths, you should highlight any unique experiences you've had. So maybe you haven't had banking internships before - but you have had unique experience abroad, in an unusual setting, or doing something not many others have done, or you've overcome unusual hardship - and those make you particularly well-qualified.
Try to make your answer some variant of "I'm smart because of [School / Academics], I can do the work because of [Internships / Previous Jobs], and I'm an interesting person and fun to be around because of [Unique Experience]."
What was your greatest failure?
As with any "weaknesses" question, you need to use a specific story - such as an exam where you did not do well, a project that did not go as planned, or a work situation that did not turn out well - and show what you learned from it and how you've improved since then. Don't say something fake like, "My greatest failure was getting into Yale and Princeton but not Harvard" - that makes you look silly. It's better to give something real and then show how you've used the failure to develop.
Can you talk about a team project or some kind of group activity you've worked on before?
Ideally, you will talk about something that was a success rather than a failure. You should use the following 3-point structure for these questions:
1. State upfront what the problem was - Maximizing returns? Attracting more donors for your nonprofit? Winning more customers?
2. Talk about the team you worked in, who did what, and what your role was. Did you manage people or delegate tasks? Those are best, but if you were a "foot soldier" that can also work as long as you worked long hours, were attentive to detail and/or came through in the end to save the team in some way.
3. State the results - Did your brand awareness go up? Did you get more funding? More members for your organization?
This is one of the fundamental questions that you need to be prepared for, because it will almost always come up in some form in interviews.
Can you describe a situation where a team did not work as intended? Whose fault was it?
I would recommend starting with a situation where your team did work as intended and talk about how it wasn't working at first and what you did to fix it.
Never blame someone specific - instead, say that there were "personality conflicts" and that you worked to resolve them.
To make things even easier, you could re-use the story you told in question #1 but instead position it as a failed team situation that turned into a successful one.
Can you discuss an ethical challenge you were confronted with and how you responded?
If you've already worked full-time, any ethical challenges you faced at work or any whistle-blowing you've done are best to discuss; otherwise, you could talk about how you stopped funds in a student group from being used illegally or how you caught someone cheating.
Just make sure you don't over-dramatize it - your life is not a soap opera and you shouldn't go on for 10 minutes about your internal conflict deciding whether to turn someone in for their wrongdoing.
What was the most difficult situation you faced as a leader and how did you respond?
Point out how you stayed calm and collected in the face of a challenging situation, and how your cool decision-making process led to a positive outcome.
Maybe 2 of your subordinates couldn't get along and you had to arbitrate; maybe you were 3 months behind on a project and had to get a team together to finish it in 2 weeks; maybe you were an RA in a dorm and you had to prevent 2 residents from harassing each other.
Just make sure that it's a real problem, as opposed to only getting an A- when you should have gotten an A.
Do you work better as a leader or a follower?
Resist the urge to say "leader" and instead talk about how you can function as both a leader and another member of the team, depending on what the situation calls for. You don't want to hog the spotlight or do everything, but if leadership is required, you can step up and handle it.
Specific examples to back up the above points are also required.
What is your leadership style?
A "moderate" answer works best here. You're responsible and can make sure things get done, but at the same time you don't annoy your teammates by micro-managing.
If you're interviewing for an Analyst or Associate position, you do want to be a bit more "hands-on" and point out that you often go in and correct mistakes to make sure everything's perfect - since you'll be spending around 50% of your time doing this.
Again, a specific example is needed once you've stated in general terms what your style is.
Does the leader make the team?
No, the team makes the team. The leader can provide direction and unify everyone, but 1 person alone is not a "team." A leader can make things better and turn around a dysfunctional team, but it's equally important for everyone to pull their own weight.
You can often re-use some of your other "leadership" or "team" stories you've used and spin them differently.
You've never worked in finance before. How much do you know about what bankers actually do?
You should acknowledge that although you haven't worked in the field before, you've done a lot of research on your own and have spoken with many friends in the industry.
Based on that, you know that bankers advise companies on transactions - buying and selling other companies, and raising capital. They are "agents" that connect a company with the appropriate buyer, seller, or investor.
The day-to-day work involves creating presentations, financial analysis and marketing materials such as Executive Summaries.
Let's say I'm working on an IPO for a client. Can you describe briefly what I would do?
First, you meet with the client and gather basic information - such as their financial details, an industry overview, and who their customers are.
Next, you meet with other bankers and the lawyers to draft the S-1 registration statement - which describes the company's business and markets it to investors. You receive some comments from the SEC and keep revising the document until it's acceptable.
Then, you spend a few weeks going on a "road show" where you present the company to institutional investors and convince them to invest. Afterwards, the company begins trading on an exchange once you've raised the capital from investors.
Can you tell me about the different product and industry groups at our bank?
This one is bank-dependent and will differ for boutiques, middle-market firms and bulge brackets - so you need to research it before your interview. Typical product groups include Mergers & Acquisitions (M&A), Leveraged Finance (LevFin) and Restructuring; you could also consider Equity Capital Markets and Debt Capital Markets "product groups" but that one is debatable.
Common industry groups include Healthcare, Retail, Industrials, Energy, Natural Resources, Financial Institutions, Gaming, Real Estate and Technology, Media & Telecom (TMT).
What's in a pitch book?
It depends on the type of deal the bank is pitching for, but the most common structure is:
1. Bank "credentials" (similar deals they've done to "prove" their expertise).
2. Summary of a company's options ("strategic alternatives" in banker-speak).
3. Valuation and appropriate financial models (for example, if you're pitching for
an IPO you might show where the IPO proceeds would go).
4. Potential acquisition targets (buy-side M&A deal) or potential buyers (sell-side
M&A deal). This is not applicable for equity/debt deals.
5. Summary and key recommendations.
Walk me through the process of a typical sell-side M&A deal.
1. Meet with company, create initial marketing materials like the Executive Summary and Offering Memorandum (OM), and decide on potential buyers.
2. Send out Executive Summary to potential buyers to gauge interest.
3. Send NDAs (Non-Disclosure Agreements) to interested buyers along with more
detailed information like the Offering Memorandum, and respond to any follow-
up due diligence requests from the buyers.
4. Set a "bid deadline" and solicit written Indications of Interest (IOIs) from buyers.
5. Select which buyers advance to the next round.
6. Continue responding to information requests and setting up due diligence
meetings between the company and potential buyers.
7. Set another bid deadline and pick the "winner."
8. Negotiate terms of the Purchase Agreement with the winner and announce the
Walk me through the process of a typical buy-side M&A deal.
1. Spend a lot of time upfront doing research on dozens or hundreds of potential acquisition targets, and go through multiple cycles of selection and filtering with the company you're representing.
2. Narrow down the list based on their feedback and decide which ones to approach.
3. Conduct meetings and gauge the receptivity of each potential seller.
4. As discussions with the most likely seller become more serious, conduct more in-
depth due diligence and figure out your offer price.
5. Negotiate the price and key terms of the Purchase Agreement and then announce
How are Equity Capital Markets (ECM) and Debt Capital Markets (DCM) different from M&A or industry groups?
ECM and DCM are both more "markets-based" than M&A. In M&A your job is to execute sell-side and buy-side transactions, whereas in ECM/DCM most of your tasks are related to staying on top of the market, following current trends, and making recommendations to industry and product groups for clients and pitch books.
In ECM/DCM you go more in-depth on certain parts of the deal process, but you don't get as broad a view as you might in other groups.
What's the difference between DCM and Leveraged Finance?
They're similar but Leveraged Finance is more "modeling-intensive" and does more of the deal execution with industry and M&A groups on LBOs and debt financings. DCM, by contrast, is more closely tied to the markets and tracks trends and relevant data.
But there's always overlap and some banks have just 1 of these groups, some have both, and some divide it differently altogether.
Explain what a divestiture is.
It's when a company (public or private) decides to sell off a specific division rather than sell the entire company. The process is very similar to the sell-side M&A process above, but it tends to be "messier" because you're dealing with a part of one company rather than the whole thing.
Creating a "standalone operating model" for the particular division they're selling is extremely important, and the transaction structure and valuation are more complex than they would be for a "plain-vanilla" M&A deal.
Imagine you want to draft a 1-slide company profile for an investor. What would you put there?
"Put the name of the company in the header, then divide the slide into 4 equal parts. The top-left is for the business description, headquarters, and key executives. Put a stock chart and the key historical and projected financial metrics and multiples on the top right. The bottom left can have descriptions of products and services, and the bottom right should have key geographies with a color-coded map to make it look pretty."
Let's say you're hired as the financial advisor for a company. What value could you add for them if they ask you about their suggested growth / M&A strategy?
At a high-level, first you'd want to see what their expansion goals are and how they can best achieve them - whether it's by partnering with another company, expanding with a merger or acquisition, or expanding organically with new products.
As the investment banker, you could provide value by making introductions to potential M&A targets and partners, and then advising on the best negotiation strategy, what companies would be most receptive, what type of price to expect, and how to manage the entire process.
Let's say you had $10 million to invest in anything. What would you do with it?
Always ask for the investor's goals first. Are they looking to have big capital gains over 30- 40 years? Are they looking for tax-free retirement income? What types of assets interest them?
Based on the response, you can give an appropriate answer. So if they're investing over 30-40 years and going for high capital gains, a well-diversified portfolio is probably best; if they are more concerned with tax-free income, maybe you should tell them about municipal bonds.
If you owned a small business and were approached by a larger company about an acquisition, how would you think about the offer, and how would you make a decision on what to do?
The key terms to consider would be:
2. Form of payment - cash, stock, or debt
3. Future plans for the company vis-à-vis your own plans.
Of course, there is much more to an M&A deal than this - you could list literally hundreds of different terms.
But those are the key ones. To make a decision you'd have to weigh each one - there's no "magical" way to decide. You might also point out that if something is particularly important to you - such as retaining a role in the company - then a difference of intentions there could be a "deal-breaker."
We do most of our work with technology companies. Can you talk about a trend or company in the industry that has piqued your interest lately?
This is very common if you're interviewing for any industry group - I recommend doing some research beforehand and being able to speak about trends in that market. It's easy to find this information for Technology and anything that sells to consumers, but it's a bit harder for something like Chemicals.
Let's say you could start any type of business you wanted, and you had $1 million in initial funds. What would you do?
If no further direction is provided, you probably want to say that you'd think about some type of niche business with high margins that requires little startup capital ($1 million is not enough to build 10 factories) and ongoing maintenance - those make it harder to turn a profit and sell the business one day.
Can you talk about a company you admire and what makes them attractive to you?
Do not say something commonly known. Saying Google or Apple, for example, would be bad.
Instead, go more obscure and pick a company no one knows so that they can tell you've done your research and so that they're less likely to ask probing questions.
You don't necessarily need to give financial details, but if the company is public and you can easily find the information, it definitely helps.
When you talk about what makes the firm attractive, emphasize qualities that investors would find appealing, such as a great and well-diversified customer base, a unique competitive advantage in the market or a high-margin business model. Don't say that you like them because your new iPhone is awesome.
Tell me about an M&A deal that interested you recently.
Pitch me a stock.
Can you explain to me, in simple terms, the subprime crisis?
In simple terms, banks made mortgage loans to people who were in no position to pay them off - or even meet monthly payments. Since interest rates were at historical lows, borrowing was easy.
At the same time, mortgages were no longer just loans made to individuals - they were sliced up, combined and "packaged" into securities that banks traded, acquired and sold to investors.
A typical "package" might contain mortgages given to both "credible" borrowers as well as mortgages granted to more risky borrowers - the more risky ones were labeled "subprime." Banks acquired these "packaged" assets on the argument that even if one "piece" of the asset was risky or likely to default, the rest still had value.
As it turns out, this was false and no one knew what any of these mortgage-related assets were worth - but as unqualified homeowners began defaulting, buyers disappeared overnight and the value of these assets plummeted to $0.
As a result, the value of many banks also approached $0 and quite a few failed or went bankrupt in the process - all because the securities were so complex that no one understood their value or the true risks involved.
What's your greatest fear about investment banking?
Do not give an actual, legitimate fear (losing your friends/significant other, gaining
weight, working too much, hating your life, getting laid off, etc.).
Instead, it's best to go with something more innocuous like, "Doing a lot of work on deals and not always getting to see them through to the conclusion because anything could cause a large transaction to collapse" or having concerns about the deal flow if the market is poor.
What's your "Plan B" if you can't get into investment banking this year?
You'll do something finance-related, in a field like corporate finance / strategy or maybe something else at a bank / financial firm. You also want to point any offers you have, especially if they're in finance or consulting
Let's say your MD is meeting with a client and you have been invited. As he's presenting, you notice a mistake in the materials - do you point it out?
No - unless it happens to come up in the meeting, in which case you speak only if the MD asks you about it. In that case you should just briefly acknowledge it and then move to a different topic.
It's bad if you make a mistake like that, but it's even worse if you embarrass your MD by pointing it out in broad daylight - chances are that no one will notice anyway since they barely read pitch books in meetings.
Why are we your first choice? Wouldn't you like London or New York more?
Even if you really do prefer New York or London, you can't say this in an interview with a regional office because your #1 goal has to be getting AN offer - not getting the perfect offer in the perfect location.
It's best to say something like, "I realize it is unusual and that are other places are sometimes more popular, but I'm most interested in [Location] because it's the best place for [Industry You Like], I have a lot of friends and family here, and on top of all that the cost of living also beats New York."
This way you acknowledge their "objection" upfront but also point out solid reasons for picking this location.
Walk me through one of the deals listed on your resume.
Try to pick an M&A deal rather than an equity/debt financing and aim for more "unique" deal types like divestitures or distressed M&A; also try to pick something that's either "high-profile" or a deal where you contributed a lot.
• Don't go into too much detail for an "opening question" like this - just give a brief overview and then let them ask the questions.
• Describe the company, give approximate financial (revenue, EBITDA, market cap) figures, and say what they wanted to do.
Did you do anything quantitative for this deal? It looks like it just involved research.
"A lot of what I worked on was qualitative and involved researching potential buyers to see what the best fit might be. Our team did some valuation and financial modeling work as well, but since I was an intern I supported the other Analyst and Associate by finding relevant facts and figures and then going through their models, figuring out how they worked, and then making sure the information was correct."
Why did the company you were representing want to sell?
Describe the deal process.
This one is completely dependent on what type of deal you worked on - but no matter what you say, don't go into an excruciating level of detail here. Focus on whether it was a broad or targeted process for M&A deals, and what kinds of buyers/sellers you approached; for debt and equity financings just go through the key points in the registration statements or investor memos, and what the investor reaction was.
"We ran a broad sell-side auction process for our client. They had in mind around 10-20 strategic buyers that might have been interested, and we added around 30 financial sponsors to their list. We got serious interest from about 5 of the companies we approached, which led to 1 strategic buyer and 1 financial sponsor ultimately competing to win the deal."
What were the major selling points of your client? What was attractive about it?
This one applies for both sell-side deals and equity/debt financings - good points to raise might include financial performance, market and industry trends, any competitive advantages it enjoyed, and anything positive about its customer base. Stay away from talking about the strength of the management team, because that is very difficult to "explain" in an interview.
What about its weaknesses? Why might investors be hesitant?
You could talk about unfavorable market trends, increased competition, uncertain financial projections, or the threat of new regulation harming the company.
What did you look at in the due diligence process?
The most important items here are the company's financial statements, contracts (with customers, employees, and suppliers), and then tax, legal, environmental, IP, and regulatory issues. Note that as an investment banker you don't really "look at" much in the due diligence process for any deal - you just process requests.
Tell me about the market your client was in.
Focus on the major trends and how the company you represented compared to the competition. Don't go into every single detail - just pick the 1-2 major points and focus on how it affected the deal and/or valuation.
How did you narrow down potential targets (or potential investors)?
For potential targets, focus on financial, industry, and geographical criteria; for potential investors, talk about what they've invested in before, how much synergy or "fit" there is, and whether or not they have complementary portfolio companies (for PE firms).
How did you value your client?
Just take the standard valuation methodologies and talk about how you applied them to the company you worked with. "We used public company comparables, precedent transactions, and a DCF. For public comps, we picked a set of software companies with over $1 billion revenue, for precedent transactions, we looked at software deals worth over $500 million, and we used the standard DCF but looked at a few different scenarios because our client's projections were aggressive. We didn't look at other methodologies because this was a standard M&A deal and they were almost certainly going to sell to a strategic buyer."
How did you personally contribute to this deal?
One of the most difficult and most important questions you can get. For this one, you have to be careful to not exaggerate too much and claim that you generated millions of dollars for your bank - but you should also try to say something more than, "I made these graphs look pretty in PowerPoint." Here's an example:
"As the intern, I helped some of the Analysts track down hard-to-find numbers to use for assumptions in our models. This played an important role in the deal, because buyers analyzed our operating model of the company and found everything more believable since we had laid out such detailed assumptions behind all the numbers."
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