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The most common mistakes in Investment Banking interviews

"Insufficient interview preparation"

That’s it. No secrets. All the interview material is out there on the internet for free, just in an unstructured manner. Overconfidence is probably driving most to think that they can just wing it resulting in blind spots and simply missing out certain items. Kind of like overseeing or just glancing over a chapter you needed to review for an *important* exam… The big problem is: You only get so many chances to interview per internship season.

After being in the industry for some time, we see a repeating pattern of the most common errors. All of them are related to insufficient interview preparation. The good thing is most of these common errors can be fixed with more effort. So, what can we do to prevent bad interview performance? Look at it like a game of "ticking the boxes". All boxes must be ticked. You miss one, you lose. (And yes, try not to take yourself too seriously. Life is a game.) Here is an outline of the items you need to check off. You don’t have to be stellar in every area, but you are not allowed to miss any of the items down below:

Not knowing your technical questions

This is the most basic level. Sometimes, we’ll just start with those questions to see whether the candidate makes the baseline cut. If you don’t have a strong grip on your technical questions, don’t bother interviewing. But don’t just learn the material by heart. You have to be able to understand the concepts. This enables you to deliver your answers more authentically rather than just spitting out random facts hoping they are correct. If you are serious about breaking into Investment Banking, go ahead and buy one high-quality interview guide and work through it (that’s the most important part!). Yes, they all work. Buying them and “just skimming through” is not good enough. Don’t make the mistake of collecting endless free content and “secret PDFs”. You have to actually work through them. No, reading summaries is not good enough. You have to practice active reproduction. You have to be able to comfortably walk through your typical interview questions in a high-stakes situation. You have to get used to perform under pressure. Knowing those technical questions like the back of your hand is really the bare minimum requirement.

Technical questions mainly cover accounting and valuation concepts. If you have some experience in Investment Banking, you may be asked to talk about your work. Here is a high-level overview of the major topics you need to cover:

  • Accounting – understanding of the three statements and how they are linked together

  • Valuation – Enterprise Value, multiples (comps & transactions), DCF, LBO (more advanced)

  • Understanding Investment Banking – company profiles, pitch books, M&A sell-side and buy side process

Having a bad story

A bad story is a weak sales pitch, where the points you are highlighting are not related to the job you’re trying to get. Don’t just sit there and rattle down your CV based on “facts”. You have to do your research and develop an understanding of what Investment Banking is, i.e. understanding the very specific job tasks. Then, you have to connect those dots to your profile. “Your story” is your chance to position yourself as the best candidate for the bank. Whether you like it or not, you have to learn to sell yourself.

Bad example: Don’t say you like to invest into stocks if you are interviewing for Investment Banking. This matches better with Equity Research or Sales & Trading, not Investment Banking. M&A Investment Banking is about selling and buying private companies.

Good example: You’ve been exposed to transaction-based work, such as selling a house or Big4 Transaction Advisory Services and are now interested in learning how the deals are actually made. The points you highlight should always tie in with the job you’re trying to get.

Not knowing what you are interviewing for

This ties in with having a bad story. This is the underlying reason why you have a bad story. You don’t know what you are interviewing for. We can easily sniff you out by simply asking you “What is Investment Banking in your words” or “In your words, what do you we do at our company?”. If you don’t know precisely what you’re interviewing for, you’ll have a bad story. Your "spark" or angle will result in a weak link to the job because you don't have a clear understanding what you are interviewing for.

Citing generic reasons, such as wanting to learn as much as possible or wanting to work in a fast-paced, environment isn’t good enough. You have to proof with details that you know what you are interviewing for. In other words, research the bank, the team and the type of deals they do.

First understand whether you are interviewing for a bulge bracket, elite boutique, middle market boutique or regional boutique. The smaller the firm, the more you want to highlight your entrepreneurial spirit and being a self-starter. Second, research the team. What are their backgrounds? Where did they go to school? What internships did they do? This is all good content for building rapport. Third, understand the types of deals they make. If you are interviewing for an M&A team, highlight transaction work; not raising funds or IPOs. On the other hand, if you are interviewing for an industry team covering all products (M&A, ECM and DCM), highlight your interest in and general trends within that particular sector.

Unable to spin weaknesses

The main goal of weaknesses questions is sniff out overconfident candidates that are unwilling to learn thinking they know it all and to test self-awareness. In other words, it’s a pure sales test. To pass this test, you name a “weakness” that is both appropriate to your level of experience and does not kill your application in an instant. This is how to demonstrate self-awareness.

Do not cite any generic weakness, such as “I am a perfectionist”, “Sometimes I am super eager” or “Sometimes I don’t like to get up early”. There are a couple of problems with those answers. First, they do not relate to any real challenges that an intern might face on-the-job. They are generic and can be recited in any interview. They mean nothing specific. Second, those empty phrases can be easily turned against you. Perfectionist = slow and inefficient. Super eager = annoying and makes lots of typos. Hard time getting up early = likely to miss a red eye flight to a client.

Here are some better examples, that are tied to your profile and to the specific job tasks. These are examples that are fair game and demonstrate that you are a humble person willing to learn.

Example 1: If you are coming from Transaction Services, say that you might have some difficulties identifying which companies match with one another because your former line of work stressed technical accuracy more than match-making. However, you bring advanced financial statement analysis skills and work endurance to ease your transition.

Example 2: If you already have one or two relevant internships in the industry, say that you want to work on your “attention to detail” (always a good one!) and that you want to work on becoming a more autonomous contributor. Based on your internship background, you bring a solid foundation to build upon and wish to push through the next level with this internship opportunity.

Example 3: If you are a student who has had only few relevant internships, say you know the basic concepts about Investment Banking (given that the interview went well!) and you know what you are getting yourself into. You don't have a lot of experience, but you have done your research, are willing to learn, improve and help the team wherever you can. Given that you are a beginner, you can confidently say that you are willing to fully commit and give it all you have for the limited time of this internship.

Unprepared follow-up questions

“Do you have any questions?” Yes, you do! This is a pure sales exercise again. At minimum, you have prepared and rehearsed questions. Better, you paid attention during the interview and ask questions related to the conversation you’ve just had. Assuming the interview went well, this your chance to show that you can push a stiff interview into a normal conversation and build some rapport with the interviewer. Let them talk about themselves a little bit. You don’t just want to say “No, I don’t have any questions” and just leave the interview. That’s a clear sign of disinterest. Have two to three questions. That’s a good length to show interest and end the conversation on a positive and professional note.

Next, remember to bucket your questions correctly:

With revenue generating senior staff, you’ll ask questions related to career trajectory and high-level business trends within the industry. Do not ask them questions regarding quality of life at the firm or work-life-balance. You should be excited about the prospect of working for that firm. If you veer too much on the side of work-life-balance, they’ll just take another candidate who is willing to work harder than you. Think about it, Senior Bankers are just interested in how they can grow their business in a non-risky manner.

Here are some good topics to talk about with Senior Bankers:

  • Deal Flow. Sourcing activities (pitching) vs. repeat clients. Verticals of most the mandates

  • Most memorable deal / war story

  • Where do you see your company going in the foreseeable future?

On the other hand, life at the firm questions should be directed at more junior non-revenue generating staff (aka everyone below VP). Junior Bankers are mainly thinking “Can I deal with this person +70h a week?”. They have to deal with you, your attitude and your typos +70h a week. This is your chance to demonstrate that you are “one of them”: intense, hard-working and pleasant to be around with (aka not a pain the ass). Here are some good questions:

Here are some good topics to talk about with Junior Bankers:

  • Their backgrounds and career moves (LinkedIn is your friend)

  • Size of the team (Interns, Analysts, Associates). Who you will be working with

  • What they enjoy most about their job (excluding the people)

  • Bring up a recent transaction and talk about responsibilities for interns

  • Deal flow. The types of mandates they are working on. What type of industries?

  • Most memorable mandate or deal experience

Where does it leave us?

With all the interview material out there, you cannot afford to miss out on any big technical items. This is the bare minimum. Just winging it is not going to work. You need to know what you are doing from start to finish. You don’t need to be super stellar in any one area, but you are not allowed to miss any item. To put it all in once sentence: Get your technical knowledge in-line.

Don’t underestimate fit questions just because there are no right or wrong answers. There are more convincing and less convincing answers. As a result, there will be a lot of awful candidates, who did not prepare properly and have weak stories to the point where they don’t even know what they are interviewing for. It’s not because they were not smart enough, they just didn’t put in enough effort. And when their first round interview pops up, they made a bad impression. You got to dig up some more dirt than your competitors if you are serious about breaking into Investment Banking. The more you know about the industry and the bank you're applying to, the better you can craft your story and the more convincing your story becomes because you know all the little details. To put it all in once sentence: Spin all your relevant experiences into relatable job tasks.

Additional resources

Are you up for the challenge? Feeling inspired to break into Investment Banking?

If you would like to fast-track your interview prep and maximize your chances of landing an offer, come train with us. We’ll give you everything you need to land the IB job you've always wanted… how to professionally edit your CV & cover letter, how to ace all technical questions, how to shine with tricky behavioral questions, how to master Excel like a pro and how to navigate office politics to maximize your chances of a return offer. Everything you need to know in one place.

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