If you are serious about landing an investment banking job in 2013, here's a very insightful article to read. This short article doesn't only talk about interview tips but a lot of information you need to know about landing an IB job.
In a nutshell it covers these points:
- About the author
- Why IB
- Special Attention / Keywords for Investment Banking Resume
- Interview Preparation
- Questions I Would Ask a Prospective Investment Banker
- Dos and Don'ts in the Interview
- Selection Criteria
- Life as an Investment Banker
How To Become An Investment Banker At Credit Suisse
About Myself
I graduated from a top undergraduate business school. I did a summer internship with Credit Suisse and spent nearly two years there after graduating from undergrad. I worked in the Los Angeles office and was focused on leveraged finance and M&A. I spent the bulk of my time working on deals for many of the largest private equity firms in the world. After my time at Credit Suisse I decided that I wanted to complement my finance skills with strategy capabilities. I joined one of the leading management consulting firms, rising to the position of Senior Case Team Leader. I completed my MBA at one of the top programs and I now work at a leading middle market private equity firm, a role which combines both my finance and strategy skills.
Why I Chose Investment Banking
Skill set development is extremely important to me. In business I consider finance and strategy the two paramount capabilities requisite in rendering strong business decisions. Unequivocally the best training out of undergraduate and MBA studies to develop a financial skill set is investment banking. It enabled me to become fluent in everything from financial statements to valuation to investment logic to transaction execution. This is a skill set that can only be achieved through the experience of doing deals. Furthermore, investment banking allowed me at a very young age to have deep exposure to the senior executives of Fortune 500 corporations. These exposures were both stimulating and great learning experiences. Investment banking also enables varied exposures. I worked on industries spanning energy, entertainment, health care, industrials, manufacturing and more. I also worked on product groups spanning equity raises (IPOs), bank and bond raises, leveraged buyouts, dividend recapitalizations, and strategic acquisitions. It is very rare in business to have such varied exposures so quickly and this breadth of experience meaningfully motivated me to banking. More than anything though was that I knew it was a very respected profession that would be a great springboard to whatever I ultimately decided I wanted to pursue in business.
Special Attention / Keywords for Investment Banking Resume
Transaction experience: If you have ever been involved in deals like any of those I noted above, be sure to make mention of them in your resume and explain your role in those deals in your interviews as well as at a high level in your resume.
Attention to detail: Investment bankers have a tremendous attention to detail. No comma can be in the wrong place, no extra spaces, everything must be accurate and aesthetically appealing. So too is the case for the resumes reviewed by investment bankers. If there is an error in the resume then the odds are the candidate will not have the requisite attention to detail. Make sure your resume is thoroughly reviewed so it is accurate.
Financial Designations: If the candidate has any significant designations, such as a Series 7, CFA, etc. be sure to note this in the applications. Languages: Investment bankers often work on deals internationally. If you speak any other languages make sure to note this.
Extracurriculars: Too often when I reviewed candidate resumes at Credit Suisse people failed to list their extracurricular achievements. Investment banks are highly social institutions and seeing lots of good extracurricular roles suggests that the candidate can fit in. If your leadership roles were elected, you can put “(elected)” in brackets after your title for the role, this is further proof that you are well-liked and can fit in.
Job Locations: This point is particularly important for bank offices outside of New York. These offices will want to know that you have a link to the area. Therefore, if you have ever worked in or near that city be sure to list the location of your jobs on your resume. At a minimum, if you are applying for a role in Charlotte make sure your cover letter indicates why you want to work there.
Interview Preparation
Read a few investment banking culture related books like Monkey Business and Liar’s Poker, it will give you something casual to discuss with the interviewer and most everyone in the industry has read these two books.
Make sure you are deeply familiar with the principles of valuation: accretion/dilution analysis; equity and debt comparables analysis; comparable transaction analysis; leveraged buyout modeling; discounted cash flow analysis (make sure you know what weighted average cost of capital is and be able to explain it in granular terms). Be sure to understand each of these analytical tools, when and why they are used and what they tell you.
Know your metrics. Know how any why to calculate: EBITDA (earnings before interest, taxes, depreciation and amortization); total enterprise value / EBITDA; the difference between trailing (aka LTM – last twelve months) and forward multiples; free cash flow (aka FCF); EBIT (earnings before interest and taxes); maintenance versus growth capital expenditures; debt ratios like total or net debt to EBITDA; covenants; have a broad understanding of reps and warranties in deals.
Know stock market index numbers especially: where the DOW, NASDAQ, S&P, oil, gold, LIBOR, and if applicable the stock of the investment bank you are meeting with are trading at. Also know key currency exchange rates (US versus pound, euro and Canadian dollar).
Have researched a minimum of two companies and be able to discuss why they would or would not make good investments. How they are viewed by analysts in the market. What they are trading at (overvalued or undervalued in your estimation and why). What are their growth prospects? What geographies do they serve? What is their revenue mix? What are their greatest risks?
Have at least 3 questions in hand to ask them about working at their firm. Some good ones: How are deal teams structured here? What is the mix of pitching to live transactions? What is the typical path for Analysts/Associates? What separates a good from a great Analyst/Associate (they really like ambitious people so this type of question so long as you do not come off as arrogant is valuable)?
Questions I Would Ask a Prospective Investment Banker
Name one company you would invest in and why? Name one company you would not invest in and why? [Expect numerous follow-up questions on these so know these companies cold].
Explain to me what happened in the most recent financial crisis. Expect this question in most interviews and have a very detailed, thorough understanding.
Why do you want to work at this firm? Be prepared to discuss how you think they differ from their peers – do your homework on them as well.
What is the best and worst pieces of financial advice you have ever been given?
Describe to me the time when you worked as hard as you ever have. Investment bankers, especially junior ones, work grueling hours (often as much as 100 per week), showing you are willing to do this and demonstrating you have worked hard in the past will be important.
What is free cash flow? Why is it important? How does it differ from EBITDA?
You may also be asked a question that requires you walk them through the debit and credits resulting from a situation.
Dos and Don'ts in the Interview
Dos:
Dress nicely. Appearance matters.
Do all the preparation noted above, you will be surprised how much of it and more is asked of you over the course of the interview process.
Truly ask yourself if you can handle the great stress and hours of the job and have a deep interest in finance and deals. If you honestly say you can and do, then go for this job with full fervor, they will see this in the process and want you as well. If you do not, this is not an industry to take lightly and I have been exposed to too many people unwilling to do this before and they were very unhappy in banking and soon left.
Learn as much as you can about finance and accounting in school and research, this will both help you in the interviews and separate you in the job.
Send thank you notes after the interviews. This diligence is noticed and appreciated.
If there is a question you really mess-up they will appreciate it if you email them shortly after with the answer. Do not over apologize for the error, you have lots to learn and the job will provide that. They will notice the diligent effort.
Don'ts:
In the interview itself DO NOT come off as arrogant. That is the kiss of death. Confident but not arrogant.
I would caution against disagreeing with the interviewer unless you are certain you are correct. Unlike consulting interviews, investment bankers view the process as less of a date than a right and wrong answer. Bankers are proud people that generally do not take well to being questioned.
DO NOT fake something in your interview. For example do not just pass off that you think the deal will be accretive without knowing what that word means and how to calculate it. Bankers can smell weakness and will likely pounce on it asking follow-up questions that uncover your lack of understanding. Thus, study hard and choose your words and areas of conversation carefully.
Do not discuss compensation. The job pays well, you already know that.
Selection Criteria
Grades: Generally each bank has certain target schools that most of their candidates come from. Applications are generally read by those who went to those schools and know good from average grades there well. In particular focus is on accounting, finance, economics and management science courses.
Extracurriculars: See notation above, emphasis here is on if the candidate has had leadership roles and if the experiences suggest a level of socialism and friendliness.
Job Experience: Related is better, but the more impressive the better. Bankers are a capable bunch and expect high levels of accomplishment from applicants. If an applicant received top tier ranking in their annual reviews, be sure to note this in your resume as that is an important metric for bankers themselves at their annual bonus reviews.
SAT , GMAT, GRE test scores are secondary, if you have a great score put it on your resume, it will only help.
Life as an Investment Banker
Work generally starts at 8:30am or 9:00am and it is rare for an Analyst or Associate to leave work before 10:00pm. Many days are well beyond midnight, especially if you are in the midst of a live transaction. The busier the group you are interviewing for the longer the hours generally. Smaller shops with smaller and less frequent deals generally have lower hours but also generally lower compensation. The hours for junior bankers tend to get busier after lunch as the Directors and Managing Directors spend the morning generating work for the junior bankers. Travel is frequent but far less than consulting. In general expect a day trip every two weeks at the Analyst level and one day a week at the Associate level (note this fluctuates meaningfully by office geography and firm). The type of work you will be doing will generally take the form of the different types of analysis I noted already above (such as leveraged buyout modeling, equity comparables, etc.). You will spend a great deal of time with those in the class you enter the firm with, especially those in your group. They are going through the exact same hardship as you and you get very close as a result. The good news about banking is that life gets easier at the Vice President level and much easier beyond that point. You then get more control over your hours and what you are working on. However, be prepared for some grueling years before that point.
Article source: InterviewBay.com
Inside Investment Banking (IIB)
If you are eager to apply for investment banking roles, visit the IIB website.
It is authored by five young investment bankers who all succeeded to break into investment banking without a degree from Harvard and without an internship from Goldman.
They’ve created the IIB website to share their experiences and help others to do the same.
Click here to visit Inside Investment Banking
