Investment Banking interview preparation

Questions

100

Traced to a firm

100

Firms

46

Updated

September 2026

Asked at

All firmsTSTruist Securities10Rothschild & Co8Centerview Partners7CSCredit Suisse7HWHarris Williams6Houlihan Lokey6Lazard6Mizuho6Barclays5Citi5Deutsche Bank5Evercore5Moelis & Company5MSMorgan Stanley5Piper Sandler5RCRBC Capital Markets5Goldman Sachs4Nomura4TD Securities4Bank of America3GSGuggenheim Securities3J.P. Morgan3Jefferies3Moody's3Perella Weinberg Partners3WPWarburg Pincus3WBWilliam Blair3HSBC2Lincoln International2Scotiabank2TPTPG2UBS2Wells Fargo Securities2Advent International1Apollo Global Management1Bain Capital1Balyasny Asset Management1BLBlackRock1BPBNP Paribas1General Atlantic1Invesco1Morningstar1PIMCO1STSociété Générale1SSState Street1WMWellington Management1

Topic

All topicsAccounting14Valuation21M&A10Markets and deals10Capital markets3LBO8Leveraged finance3Restructuring2Credit3Debt capital markets2Capital structure2Case and estimation11Brainteasers6Fit5

Level

AnyCoreIntermediateHard

Type

AnyTechnicalCaseBrainteaserFitMarket view

1. 003Walk me through the three statements at the point of purchase and then after year one, given $100 of deferred revenue over two years.AccountingHardsuperdayCenterview PartnersInvestment Banking · New York · 2026Piper SandlerInvestment Banking · Houston · 2026

   Say this

   At the moment of sale, cash goes up $100 and deferred revenue, a liability, goes up $100. Nothing touches the income statement yet. After year one, $50 is recognised as revenue, so the liability halves and earnings finally show up.

   Then walk it

   1. Day one: cash up $100 on the asset side, deferred revenue up $100 on the liability side. Income statement untouched, because you have been paid but have not delivered.
   2. Year one: recognise $50 of revenue. At a 25% tax rate that is $37.50 of net income, assuming no costs for simplicity.
   3. Cash flow: net income up $37.50, then a working capital adjustment of minus $50 as deferred revenue unwinds. So cash from operations is minus $12.50 for the year, which is just the tax you paid.
   4. Balance sheet: cash down $12.50 from the year-one peak, deferred revenue down to $50, retained earnings up $37.50.
   5. The economic story is that a subscription business collects cash long before it books profit. That is why deferred revenue growth is a leading indicator.

   Where candidates lose it

   Recognising the revenue on day one. Cash received is not revenue earned. Also, candidates forget the working capital drag in year one and end up with a balance sheet that does not balance. Do the liability and the revenue in the same breath.

   Expect next

   • Would you rather own a business with growing or shrinking deferred revenue, and why?
   • How does deferred revenue affect a DCF?
   • What happens to deferred revenue in an acquisition?

   Reported by candidates at Centerview Partners (Investment Banking, New York, 2026); Piper Sandler (Investment Banking, Houston, 2026). Source: Wall Street Oasis.

2. 008Walk me from revenue down to unlevered free cash flow.AccountingCoretechnicalRCRBC Capital MarketsLeveraged Finance · London · 2026Centerview PartnersInvestment Banking · Menlo Park · 2025

   Say this

   Revenue less COGS and operating expenses gives EBIT. Tax EBIT at the marginal rate to get after-tax EBIT, add back D&A, subtract CapEx, then subtract the increase in net working capital.

   Then walk it

   1. Start at EBIT, not net income, because unlevered means before any financing decision.
   2. Multiply EBIT by one minus the tax rate. This is the step people rush: you tax EBIT, not EBITDA.
   3. Add back D&A because it is non-cash, but note you already got its tax benefit inside the taxed EBIT.
   4. Subtract CapEx, which is the real cash going into the asset base.
   5. Subtract the change in net working capital. Growth normally consumes working capital, so this is usually negative for a growing company.
   6. The result is cash available to all capital providers, debt and equity, which is why you discount it at WACC.

   Where candidates lose it

   Subtracting interest. The moment interest appears, it is levered, not unlevered, and you have double-counted the capital structure because WACC already prices the debt. Say 'no interest, because it is unlevered' out loud.

   Expect next

   • What is the difference between levered and unlevered free cash flow?
   • Which one do you discount at cost of equity?
   • If I gave you a $10 change in revenue, COGS, or CapEx, which moves your DCF most?

   Reported by candidates at RBC Capital Markets (Leveraged Finance, London, 2026); Centerview Partners (Investment Banking, Menlo Park, 2025). Source: Wall Street Oasis.

3. 021What are the main valuation methodologies, with the pros and cons of each?ValuationCoretechnicalCenterview PartnersInvestment Banking · Menlo Park · 2026Piper SandlerInvestment Banking · New York · 2026InvescoAsset Management · New York · 2023

   Say this

   Three core ones: comparable companies, precedent transactions and DCF. Comps tell you what the market pays today, precedents tell you what buyers paid including control, and a DCF tells you what the cash flows are worth on your own assumptions.

   Then walk it

   1. Trading comps: fast, market-based, easy to defend. But no two companies are truly comparable, and if the whole sector is mispriced your answer inherits that.
   2. Precedent transactions: captures the control premium and what strategic buyers actually paid. But deals are stale, each had its own circumstances, and disclosure is patchy.
   3. DCF: the only method grounded in the actual economics, and it forces you to state your assumptions. But it is enormously sensitive to WACC and terminal value, so it can be made to say almost anything.
   4. Situational ones sit alongside: LBO analysis for a floor value a sponsor would pay, sum of the parts for conglomerates, NAV for asset-heavy or real estate businesses, and dividend discount for banks.
   5. In practice you show all of them as a football field and argue for a range, because the overlap between methods is more persuasive than any single number.

   Where candidates lose it

   Listing the three and stopping when the question explicitly asked for pros and cons. Also, claiming DCF is 'the most accurate'. It is the most theoretically sound and the most easily manipulated, and saying both is what makes you sound credible.

   Expect next

   • Rank the four methodologies from highest to lowest value and explain why.
   • Which would you weight most for a company like this?
   • When would you not use a DCF at all?

   Reported by candidates at Centerview Partners (Investment Banking, Menlo Park, 2026); Piper Sandler (Investment Banking, New York, 2026); Invesco (Asset Management, New York, 2023). Source: Wall Street Oasis.

4. 030Walk me through what happens to WACC when leverage rises, and tell me whether shareholder value actually changed.ValuationHardsuperdayCenterview PartnersInvestment Banking · New York · 2026

   Say this

   WACC falls at first, because you are swapping expensive equity for cheaper tax-deductible debt, then rises again as distress risk takes over. So there is a U shape. Whether shareholder value changed depends on whether the tax shield outweighs the distress cost.

   Then walk it

   1. Early leverage lowers WACC because debt is cheaper than equity and interest is deductible. The tax shield is a genuine transfer of value from the government to the capital providers.
   2. But as leverage rises, equity gets riskier, so cost of equity climbs. Lenders also reprice, so cost of debt climbs. Eventually both swamp the tax benefit and WACC turns back up.
   3. In a world with no taxes and no bankruptcy costs, Modigliani-Miller says the value of the firm is unchanged and you have only reshuffled claims. That is the reference case.
   4. In the real world the tax shield adds value and financial distress subtracts it, so there is an optimum somewhere in the middle. That is the whole theory of capital structure.
   5. So the honest answer to the second half is: shareholder value changed, but not because WACC fell. It changed because of the tax shield net of distress and agency costs. Falling WACC is a symptom, not the cause.

   Where candidates lose it

   Saying 'WACC falls so value goes up, therefore infinite leverage is optimal'. The interviewer asked the second half specifically to catch that. You must separate the mechanical WACC effect from the economic source of value.

   Expect next

   • So what is the optimal capital structure?
   • Can debt ever be more expensive than equity?
   • Why does Modigliani-Miller not hold in practice?

   Reported by candidates at Centerview Partners (Investment Banking, New York, 2026). Source: Wall Street Oasis.

5. 052How do you drive returns in an LBO?LBOIntermediatetechnicalCenterview PartnersInvestment Banking · Menlo Park · 2025TPTPGInvestment Banking · New York · 2024

   Say this

   Three levers: pay down debt with the company's cash flow, grow EBITDA through revenue and margin, and exit at a higher multiple than you paid. The first two you control, the third you mostly do not.

   Then walk it

   1. Deleveraging: every dollar of debt repaid transfers a dollar of enterprise value to the equity. At five times leverage this alone can double equity over five years with no growth at all.
   2. EBITDA growth: organic revenue growth, pricing, cost programmes, and bolt-on acquisitions. Bolt-ons are especially powerful because a small target bought at six times inside a platform valued at twelve times creates value on day one through multiple arbitrage.
   3. Multiple expansion: selling at a higher multiple, either because the market re-rated or because you made the asset more valuable, bigger, more diversified, faster-growing.
   4. A fourth, less discussed: the dividend recap. Refinancing to pull cash out early shortens the duration of the return and lifts IRR without any exit.
   5. The discipline point: a sponsor's investment committee wants to see the return work on deleveraging and EBITDA alone, with flat or lower exit multiples. Anything that only works on multiple expansion does not get approved.

   Where candidates lose it

   Naming only leverage. Leverage amplifies returns; it does not create them. And forgetting that IRR is time-sensitive, so the speed of the return matters as much as the size.

   Expect next

   • Which lever matters most?
   • What would you do in the first hundred days?
   • How does a dividend recap change the IRR?

   Reported by candidates at Centerview Partners (Investment Banking, Menlo Park, 2025); TPG (Investment Banking, New York, 2024). Source: Wall Street Oasis.

6. 056Which yields a greater return, an IRR of 25 percent over 5 years or an IRR of 30 percent over 3 years?LBOIntermediatesuperdayCenterview PartnersGeneralist · New York · 2026

   Say this

   The 25 percent over five years returns more total money: about 3.05 times against about 2.2 times. But the 30 percent is the better rate of return, so the answer depends on whether you can redeploy the capital.

   Then walk it

   1. 1.25 to the fifth is roughly 3.05 times. 1.3 cubed is roughly 2.2 times. So more absolute money from the longer hold.
   2. But IRR is an annualised rate, and 30 percent beats 25 percent per year of capital employed.
   3. The deciding question is reinvestment. If you can put that capital straight into another 30 percent deal for the remaining two years, the short hold wins comfortably: 2.2 times 1.69 is about 3.7 times.
   4. If the capital sits in cash for two years, the long hold wins.
   5. This is exactly why limited partners care about both IRR and multiple on invested capital, and why a fund with spectacular IRR from fast flips can return less cash than one with lower IRR and longer holds.

   Where candidates lose it

   Answering with only one of the two framings. The question is deliberately ambiguous, and the right move is to compute both, then name reinvestment risk as the thing that decides it.

   Expect next

   • So which would a limited partner prefer?
   • Why do funds report both IRR and MOIC?
   • How would you game an IRR?

   Reported by candidates at Centerview Partners (Generalist, New York, 2026). Source: Wall Street Oasis.

7. 091What angle is formed by the clock hands at 3:15?BrainteasersCoretechnicalCenterview PartnersInvestment Banking · Menlo Park · 2025

   Say this

   7.5 degrees. The minute hand is exactly on the 3, but the hour hand has moved a quarter of the way from 3 to 4. Each hour is 30 degrees, so a quarter of that is 7.5.

   Then walk it

   1. The clock face is 360 degrees over 12 hours, so each hour mark is 30 degrees apart.
   2. At 3:15 the minute hand sits exactly at the 3, which is 90 degrees from twelve.
   3. The hour hand does not stay on the 3. In 15 minutes it travels a quarter of the way to the 4, which is a quarter of 30 degrees, so 7.5 degrees past the 3.
   4. The gap between them is therefore 7.5 degrees.
   5. The general formula worth having: the angle equals the absolute value of 30 times the hour minus 5.5 times the minutes. Here that is 90 minus 82.5, which is 7.5.

   Where candidates lose it

   Answering zero, because you assumed both hands are on the 3. The hour hand moves continuously, and that is the entire point of the question. Say the formula afterwards to show it was not luck.

   Expect next

   • When is the next time the hands overlap exactly?
   • How many times a day do the hands overlap?
   • How many 0s are in 1000 factorial?

   Reported by candidates at Centerview Partners (Investment Banking, Menlo Park, 2025). Source: Wall Street Oasis.

Firm tags come from public, anonymous candidate reports on Wall Street Oasis: strong signal, not sworn testimony. Firms are named as the places a question was reported, not as partners of Fin Maverick. Answers are written for this page to show how to think out loud; they are not scripts to recite.