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. 007What are some non-cash items you would find on the cash flow statement?AccountingCoretechnicalMoody'sProject Finance · New York · 2018LazardInvestment Banking · New York · 2026

   Say this

   Depreciation and amortisation, stock-based compensation, deferred taxes, impairments and write-downs, unrealised gains or losses on investments, and equity income from unconsolidated affiliates.

   Then walk it

   1. D&A is the big one and the one everyone names.
   2. Stock-based compensation is the one that matters most in practice, especially in tech, because it is a real cost to shareholders that never touches cash.
   3. Deferred tax movements, impairments and goodwill write-downs are all added back.
   4. Equity method income gets reversed out and replaced with the actual dividend received, because you only book cash you were paid.
   5. The judgement call is SBC. Adding it back and calling the result free cash flow overstates what shareholders actually keep, because the dilution is real.

   Where candidates lose it

   Listing D&A and stopping. Naming stock-based compensation, and then saying why treating it as a pure add-back is dishonest, is what separates a memoriser from someone who has actually thought about earnings quality.

   Expect next

   • Should stock-based compensation be added back in a DCF?
   • How do you handle it when you are comparing a tech company to an industrial?
   • What is the difference between deferred tax assets and liabilities?

   Reported by candidates at Moody's (Project Finance, New York, 2018); Lazard (Investment Banking, New York, 2026). Source: Wall Street Oasis.

2. 014Walk me through what OpenAI's income statement probably looks like.AccountingHardsuperdayLazardInvestment Banking · San Francisco · 2026

   Say this

   Large and fast-growing revenue from subscriptions and API usage, a gross margin far below normal software because inference costs real compute, then enormous R&D and compute spend that puts operating income deeply negative.

   Then walk it

   1. Revenue splits into consumer subscriptions, enterprise seats, and API consumption. The API line is usage-based, so it behaves more like a utility than like seat-based SaaS.
   2. Cost of revenue is the interesting part: every query costs GPU time. That is why gross margin sits well below the 75 to 85 percent you would expect from software.
   3. Below that, R&D dominates, and most of it is training compute plus a small number of very expensive people.
   4. Sales and marketing is unusually light for the growth rate, because distribution has been largely organic.
   5. So the shape is high growth, compressed gross margin, and a big operating loss funded by capital rather than cash flow. If I were valuing it I would care most about whether inference cost per query is falling faster than usage is rising.

   Where candidates lose it

   Treating it as generic SaaS with 80% gross margins. The entire point of the question is whether you understand that inference is a variable cost of goods sold. Name that and you have answered it, even if every number you guess is wrong.

   Expect next

   • How would you value it then?
   • What would you need to believe for this to be worth its last round?
   • Compare the business model to Microsoft's.

   Reported by candidates at Lazard (Investment Banking, San Francisco, 2026). Source: Wall Street Oasis.

3. 039Would an increase in price or an increase in volume be more preferable when you are trying to deliver synergies?M&AHardsuperdayLazardMergers and Acquisitions · New York · 2026

   Say this

   Price, almost always. A price increase drops straight to the bottom line with no incremental cost, while a volume increase carries variable cost, working capital and often capacity investment with it.

   Then walk it

   1. A dollar of price is a dollar of gross profit. A dollar of volume is a dollar times the gross margin, so at a 40 percent margin you need two and a half times the revenue to get the same profit.
   2. Volume also consumes cash. More units means more inventory and receivables, and eventually more capacity, so free cash flow lags the revenue.
   3. Price is also faster. You can reprice a portfolio in a quarter; winning share takes years.
   4. The counterargument, and I would raise it: price synergies are much harder to defend to regulators, because raising prices post-merger is precisely what antitrust authorities are watching for. Volume and cost synergies are safer ground in a filing.
   5. Price is also fragile. It invites competitive response and it can accelerate customer churn, so the durability is lower even though the immediate flow-through is better.

   Where candidates lose it

   Answering only with the margin arithmetic. The regulatory dimension is what makes this an M&A question rather than a maths question, and at a firm like Lazard that is the half they are listening for.

   Expect next

   • How would you defend price synergies to a regulator?
   • Which synergies do you actually put in the model?
   • Why do most deals miss their synergy targets?

   Reported by candidates at Lazard (Mergers and Acquisitions, New York, 2026). Source: Wall Street Oasis.

4. 051Walk me through an LBO.LBOIntermediatetechnicalTSTruist SecuritiesGeneralist · Charlotte · 2024TPTPGInvestment Banking · New York · 2024Advent InternationalTechnology, Media and Telecom · Palo Alto · 2020LazardInvestment Banking · New York · 2026

   Say this

   Buy a company using mostly debt, use its own cash flow to pay that debt down over five years, then sell it. The equity return comes from deleveraging, from growing EBITDA, and from any multiple expansion.

   Then walk it

   1. Set the entry: purchase price as a multiple of EBITDA, then a sources and uses table. Debt takes you as far as the credit market allows, say five times EBITDA, and the sponsor writes a cheque for the rest plus fees.
   2. Project the operating model for five years, then build the debt schedule: interest, mandatory amortisation, and a cash sweep that applies surplus cash to the debt.
   3. Free cash flow after interest pays down debt each year, so the equity slice grows even if enterprise value does not move at all. That is deleveraging.
   4. Exit at an assumed multiple on final-year EBITDA, subtract the remaining debt, and you have exit equity value.
   5. Compute IRR and money multiple against the initial cheque. Then attribute the return across the three drivers: debt paydown, EBITDA growth and multiple change. A sponsor will always ask which one is carrying the deal.
   6. The sanity test: if the whole return depends on exiting at a higher multiple than you paid, it is not an investment thesis, it is a bet on the market.

   Where candidates lose it

   Describing the mechanics with no attribution of returns. Every good LBO answer ends with which of the three drivers produces the IRR, and an acknowledgement that multiple expansion is the one you cannot control.

   Expect next

   • How do you drive returns in an LBO?
   • What makes a good LBO candidate?
   • Do a paper LBO for me.

   Reported by candidates at Truist Securities (Generalist, Charlotte, 2024); TPG (Investment Banking, New York, 2024); Advent International (Technology, Media and Telecom, Palo Alto, 2020); Lazard (Investment Banking, New York, 2026). Source: Wall Street Oasis.

5. 059Why would a sponsor prefer to take on high yield debt to finance an LBO rather than bank debt?Leveraged financeHardtechnicalLazardGeneralist · Amsterdam · 2025

   Say this

   Flexibility. High yield bonds are typically fixed rate, bullet maturity, with no maintenance covenants and no mandatory amortisation. You pay more in coupon to buy freedom and certainty of cash flow.

   Then walk it

   1. No amortisation. Bank term loans grind down cash with mandatory repayments and a cash sweep; bonds are bullet, so all the cash stays in the business for growth or bolt-ons.
   2. Covenant-light. Bonds carry incurrence covenants that only bite when you do something, rather than maintenance covenants tested every quarter. A sponsor running a turnaround does not want a quarterly leverage test.
   3. Fixed rate. Bonds lock the coupon, so a rising rate environment does not eat the equity. Floating-rate term loans expose the deal to rate risk unless hedged.
   4. Longer tenor, usually seven to ten years against five to seven for a term loan, so no refinancing wall mid-hold.
   5. The costs, which you should name: a higher coupon, call protection that makes early repayment expensive, and a public disclosure burden. So the real answer is that sponsors use both, bank debt for the cheap senior layer and bonds for the flexible layer, and the mix depends on whether the thesis needs cash flexibility or the lowest possible cost.

   Where candidates lose it

   Answering 'because banks will not lend that much'. Sometimes true, but it misses the point. The trade is cost against flexibility, and naming covenant structure and bullet maturity is what shows leveraged finance literacy.

   Expect next

   • What is the difference between incurrence and maintenance covenants?
   • Describe the differences between private credit and bank syndicated debt.
   • What is call protection?

   Reported by candidates at Lazard (Generalist, Amsterdam, 2025). Source: Wall Street Oasis.

6. 075What are you seeing in your coverage sector right now, and where is the opportunity over the next 12 to 24 months?Markets and dealsHardsuperdayLazardMergers and Acquisitions · New York · 2026NomuraGeneralist · San Francisco · 2026

   Say this

   Answer like a banker pitching, not a student summarising. Name the structural change in the sector, then the deal type it generates, then the specific companies you would call.

   Then walk it

   1. Open with the structural driver. Something like: the sector has too many subscale players and a cost base that only works above a certain revenue level, so consolidation is inevitable.
   2. Then name the deal type that follows. Structural overcapacity means mergers of equals and take-privates. A regulatory change means carve-outs. A technology shift means acquisitions of capability.
   3. Then be specific about targets and buyers. Two or three names with a reason each. This is the part almost nobody does, and it is the part that gets you the offer.
   4. Then the constraint. What is stopping these deals from happening today, financing cost, a valuation gap, antitrust, a founder who will not sell? Naming the blocker shows you are thinking commercially.
   5. Close with the actual pitch: 'so over the next year I would expect the mid-cap names to be taken out, and the call I would make is to X.'

   Where candidates lose it

   Giving a sector summary with no deal thesis. Coverage bankers get paid to originate. If your answer does not end with a transaction and a name, you have answered a different question.

   Expect next

   • Who would buy them?
   • What is stopping that deal today?
   • Pitch me a company.

   Reported by candidates at Lazard (Mergers and Acquisitions, New York, 2026); Nomura (Generalist, San Francisco, 2026). 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.