Investment Banking interview preparation
Every question below is either traced to a named firm from a public candidate report, or tagged at desk level when we could not trace it. Answers are written the way you would actually say them out loud — answer first, then the mechanism, then the limitation.
100 questions, mapped to the firms that asked them
- Questions
- 100
- Traced to a firm
- 100
- Firms
- 46
- Updated
- September 2026
036Walk me through a merger model.Morgan StanleyInvestment Banking · Hong Kong · 2025Morgan StanleyInvestment Banking · New York · 2026
Say this
Set the purchase price and the mix of cash, debt and stock. Combine the two income statements, layer in synergies and the financing effects, then compare the new pro forma EPS against what the acquirer would have earned alone.
Then walk it
- Start with the offer price per share and the premium to the unaffected price. That gives you total consideration and the funding need.
- Choose the funding mix. Cash costs you forgone interest, new debt costs interest, new stock costs share count. Each has a different EPS effect.
- Add the two income statements together, then adjust: add synergies, subtract new interest expense, subtract forgone interest on cash used, and add incremental D&A from any asset write-up.
- Tax the adjustments at the marginal rate, then divide by the new share count including shares issued to the target.
- Compare pro forma EPS to standalone EPS. Higher is accretive, lower is dilutive. Then find the breakeven, usually the maximum price or the minimum synergies that keep it neutral.
- The output the client actually wants is the accretion-dilution sensitivity grid across price and synergy assumptions, plus the credit impact on pro forma leverage.
Where candidates lose it
Forgetting the forgone interest on cash. Cash is not free: using it costs you the interest you were earning. Candidates also skip the incremental D&A from purchase accounting, which quietly makes a deal look better than it is.
Expect next
- Is this deal accretive or dilutive, and by how much?
- What is the rule of thumb for accretion using P/E?
- How does an asset sale differ from a stock sale here?
Reported by candidates at Morgan Stanley (Investment Banking, Hong Kong, 2025); Morgan Stanley (Investment Banking, New York, 2026). Source: Wall Street Oasis.
038What is the difference between an asset sale and a stock sale?Morgan StanleyInvestment Banking · Hong Kong · 2025
Say this
In an asset sale the buyer picks the assets and liabilities it wants and gets a stepped-up tax basis it can depreciate. In a stock sale the buyer takes the whole legal entity, warts and all, with the historical tax basis carried over.
Then walk it
- Buyers prefer asset sales. You leave behind unwanted liabilities, including litigation and environmental exposure, and you get to write up the assets and depreciate them, which is a real cash tax benefit.
- Sellers prefer stock sales. One level of tax at capital gains rates, a clean exit, and no lingering obligations. In an asset sale a corporate seller can be taxed twice, at the entity and again on distribution.
- Asset sales are administratively painful. Every contract, licence and employee has to be assigned or novated, and some consents cannot be obtained.
- So price usually bridges the gap. A buyer will pay more for an asset deal because the tax step-up is worth something, and that premium is negotiated.
- The middle ground is a 338(h)(10) election in the US, where a stock sale is treated as an asset sale for tax purposes. That gets the buyer the step-up without unwinding every contract.
Where candidates lose it
Getting the preference backwards, or not knowing why the buyer cares. The step-up in basis is the whole economic point. If you cannot explain that the write-up creates future depreciation and therefore a cash tax shield, you have only memorised labels.
Expect next
- How do you quantify the value of the step-up?
- What is a 338(h)(10) election?
- How does purchase accounting change your merger model?
Reported by candidates at Morgan Stanley (Investment Banking, Hong Kong, 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.