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. 054Do a paper LBO. EBITDA of $100, bought at 10x, five times leverage, exit at 10x in five years, EBITDA grows to $150, all cash sweeps to debt.LBOHardsuperdayBain CapitalGeneralist · Boston · 2024WPWarburg PincusPrivate Equity · New York · 2014

   Say this

   Entry equity is $500. Exit enterprise value is $1,500 less remaining debt. If the business repays roughly $250 of the $500 of debt over five years, exit equity is about $1,250, so 2.5 times the money and roughly a 20 percent IRR.

   Then walk it

   1. Entry: $100 EBITDA at 10 times is $1,000 enterprise value. Debt at five times EBITDA is $500, so the sponsor puts in $500.
   2. Cash flow: EBITDA ramps from $100 to $150. Say average EBITDA over the period is $125. Interest on $500 at 8 percent is about $40. Take off CapEx of $25, working capital of $5, and tax on EBIT.
   3. That leaves roughly $50 a year of cash to sweep, so about $250 of debt repaid over five years. Ending debt is $250.
   4. Exit: $150 EBITDA at 10 times is $1,500 enterprise value, less $250 debt, equals $1,250 of equity.
   5. Return: $1,250 on $500 is 2.5 times. The rule of thumb is that 2.0 times over five years is about 15 percent and 2.5 times is about 20 percent, so call it 20 percent.
   6. Then attribute it: EBITDA grew 50 percent and debt halved. No multiple expansion needed, which is why this deal would clear an investment committee.

   Where candidates lose it

   Getting lost in precision. Round aggressively, announce every assumption, and keep the arithmetic in whole numbers you can do out loud. And know the IRR rule of thumb, because reaching for a calculator is the tell that you have never done one.

   Expect next

   • What if you exit at 8 times instead?
   • If I make 8 times my money in 6 years, what is my IRR?
   • Which would you rather have, 25 percent IRR over 5 years or 30 percent over 3?

   Reported by candidates at Bain Capital (Generalist, Boston, 2024); Warburg Pincus (Private Equity, New York, 2014). Source: Wall Street Oasis.

2. 055If I make 8 times my money in 6 years, what is my IRR?LBOIntermediatetechnicalWPWarburg PincusPrivate Equity · New York · 2012

   Say this

   About 41 percent. Eight times is two doublings and a bit: 2 times is 100 percent, 4 times is 300 percent, 8 times is 2 cubed, so the money doubles three times in six years, which is a doubling every two years. A doubling in two years is about 41 percent a year.

   Then walk it

   1. Reframe 8 times as 2 to the power of 3. Three doublings in six years means one doubling every two years.
   2. The rule of 72 in reverse: 72 divided by 2 years is 36, so roughly 36 percent. That gets you close, and the precise answer is 41 percent because the rule of 72 is an approximation.
   3. Exact check: 1.41 squared is 2, so a 41 percent annual return doubles money in two years, and three of those gives 8 times.
   4. Worth memorising the grid, because these come up constantly: 2 times in 5 years is 15 percent, 2.5 times in 5 years is 20 percent, 3 times in 5 years is 25 percent, 2 times in 3 years is 26 percent.
   5. Then say the practical caveat: IRR is time-weighted, so an early dividend recap flatters it. Money multiple and IRR can disagree, and sponsors quote whichever looks better.

   Where candidates lose it

   Trying to compute the sixth root arithmetically and stalling. Decompose the multiple into powers of two and use doublings. Interviewers are testing mental agility and whether you know the standard IRR grid cold.

   Expect next

   • Which is better, 25 percent IRR over 5 years or 30 percent over 3?
   • Why can IRR and money multiple disagree?
   • How does a dividend recap affect IRR?

   Reported by candidates at Warburg Pincus (Private Equity, New York, 2012). Source: Wall Street Oasis.

3. 057What makes a good LBO candidate?LBOCoretechnicalWPWarburg PincusPrivate Equity · San Francisco · 2014GSGuggenheim SecuritiesHealthcare · London · 2026

   Say this

   Predictable, recurring cash flow that can service debt, low capital intensity, a defensible market position, an identifiable operational improvement, and a credible exit. Cash flow stability matters more than growth.

   Then walk it

   1. Stable cash flow first, because the debt has to be serviced whatever happens. Contracted or subscription revenue, low cyclicality, sticky customers.
   2. Low CapEx, because every dollar into maintenance is a dollar not repaying debt.
   3. Strong market position and real barriers to entry, so margins survive the hold period without the company needing to outspend rivals.
   4. A visible value-creation lever: an underinvested sales function, a bloated cost base, a fragmented sector that supports a bolt-on strategy, or a non-core division to divest.
   5. And an exit that is not hypothetical. A deep strategic buyer list, or a peer set that trades publicly at a decent multiple. The best entry price in the world is worthless if nobody will buy it from you in five years.
   6. Conversely, the anti-candidate is a high-growth, cash-burning, cyclical business with heavy CapEx. It can be a great investment and a terrible LBO.

   Where candidates lose it

   Saying 'high growth' near the top of your list. Growth consumes cash and cash service is the constraint. Venture-style growth is the opposite of what an LBO needs, and saying so shows you understand why the structure exists.

   Expect next

   • Tell me about a company you like. Is it a good LBO candidate?
   • Why is high growth not necessarily good here?
   • What type of company is a good candidate for a dividend recap?

   Reported by candidates at Warburg Pincus (Private Equity, San Francisco, 2014); Guggenheim Securities (Healthcare, London, 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.