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. 028Which company would have a higher multiple, an asset-heavy company or an asset-light one?ValuationIntermediatetechnicalBarclaysInvestment Banking · London · 2026

   Say this

   Asset-light, normally, on EV/EBITDA. It converts more of its EBITDA into free cash flow because it does not have to spend heavily just to maintain the asset base, and it can grow without proportional capital.

   Then walk it

   1. Asset-light means low maintenance CapEx, so a higher share of EBITDA reaches free cash flow. Buyers pay for cash, not for EBITDA.
   2. It also means higher return on invested capital and the ability to scale without a matching balance sheet, which supports a growth premium.
   3. The mechanical wrinkle worth flagging: asset-heavy companies have large D&A, which inflates EBITDA relative to EBIT. So their EV/EBITDA looks artificially low while their EV/EBIT looks more normal.
   4. That is why comparing the two on EV/EBITDA alone is misleading, and why I would pull EV/EBIT or EBITDA less CapEx as well.
   5. The exception: an asset-heavy business with a genuinely protected asset, like a toll road or a regulated utility with a rate base, can command a high multiple precisely because the assets are the moat.

   Where candidates lose it

   Answering 'asset-light' with no mechanism. And missing the D&A point, which is the technically interesting half: part of the multiple gap is real economics and part is just an accounting artefact of EBITDA.

   Expect next

   • So how would you compare them fairly?
   • How would you value an airline that leases its fleet versus one that owns it?
   • Where does a toll road fit in your answer?

   Reported by candidates at Barclays (Investment Banking, London, 2026). Source: Wall Street Oasis.

2. 036Walk me through a merger model.M&AIntermediatetechnicalMSMorgan StanleyInvestment Banking · Hong Kong · 2025MSMorgan 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

   1. Start with the offer price per share and the premium to the unaffected price. That gives you total consideration and the funding need.
   2. Choose the funding mix. Cash costs you forgone interest, new debt costs interest, new stock costs share count. Each has a different EPS effect.
   3. 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.
   4. Tax the adjustments at the marginal rate, then divide by the new share count including shares issued to the target.
   5. 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.
   6. 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.

3. 037Is the deal accretive or dilutive to the acquirer's EPS, and by how much?M&AIntermediatetechnicalMizuhoInvestment Banking · San Francisco · 2026Bank of AmericaConsumer and Retail · London · 2026

   Say this

   The quick test is to compare the cost of the funding with the yield you are buying. If the target's earnings yield, the inverse of its P/E, exceeds the after-tax cost of the capital you use, the deal is accretive.

   Then walk it

   1. For an all-stock deal the rule is simple: if the acquirer's P/E is higher than the target's, it is accretive. You are issuing expensive paper to buy cheap earnings.
   2. For cash, compare the target's earnings yield to the after-tax interest forgone on the cash. Cash earning 3 percent pre-tax, so about 2.25 percent after tax, against a target at 20 times P/E which is a 5 percent yield, is accretive.
   3. For debt, compare the target's earnings yield to the after-tax cost of the new debt. Debt at 7 percent pre-tax is 5.25 percent after tax, so a 5 percent yield target would be slightly dilutive on that funding alone.
   4. To quantify it, build the pro forma: combined net income including synergies and financing costs, divided by the new share count, against standalone EPS.
   5. Then the point that matters: accretion is not the same as value creation. You can buy a low-multiple, declining business, show accretion, and destroy value. The real test is whether the price is below the intrinsic value plus achievable synergies.

   Where candidates lose it

   Treating accretion as proof the deal is good. It is an EPS arithmetic result, not a value judgement. Saying so unprompted is exactly what the Bank of America version of this question was reaching for.

   Expect next

   • What drives the result, and how would you assess whether the deal creates value?
   • So can an accretive deal destroy value?
   • Where would the breakeven price be?

   Reported by candidates at Mizuho (Investment Banking, San Francisco, 2026); Bank of America (Consumer and Retail, London, 2026). Source: Wall Street Oasis.

4. 038What is the difference between an asset sale and a stock sale?M&AIntermediatetechnicalMSMorgan 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

   1. 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.
   2. 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.
   3. Asset sales are administratively painful. Every contract, licence and employee has to be assigned or novated, and some consents cannot be obtained.
   4. 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.
   5. 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.

5. 041Who is typically willing to pay more for an acquisition, a financial sponsor or a strategic buyer?M&AIntermediatetechnicalHoulihan LokeyMergers and Acquisitions · Los Angeles · 2026

   Say this

   A strategic, normally, because it can capture synergies and does not need a fixed return on equity. A sponsor is constrained by its return hurdle and the debt markets, so it is valuing standalone cash flows only.

   Then walk it

   1. The strategic gets cost synergies, revenue synergies and sometimes a strategic premium for defending a market position. All of that expands the price it can justify.
   2. It also has a lower cost of capital and no fund life, so it can accept a longer payback.
   3. The sponsor has to hit roughly a 20 to 25 percent IRR in five years with debt it can actually raise. That caps the entry multiple mechanically.
   4. Where sponsors win anyway: a platform sponsor with an existing portfolio company in the sector effectively has synergies too, through a bolt-on. In that case the gap closes or reverses.
   5. And in a cheap credit market with high multiples, sponsors have repeatedly outbid strategics, because the leverage available made the maths work. So the rule holds on average and breaks often.

   Where candidates lose it

   Stating the rule with no mechanism and no exception. The interviewer wants the return-hurdle constraint named explicitly, and the bolt-on case is the answer that shows you follow live deals.

   Expect next

   • When does the sponsor win?
   • What return does a sponsor actually need?
   • How does the credit market change your answer?

   Reported by candidates at Houlihan Lokey (Mergers and Acquisitions, Los Angeles, 2026). Source: Wall Street Oasis.

6. 049What are the differences between listing in India and listing in the US?Capital marketsIntermediatetechnicalCSCredit SuisseInvestment Banking · Mumbai · 2021

   Say this

   Different regulators, different investor mix and different tolerance for loss-making growth. India is SEBI-governed with a large retail and domestic institutional bid; the US is SEC-governed with deeper institutional capital and more appetite for unprofitable scale stories.

   Then walk it

   1. Regulator and process: SEBI reviews the draft offer document and the timetable is fairly prescriptive, with mandated retail and anchor allocations. The US is a disclosure regime with SEC comment letters and far more flexibility on structure.
   2. Investor base: Indian books lean on domestic mutual funds, insurers and a genuine retail tranche. US books are dominated by large institutions, so fewer, bigger tickets and more reliance on the anchor process.
   3. Valuation of unprofitable companies: the US market has historically paid for growth without earnings more readily. India's market has become much more receptive to this than a decade ago, but the scrutiny of path-to-profitability is heavier.
   4. Compliance load: US listing brings Sarbanes-Oxley, quarterly reporting to SEC standards, class-action litigation risk and materially higher ongoing cost. India is cheaper to maintain.
   5. And structural points that decide real cases: index inclusion and the domestic flow that follows it, currency of proceeds, dual-class share structures which the US permits and India generally does not, and where your customers and comparables actually are.

   Where candidates lose it

   Reducing it to 'US gives higher valuations'. That was more true five years ago than now, and an interviewer in Mumbai will push back. Talk about investor base, share structure and compliance cost, which are the durable differences.

   Expect next

   • Where would you advise an Indian software company to list?
   • Why do some Indian companies choose to list overseas?
   • How does dual-class structure change your answer?

   Reported by candidates at Credit Suisse (Investment Banking, Mumbai, 2021). Source: Wall Street Oasis.

7. 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.

8. 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.

9. 053A PE firm bought a company for $1,000 and sold it for $1,000. How did they make money?LBOIntermediatetechnicalTD SecuritiesInvestment Banking · Toronto · 2026

   Say this

   Debt paydown. Enterprise value did not move, but the debt inside it shrank, so the equity slice grew. Buy at $1,000 with $700 of debt and $300 of equity; if cash flow repays $300 of debt, you sell at $1,000 and the equity is now $600.

   Then walk it

   1. Entry: $1,000 enterprise value, $700 debt, $300 sponsor equity.
   2. Over the hold, the company's free cash flow after interest pays down $300 of debt. Nothing else changes.
   3. Exit: $1,000 enterprise value less $400 remaining debt equals $600 of equity.
   4. That is 2.0 times the money. Over five years it is roughly a 15 percent IRR.
   5. Other routes to the same outcome: a dividend recap that returned cash mid-hold, or selling a division and returning proceeds while the remaining business held its value. Both put money in the sponsor's pocket without any change in headline enterprise value.

   Where candidates lose it

   Freezing because the entry and exit prices match. The question is testing whether you understand that the sponsor owns the equity, not the enterprise. Use round numbers immediately and show the two balance sheets.

   Expect next

   • What IRR is that over five years?
   • What if they had used no debt at all?
   • How else could they have made money at a flat exit?

   Reported by candidates at TD Securities (Investment Banking, Toronto, 2026). Source: Wall Street Oasis.

10. 062What makes a company distressed, and why restructuring?RestructuringIntermediatetechnicalEvercoreRestructuring · New York · 2025Rothschild & CoRestructuring · London · 2025

    Say this

    Distress is when a company cannot service its obligations from its cash flow, or cannot refinance a maturity. Distinguish operational distress, where the business is broken, from financial distress, where a good business carries the wrong capital structure.

    Then walk it

    1. The observable triggers: interest coverage falling toward one, a covenant breach, a maturity wall it cannot refinance, bonds trading at a deep discount to par, and a credit downgrade.
    2. Financial distress means the operations work but the balance sheet does not. The fix is a balance sheet fix: amend and extend, a debt-for-equity swap, a rights issue, a liability management exercise.
    3. Operational distress means the business itself is impaired, by a lost contract, structural decline or a broken cost base. No amount of refinancing solves that; you need an operational turnaround or a sale.
    4. The distinction drives everything about the advice, so I would establish it first in any situation.
    5. On why restructuring specifically: the work is analytically harder than M&A because you are valuing the enterprise and then allocating it across a capital structure, and the negotiation is multi-party and adversarial. It is also counter-cyclical, which is a genuine reason to want to be in it.

    Where candidates lose it

    Not separating operational from financial distress. That single distinction is the core intellectual content of restructuring, and a restructuring interviewer will hear immediately whether you have it. Also, do not answer 'why restructuring' with 'because it is counter-cyclical' alone; that reads as cynical.

    Expect next

    • What is the recovery on each claim?
    • Do you understand what we actually do here?
    • What were the recent developments in the debt space?

    Reported by candidates at Evercore (Restructuring, New York, 2025); Rothschild & Co (Restructuring, London, 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.