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. 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.

2. 060Describe the differences between private credit and bank syndicated debt.Leveraged financeHardtechnicalMizuhoInvestment Banking · New York · 2026MizuhoGeneralist · New York · 2026

   Say this

   A private credit loan is held by one or a handful of funds, negotiated bilaterally, priced higher but certain and fast. Syndicated debt is arranged by a bank and sold to many institutional investors, cheaper but subject to market conditions.

   Then walk it

   1. Execution certainty is the big one. A direct lender commits and holds. A bank underwrites and then has to syndicate, so the borrower carries flex risk if the market moves against them.
   2. Price: private credit typically costs 100 to 300 basis points more. You pay for speed, confidentiality and certainty.
   3. Documentation and relationship: a small lender group means you can renegotiate in a downturn with people you know. A broadly syndicated loan means hundreds of holders, some of them distressed funds who bought in at a discount and want a different outcome.
   4. Size and liquidity: the syndicated market handles the largest deals and trades in a secondary market, which matters for pricing transparency. Private credit paper is illiquid and marked by the manager.
   5. Structurally, private credit has taken a large share of mid-market and increasingly large-cap leveraged lending, which is why the market can now fund deals when the syndicated window is shut. The systemic question people are watching is whether valuations in an illiquid, manager-marked asset class are honest through a real default cycle.

   Where candidates lose it

   Describing only the price difference. The reason private credit won share is certainty of execution and flexibility of documentation, not price. If you can also name the concern about mark-to-model valuations, you sound like someone who reads the market.

   Expect next

   • Why has private credit taken share from the banks?
   • Which would you advise a sponsor to use?
   • Tell me about the two different types of loans in the broadly syndicated loan market.

   Reported by candidates at Mizuho (Investment Banking, New York, 2026); Mizuho (Generalist, New York, 2026). Source: Wall Street Oasis.

3. 061Does PIK financing increase or decrease enterprise value?Leveraged financeHardtechnicalMoelis & CompanyInvestment Banking · Los Angeles · 2026

   Say this

   Neither, directly. Enterprise value is set by operating cash flows, and how you finance the business does not change them. PIK changes the split between debt and equity, and it grows the debt claim over time because the interest accrues.

   Then walk it

   1. PIK means pay in kind: the interest is not paid in cash, it capitalises onto the principal. So the debt balance compounds upward.
   2. Enterprise value is unaffected in theory, because EBITDA and cash flow are unchanged. Financing does not create operating value.
   3. What changes is the bridge. Net debt grows every year as interest accrues, so at a constant enterprise value the equity value shrinks over time. The equity is being eaten from below.
   4. The genuine second-order effects: PIK preserves cash today, which can fund growth and therefore raise EBITDA, so it can indirectly support value. And PIK accretion may not be cash-tax deductible in the same way, which weakens the tax shield.
   5. The practical reason it exists: it lets a struggling or fast-growing borrower avoid a cash interest burden it cannot currently service. It buys time and it is expensive. If the business does not grow into it, the accreting balance is what wipes out the equity.

   Where candidates lose it

   Saying enterprise value falls because debt went up. Debt is not part of enterprise value; it is part of the bridge to equity. Confusing the two here is the exact error the question is designed to expose.

   Expect next

   • How much would you pay for 2x your money on a 12 percent PIK with no compounding?
   • So what happens to the equity value over the hold?
   • When would a lender insist on PIK?

   Reported by candidates at Moelis & Company (Investment Banking, Los Angeles, 2026). Source: Wall Street Oasis.

4. 068Tell me about the two different types of loans in the broadly syndicated loan market.Debt capital marketsHardtechnicalScotiabankDebt Capital Markets · New York · 2026

   Say this

   Pro rata and institutional. Pro rata is the revolver and the amortising term loan A, held mostly by banks. Institutional is the term loan B, bullet maturity, sold to CLOs and credit funds.

   Then walk it

   1. The pro rata tranche is the revolving credit facility plus term loan A. Banks take both together, because the revolver is a relationship product that generates ancillary business and is often undrawn.
   2. Term loan A amortises over five to seven years and prices tighter, because banks accept lower spread for the relationship.
   3. The institutional tranche is term loan B: minimal amortisation, usually one percent a year, bullet at maturity in seven years, floating rate over a benchmark like SOFR with a floor.
   4. Term loan B buyers are CLOs, loan mutual funds and credit funds. They want yield and duration, not relationship, so they price purely on credit and market conditions.
   5. The reason the split exists: the two buyer bases want completely different things. Banks want short duration and ancillary revenue; institutional investors want long floating-rate paper they can lever inside a CLO. Structuring a deal means giving each what it wants.

   Where candidates lose it

   Confusing term loan A and term loan B, or not knowing who buys each. The buyer base is the actual content of this question. If you can name CLOs as the dominant term loan B buyer, you sound like you work in the market.

   Expect next

   • Who buys term loan B, and why does that matter for pricing?
   • What is a CLO?
   • What are the different types of accounts in a CLO new issue settlement?

   Reported by candidates at Scotiabank (Debt Capital Markets, New York, 2026). Source: Wall Street Oasis.

5. 089Given a 20x P/E, 10x EV/EBITDA, $20 of interest at a 5 percent rate, $200 of market cap and $20 of depreciation, calculate the tax rate.Case and estimationHardsuperdayEvercoreMergers and Acquisitions · San Francisco · 2026

   Say this

   Work backwards from the multiples to build the income statement. Net income is $10, debt is $400, so enterprise value is $600 and EBITDA is $60. EBIT is $40, pre-tax income is $20, so tax is $10 on $20 — a 50 percent rate. That is above any statutory rate, so I would flag that the inputs are inconsistent rather than just hand you the number.

   Then walk it

   1. Net income: market cap $200 at a 20 times P/E means net income of $10.
   2. Debt: $20 of interest at a 5 percent rate implies $400 of debt.
   3. Enterprise value: $200 equity plus $400 debt is $600, assuming no cash. At 10 times EV/EBITDA, EBITDA is $60.
   4. Then EBIT is EBITDA less depreciation, so $60 less $20 is $40. Pre-tax income is EBIT less interest, so $40 less $20 is $20. Net income is $10, so tax is $10 on $20, which is a 50 percent rate.
   5. I would then flag it: 50 percent is above any statutory rate, which usually means the question contains rounded or inconsistent inputs, or there is a non-operating item I am not being told about.
   6. The way to handle this live is to lay out the chain clearly, state the answer the arithmetic gives, and then say what would make it plausible: cash on the balance sheet would lower enterprise value and therefore EBITDA, and minority interest or a one-off charge below the line would change the bridge.

   Where candidates lose it

   Either freezing on the arithmetic or reporting an absurd tax rate with a straight face. The test is whether you can chain multiples backwards into an income statement, and whether you have the judgement to flag an implausible output rather than just handing it over.

   Expect next

   • What if there were cash on the balance sheet?
   • Which assumption are you least comfortable with?
   • Redo it with $100 of cash.

   Reported by candidates at Evercore (Mergers and Acquisitions, 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.