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. 058What type of company is a good candidate for a dividend recapitalisation?LBOHardtechnicalRothschild & CoInvestment Banking · London · 2026

   Say this

   One that has already deleveraged meaningfully, has very stable cash flow, and has no near-term need for its balance sheet. Typically a sponsor-owned asset two or three years into the hold where the exit has been delayed.

   Then walk it

   1. The mechanical precondition is headroom. The company must have paid down enough debt that re-levering back to its original multiple is still something the credit market will fund.
   2. Cash flow has to be genuinely stable, because you are removing the cushion. Contracted revenue, low cyclicality, low CapEx.
   3. No competing call on capital. If the company needs to fund a plant or an acquisition, the cash should go there instead.
   4. The motivation is almost always sponsor-side: fund life is advancing, the exit window is shut, and the sponsor wants to de-risk and crystallise part of the return. It resets the IRR clock because cash returned early is heavily weighted.
   5. And the honest downside: nothing about the operating business improved. Leverage went back up, the equity cushion is thinner, and if the cycle turns the company is more fragile. Lenders price that, and the covenant package usually tightens.

   Where candidates lose it

   Describing the mechanics but not the motive. This question is really asking whether you understand sponsor incentives and fund life. And you should name the downside, because a banker who pitches a recap without acknowledging the fragility is not credible.

   Expect next

   • How does it affect the sponsor's IRR?
   • Why would lenders agree to it?
   • What happens if the cycle turns afterwards?

   Reported by candidates at Rothschild & Co (Investment Banking, 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.