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
058What type of company is a good candidate for a dividend recapitalisation?Rothschild & 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
- 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.
- Cash flow has to be genuinely stable, because you are removing the cushion. Contracted revenue, low cyclicality, low CapEx.
- No competing call on capital. If the company needs to fund a plant or an acquisition, the cash should go there instead.
- 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.
- 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.