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. 025What is EV/EBITDA and when would you use it?ValuationCorephone / HireVueWBWilliam BlairInvestment Banking · Chicago · 2026

   Say this

   It values the whole enterprise against operating cash earnings before capital structure and accounting choices. You use it when you want to compare companies with different leverage, different tax positions or different depreciation policies.

   Then walk it

   1. Enterprise value is capital-structure neutral, and EBITDA is pre-interest, so numerator and denominator match. Both belong to all capital providers.
   2. It strips out D&A, so it lets you compare an asset-heavy company with an asset-light one on operating performance.
   3. It is the default in M&A and leveraged finance, because a buyer is buying the enterprise and will put its own capital structure on it.
   4. Where it fails: it ignores capital intensity entirely. Two companies with the same EBITDA but very different CapEx are not worth the same, and EV/EBITDA cannot see that.
   5. So for capital-heavy businesses I would look at EV/EBIT or EV/EBITDA less CapEx alongside it. And for banks it is meaningless, because interest is revenue.

   Where candidates lose it

   Not being able to say when it breaks. Everyone knows the formula. The candidate who volunteers 'it is blind to CapEx, so I would pair it with EV/EBIT for a capital-intensive business' has answered the real question.

   Expect next

   • What happens to EV/EBITDA when EBITDA increases?
   • How does EV/EBITDA vary across industries?
   • Why would you never use it for a bank?

   Reported by candidates at William Blair (Investment Banking, Chicago, 2026). Source: Wall Street Oasis.

2. 026What happens to the EV/EBITDA multiple when EBITDA increases?ValuationIntermediatetechnicalJefferiesInvestment Banking · New York · 2025

   Say this

   Mechanically the multiple falls, because the denominator grew and enterprise value is fixed at a point in time. But that is only true for an instant, because in a real market EV would move too.

   Then walk it

   1. Holding EV constant, a bigger denominator means a smaller multiple. That is just arithmetic.
   2. In reality, if EBITDA rises because the business genuinely improved, the market re-rates the equity and EV rises, often more than proportionally if growth expectations improve.
   3. So the multiple could stay flat or even expand, depending on why EBITDA moved.
   4. If EBITDA rose for a low-quality reason, say a one-off gain or an accounting change, EV should not move and the multiple genuinely compresses.
   5. The useful framing: the multiple is an output, not an input. Ask what caused the EBITDA change and the answer follows.

   Where candidates lose it

   Giving only the mechanical answer and looking pleased. The interviewer is waiting to see whether you notice that EV is not actually constant. Give both layers, and the 'why did EBITDA move' framing.

   Expect next

   • So is the multiple an input or an output?
   • What if EBITDA rose because of a one-time gain?
   • How would you adjust EBITDA for quality?

   Reported by candidates at Jefferies (Investment Banking, New York, 2025). Source: Wall Street Oasis.

3. 027How does EV/EBITDA vary across industries, and where is it larger or smaller?ValuationIntermediatetechnicalTSTruist SecuritiesInvestment Banking · New York · 2026

   Say this

   High multiples go to businesses with durable growth, high returns on capital and low reinvestment needs, so software and branded consumer sit at the top. Low multiples go to cyclical, capital-hungry, low-growth businesses like steel, airlines and utilities.

   Then walk it

   1. Software trades high because incremental revenue costs almost nothing to serve, revenue is recurring, and CapEx is minimal. Twenty times and above is normal.
   2. Branded consumer and medical devices sit in the mid to high teens on pricing power and stable demand.
   3. Industrials and distribution sit around eight to twelve, reflecting moderate growth and real capital needs.
   4. Cyclicals and capital-intensive businesses sit low, often four to seven, because earnings are volatile and most of the EBITDA gets reinvested just to stand still.
   5. The unifying logic is that EV/EBITDA is a shorthand for growth, risk and reinvestment. High multiple means the market expects EBITDA to grow and to convert into cash. Steel fails both tests.

   Where candidates lose it

   Reciting sector multiples as trivia without the underlying driver. If you cannot explain why software earns twenty times and steel earns five, you have memorised a table. The answer is cash conversion and growth durability.

   Expect next

   • Which company would have a higher multiple, asset-heavy or asset-light?
   • What is an appropriate multiple for software?
   • A company in your sector trades at half the peer multiple. Why?

   Reported by candidates at Truist Securities (Investment Banking, New York, 2026). Source: Wall Street Oasis.

4. 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.

5. 029Can you think of an asset or company where you would not calculate a terminal value and would just forecast cash flows for a set number of years and stop?ValuationHardtechnicalBPBNP ParibasInvestment Banking · New York · 2026

   Say this

   Anything with a contractually finite life. A mine with defined reserves, a pharmaceutical asset with a patent cliff, a toll road or power plant on a concession that reverts to the state, or a single-property real estate asset you will sell.

   Then walk it

   1. A mine or oilfield has a reserve life. When the resource is gone the cash flows are gone, so a perpetuity would be fiction. You forecast to depletion and add any salvage or remediation cost.
   2. A patented drug loses most of its economics at expiry when generics enter. You forecast through the cliff and apply a steep decline, not a growing perpetuity.
   3. Concession assets like toll roads, airports and power purchase agreements have a contractual end date and often hand the asset back for nothing.
   4. Project finance generally works this way, which is why the metric is often an equity IRR over the concession rather than a perpetuity value.
   5. The test I would apply: is there a contract or a physical limit that ends the cash flows? If yes, no terminal value. Gordon growth assumes the business outlives you, and these do not.

   Where candidates lose it

   Not having a single concrete example ready. This question is easy if you can name a mine or a patent cliff, and impossible if you only know the Gordon growth formula. Have two examples ready and state the test.

   Expect next

   • How would you handle the patent cliff specifically?
   • What about remediation costs at the end of a mine's life?
   • How does this change the discount rate you use?

   Reported by candidates at BNP Paribas (Investment Banking, New York, 2026). Source: Wall Street Oasis.

6. 030Walk me through what happens to WACC when leverage rises, and tell me whether shareholder value actually changed.ValuationHardsuperdayCenterview PartnersInvestment Banking · New York · 2026

   Say this

   WACC falls at first, because you are swapping expensive equity for cheaper tax-deductible debt, then rises again as distress risk takes over. So there is a U shape. Whether shareholder value changed depends on whether the tax shield outweighs the distress cost.

   Then walk it

   1. Early leverage lowers WACC because debt is cheaper than equity and interest is deductible. The tax shield is a genuine transfer of value from the government to the capital providers.
   2. But as leverage rises, equity gets riskier, so cost of equity climbs. Lenders also reprice, so cost of debt climbs. Eventually both swamp the tax benefit and WACC turns back up.
   3. In a world with no taxes and no bankruptcy costs, Modigliani-Miller says the value of the firm is unchanged and you have only reshuffled claims. That is the reference case.
   4. In the real world the tax shield adds value and financial distress subtracts it, so there is an optimum somewhere in the middle. That is the whole theory of capital structure.
   5. So the honest answer to the second half is: shareholder value changed, but not because WACC fell. It changed because of the tax shield net of distress and agency costs. Falling WACC is a symptom, not the cause.

   Where candidates lose it

   Saying 'WACC falls so value goes up, therefore infinite leverage is optimal'. The interviewer asked the second half specifically to catch that. You must separate the mechanical WACC effect from the economic source of value.

   Expect next

   • So what is the optimal capital structure?
   • Can debt ever be more expensive than equity?
   • Why does Modigliani-Miller not hold in practice?

   Reported by candidates at Centerview Partners (Investment Banking, New York, 2026). Source: Wall Street Oasis.

7. 031Can debt ever be more expensive than equity, and in what scenario?ValuationHardtechnicalTD SecuritiesCapital Markets · New York · 2025

   Say this

   Yes. In deep distress, debt yields can exceed any plausible cost of equity, because the debt is effectively pricing bankruptcy risk while the equity is a cheap out-of-the-money option on recovery.

   Then walk it

   1. The usual ordering holds because debt is senior and its interest is deductible. But it is a tendency, not a law.
   2. In distress, existing bonds can trade at yields of 20 or 30 percent. New rescue financing can price higher still, sometimes with PIK toggles and warrants on top.
   3. Meanwhile the equity has almost no value left, so the required return the market demands on the residual stub can look modest in absolute dollars. Option-like equity behaves strangely.
   4. The tax shield also disappears when there is no taxable income to shield. A company with large losses gets no benefit from deductibility, so the after-tax cost of debt equals the pre-tax cost.
   5. Rescue and mezzanine financing is the clean real-world example. Sponsors regularly choose to issue equity rather than take a 15 percent PIK instrument, precisely because the debt is dearer.

   Where candidates lose it

   Answering flatly 'no, debt is always cheaper because it is senior and tax-deductible'. That is the textbook line and the question is designed to test whether you can break it. Name distress and the loss of the tax shield.

   Expect next

   • What happens to the tax shield if the company has no taxable income?
   • Why would a sponsor prefer high yield over bank debt in an LBO?
   • How would you price rescue financing?

   Reported by candidates at TD Securities (Capital Markets, New York, 2025). Source: Wall Street Oasis.

8. 032How do you get from enterprise value to equity value without using an equation?ValuationCoretechnicalPIMCOFinancial Institutions Group · New York · 2023TSTruist SecuritiesCorporate Banking · Atlanta · 2025WBWilliam BlairMergers and Acquisitions · London · 2026

   Say this

   Enterprise value is the price of the operating business itself. To get to what shareholders own, you pay off everyone with a prior claim, then add back anything the business owns that is not part of operations.

   Then walk it

   1. Start with the value of the operating business, which is what enterprise value measures.
   2. Settle the lenders first, because they stand ahead of shareholders. Subtract debt.
   3. Add back cash, because cash is not part of the operating business and a buyer effectively gets it for free.
   4. Subtract the other prior claims: preferred stock, minority interest in consolidated subsidiaries, and funded pension shortfalls, since a buyer inherits those obligations.
   5. Add non-operating assets like stakes in unconsolidated affiliates or surplus real estate, because the operating cash flow never captured them.
   6. What is left is what the equity is worth. Divide by diluted shares and you have value per share.

   Where candidates lose it

   Reciting 'EV minus net debt' when the interviewer explicitly asked for no equation. They want the story of who gets paid in what order. Talk in terms of claims and seniority, not symbols.

   Expect next

   • How do you treat underfunded pensions in that bridge?
   • What is the equity ticker and how do you calculate it?
   • Why do you add back cash?

   Reported by candidates at PIMCO (Financial Institutions Group, New York, 2023); Truist Securities (Corporate Banking, Atlanta, 2025); William Blair (Mergers and Acquisitions, London, 2026). Source: Wall Street Oasis.

9. 033How do you treat underfunded pensions in the bridge from enterprise value to equity value?ValuationHardsuperdayBarclaysInvestment Banking · London · 2025

   Say this

   Treat the net deficit as a debt-like item and subtract it in the bridge, but on an after-tax basis, because the contributions that eventually close the gap are usually tax-deductible.

   Then walk it

   1. The deficit is the projected benefit obligation less the fair value of plan assets. That shortfall is a real claim on the business that sits ahead of shareholders.
   2. So subtract it from enterprise value alongside debt. A buyer inheriting the plan inherits the obligation to fund it.
   3. Tax-effect it. If future contributions are deductible, the economic cost is the deficit times one minus the tax rate, not the gross number.
   4. Do not also leave pension service cost inside EBITDA and then subtract the deficit, or you have charged for it twice. Pick a lane and be consistent across every company in the comp set.
   5. The reason this matters in practice: for old industrials the deficit can be a meaningful fraction of market capitalisation, and it moves with discount rates. A falling rate environment inflates the obligation and can quietly destroy equity value.

   Where candidates lose it

   Ignoring it entirely, or subtracting it gross with no tax adjustment. Also double-counting by leaving service cost in EBITDA. Consistency across the comp set is the part that separates a real answer from a memorised one.

   Expect next

   • What if the plan is overfunded?
   • How does a change in discount rates affect the obligation?
   • Which sectors does this matter most in?

   Reported by candidates at Barclays (Investment Banking, London, 2025). Source: Wall Street Oasis.

10. 034How would you value a pre-revenue healthcare company?ValuationHardsuperdayPiper SandlerInvestment Banking · New York · 2026Moelis & CompanyMergers and Acquisitions · Los Angeles · 2022

    Say this

    A risk-adjusted DCF built asset by asset. For each drug candidate, forecast peak sales after launch, discount back, then multiply by the cumulative probability of clinical and regulatory success for that phase.

    Then walk it

    1. Value each pipeline asset separately. A Phase III candidate and a preclinical one are completely different risks and cannot share a discount rate.
    2. For each asset: estimate the addressable patient population, penetration, price and duration of therapy to build peak sales, then shape the ramp and the patent cliff.
    3. Apply probability of technical and regulatory success. Industry benchmarks run roughly 60 to 70 percent from Phase III, around 30 percent from Phase II, and low single digits from preclinical.
    4. Discount at a high rate, often 10 to 15 percent, and net off the cash burn until launch. Then sum the assets and add the cash on the balance sheet.
    5. Cross-check against what the market pays. EV per pipeline asset by phase, precedent biotech M&A, and the last private round. And say plainly that the answer is a wide range, because a single readout can move it by a factor of three.

    Where candidates lose it

    Reaching for revenue multiples when there is no revenue, or building one DCF for the whole company. The technique is per-asset and probability-weighted. If you cannot name roughly what a Phase II success rate looks like, you have not prepared the sector.

    Expect next

    • What probability would you use for a Phase II asset?
    • How do you handle the patent cliff?
    • What would you cross-check this against?

    Reported by candidates at Piper Sandler (Investment Banking, New York, 2026); Moelis & Company (Mergers and Acquisitions, Los Angeles, 2022). 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.