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. 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.

2. 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.

3. 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.

4. 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.

5. 035How would you value a telco versus a software company?ValuationIntermediatetechnicalCSCredit SuisseInvestment Banking · Sydney · 2020

   Say this

   The telco is a capital-intensive, low-growth cash cow, so you value it on EV/EBITDA and EV/EBITDA less CapEx, and you care about the dividend. The software company is asset-light and growth-driven, so you value it on revenue multiples adjusted for growth and retention.

   Then walk it

   1. For the telco, EBITDA is large but so is CapEx on spectrum and network, so EV/EBITDA alone flatters it. EV/EBITDA less CapEx, or EV/EBIT, is the honest read.
   2. Telco value is also driven by regulation, spectrum holdings and subscriber metrics like ARPU and churn. A DCF works well because the cash flows are predictable.
   3. For the software company, current earnings are suppressed by growth spending, so EV/EBITDA is close to meaningless. EV/revenue against growth rate is the working metric.
   4. The quality tests for software are net revenue retention, gross margin and the rule of forty, growth plus margin. Those determine whether a revenue multiple is deserved.
   5. So both get a DCF, but the telco DCF is credible on near-term cash flows while the software DCF is almost entirely terminal value. That difference is the real answer: you trust the telco's forecast and you stress-test the software company's.

   Where candidates lose it

   Treating it as a list of two metric sets. The interviewer wants you to notice that the DCF is reliable for one and mostly assumption for the other. That structural insight is the answer.

   Expect next

   • What is the rule of forty?
   • What is the formula for net revenue retention, gross retention and churn?
   • Which would you rather own at today's multiples?

   Reported by candidates at Credit Suisse (Investment Banking, Sydney, 2020). Source: Wall Street Oasis.

6. 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.

7. 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.

8. 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.

9. 039Would an increase in price or an increase in volume be more preferable when you are trying to deliver synergies?M&AHardsuperdayLazardMergers and Acquisitions · New York · 2026

   Say this

   Price, almost always. A price increase drops straight to the bottom line with no incremental cost, while a volume increase carries variable cost, working capital and often capacity investment with it.

   Then walk it

   1. A dollar of price is a dollar of gross profit. A dollar of volume is a dollar times the gross margin, so at a 40 percent margin you need two and a half times the revenue to get the same profit.
   2. Volume also consumes cash. More units means more inventory and receivables, and eventually more capacity, so free cash flow lags the revenue.
   3. Price is also faster. You can reprice a portfolio in a quarter; winning share takes years.
   4. The counterargument, and I would raise it: price synergies are much harder to defend to regulators, because raising prices post-merger is precisely what antitrust authorities are watching for. Volume and cost synergies are safer ground in a filing.
   5. Price is also fragile. It invites competitive response and it can accelerate customer churn, so the durability is lower even though the immediate flow-through is better.

   Where candidates lose it

   Answering only with the margin arithmetic. The regulatory dimension is what makes this an M&A question rather than a maths question, and at a firm like Lazard that is the half they are listening for.

   Expect next

   • How would you defend price synergies to a regulator?
   • Which synergies do you actually put in the model?
   • Why do most deals miss their synergy targets?

   Reported by candidates at Lazard (Mergers and Acquisitions, New York, 2026). Source: Wall Street Oasis.

10. 040Would Blackstone or Nike pay more to acquire Adidas, and why?M&AHardsuperdayNomuraInvestment Banking · New York · 2026

    Say this

    Nike, on economics. A strategic buyer can pay for synergies a sponsor cannot: overlapping supply chain, shared distribution and marketing scale. Blackstone only has financial engineering and whatever operational improvement it can drive alone.

    Then walk it

    1. Nike's ceiling is intrinsic value plus synergies. Procurement, logistics, retail footprint and back office overlap are all real, so the synergy pool is large.
    2. Blackstone's ceiling is whatever price still clears its target return, typically a low-to-mid twenties IRR over five years. No synergies, so the value has to come from leverage, multiple expansion and operational improvement.
    3. So on paper the strategic wins, and that is the standard answer.
    4. But the deal would never happen for Nike. Combining the two largest athletic brands would be blocked on competition grounds in every major market. A buyer who cannot close cannot be the highest bidder in any real sense.
    5. So the honest answer is: Nike can pay more and will not be allowed to; Blackstone can actually transact. And a sponsor can sometimes win anyway on speed, certainty and no antitrust review, which is why sellers do not always take the highest nominal number.

    Where candidates lose it

    Giving the textbook 'strategics pay more' answer without noticing that this particular pairing is an antitrust impossibility. The firm names were chosen deliberately. Spotting that is the whole test.

    Expect next

    • Who typically pays more, a sponsor or a strategic?
    • Who would be a realistic buyer then?
    • When does a seller take the lower bid?

    Reported by candidates at Nomura (Investment Banking, New York, 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.