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. 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.

2. 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.

3. 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.

4. 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.

5. 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.

6. 041Who is typically willing to pay more for an acquisition, a financial sponsor or a strategic buyer?M&AIntermediatetechnicalHoulihan LokeyMergers and Acquisitions · Los Angeles · 2026

   Say this

   A strategic, normally, because it can capture synergies and does not need a fixed return on equity. A sponsor is constrained by its return hurdle and the debt markets, so it is valuing standalone cash flows only.

   Then walk it

   1. The strategic gets cost synergies, revenue synergies and sometimes a strategic premium for defending a market position. All of that expands the price it can justify.
   2. It also has a lower cost of capital and no fund life, so it can accept a longer payback.
   3. The sponsor has to hit roughly a 20 to 25 percent IRR in five years with debt it can actually raise. That caps the entry multiple mechanically.
   4. Where sponsors win anyway: a platform sponsor with an existing portfolio company in the sector effectively has synergies too, through a bolt-on. In that case the gap closes or reverses.
   5. And in a cheap credit market with high multiples, sponsors have repeatedly outbid strategics, because the leverage available made the maths work. So the rule holds on average and breaks often.

   Where candidates lose it

   Stating the rule with no mechanism and no exception. The interviewer wants the return-hurdle constraint named explicitly, and the bolt-on case is the answer that shows you follow live deals.

   Expect next

   • When does the sponsor win?
   • What return does a sponsor actually need?
   • How does the credit market change your answer?

   Reported by candidates at Houlihan Lokey (Mergers and Acquisitions, Los Angeles, 2026). Source: Wall Street Oasis.

7. 042What is the difference between management rollover and management incentives?M&AHardtechnicalCitiMergers and Acquisitions · New York · 2026

   Say this

   Rollover is management reinvesting its existing equity into the new deal instead of cashing out. Incentives are new equity granted to management going forward, usually options or a management incentive plan that vests on performance.

   Then walk it

   1. Rollover is backward-looking value. Management already owns shares; instead of taking the cash, they roll some percentage into the new capital structure alongside the sponsor.
   2. It reduces the sponsor's cheque size, which is helpful, and it signals confidence, which buyers care about. It can also be tax-deferred, so management has a reason to want it.
   3. Incentives are forward-looking and dilutive to the sponsor. A typical management incentive plan is five to fifteen percent of equity, vesting on time and on a return hurdle.
   4. In a model they sit in different places. Rollover is a source of funds in the sources and uses table. The incentive pool is dilution to the sponsor's exit proceeds, so it reduces the sponsor's IRR, not the entry price.
   5. The reason both exist: rollover aligns management on the downside because their own money is at risk, and the incentive plan aligns them on the upside. A sponsor wants both.

   Where candidates lose it

   Conflating the two, or putting the incentive pool in sources and uses. Rollover funds the deal; incentives dilute the exit. Getting that placement right is what the question is actually testing.

   Expect next

   • How does the incentive pool affect the sponsor's IRR?
   • How much rollover would you expect management to do?
   • Where does rollover sit in the sources and uses?

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

8. 044If you were the buyer, what would you consider before doing this acquisition?M&AIntermediatetechnicalEvercoreInvestment Banking · Menlo Park · 2025

   Say this

   Four things in order: is the target worth what I am paying on a standalone basis, what synergies are genuinely achievable, can I fund it without breaking my own credit profile, and can I actually integrate it.

   Then walk it

   1. Standalone value first. Run the DCF and comps on the target alone, ignoring any synergy, so you know what you are paying for the business as it is.
   2. Then synergies, split into cost and revenue, with a probability attached. Cost synergies are largely deliverable; revenue synergies are usually aspirational and I would haircut them heavily.
   3. Then funding and credit. What does pro forma leverage look like, does it breach covenants, does it cost the acquirer its rating? A deal that triggers a downgrade can be value-destructive even if it is accretive.
   4. Then integration and diligence risk: customer concentration, key-person dependency, systems compatibility, culture, and anything in the quality-of-earnings work that suggests the EBITDA is not real.
   5. And the deal-breaker screen: antitrust, foreign investment review, and change-of-control clauses in the target's major contracts. Those are the things that kill deals after you have paid the fees.

   Where candidates lose it

   Producing an unstructured list of worries. Structure is the point. Standalone value, then synergies, then financing, then integration, then closing risk. Give the frame first, then populate it.

   Expect next

   • Which synergies would you actually put in the model?
   • How would you diligence the quality of earnings?
   • What would make you walk away?

   Reported by candidates at Evercore (Investment Banking, Menlo Park, 2025). Source: Wall Street Oasis.

9. 045Based on the financials in front of you, would you advise this company to sell or not?M&AHardsuperdayHWHarris WilliamsInvestment Banking · Richmond · 2024Lincoln InternationalMergers and Acquisitions · New York · 2025

   Say this

   I would answer the question directly with a recommendation, then defend it on three axes: where the business is in its own trajectory, where the market is in its cycle, and what the owner actually wants.

   Then walk it

   1. Sell into strength. If margins have just peaked, growth is decelerating, and the sector is trading at a cyclical high multiple, that is the moment. Buyers pay for the next three years, not the last three.
   2. Hold if there is a visible, fundable value-creation step the current owner can capture: a margin programme half done, a new facility about to come online, a contract about to be signed. Let the buyer pay for the result, not the plan.
   3. Then the owner's own position. A founder with all their net worth in one asset has a diversification reason to sell that has nothing to do with the multiple. A partial sale can solve that.
   4. Test the buyer universe before recommending a process. A thin buyer list means a weak auction and a weak price, whatever the financials say.
   5. Then commit. Something like: given decelerating growth, peak margins and a deep strategic buyer list, I would run a process now and target the strategics.

   Where candidates lose it

   Hedging. Middle-market bankers ask this to see whether you can make a recommendation on incomplete information. Saying 'it depends' and stopping is a fail. Pick a side, then name what would change your mind.

   Expect next

   • Who would be a dark horse buyer?
   • Build me the buyer universe.
   • What would change your recommendation?

   Reported by candidates at Harris Williams (Investment Banking, Richmond, 2024); Lincoln International (Mergers and Acquisitions, New York, 2025). Source: Wall Street Oasis.

10. 046Who would be a dark horse candidate to buy a pen manufacturer?M&AHardsuperdayHWHarris WilliamsMergers and Acquisitions · Richmond · 2025

    Say this

    I would look for buyers who want the capability rather than the product. An injection-moulding or precision-plastics group buying for the manufacturing asset, or a promotional-products and corporate-gifting business buying for the channel.

    Then walk it

    1. The obvious buyers are other stationery brands and their sponsors. Those are not dark horses, so I would name them and move past them.
    2. The manufacturing angle: a pen is a high-volume precision plastics and micro-assembly business. A contract manufacturer in medical devices or cosmetics packaging could want that capacity and tolerance capability.
    3. The channel angle: whoever owns the shelf. A promotional products distributor, or a corporate gifting platform, buys the brand as a hook for a much larger merchandising catalogue.
    4. The brand angle: luxury. If the target has any premium line, a luxury goods group could take the brand and abandon the volume business entirely. That is a different valuation basis, brand not EBITDA.
    5. And the adjacency angle: an office-products distributor integrating backwards, or an Asian manufacturer buying Western distribution and brand. Each of these values a different asset inside the same company, which is the whole point of building a buyer universe properly.

    Where candidates lose it

    Naming only competitors. The word 'dark horse' means they want to see whether you can decompose the company into its separate assets, manufacturing, brand, channel, and find who values each one most. Structure the answer by asset, not by company.

    Expect next

    • Which of those pays the most?
    • How would you approach them differently in a process?
    • How would you value it for a luxury buyer versus a manufacturer?

    Reported by candidates at Harris Williams (Mergers and Acquisitions, Richmond, 2025). 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.