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. 015Walk me through a DCF.ValuationCoretechnicalGoldman SachsInvestment Banking · New York · 2026Deutsche BankInvestment Banking · Honolulu · 2025BarclaysInvestment Banking · New York · 2025TSTruist SecuritiesCorporate Banking · Atlanta · 2025Houlihan LokeyDebt Capital Markets · Los Angeles · 2025CSCredit SuisseInvestment Banking · São Paulo · 2021

   Say this

   Project unlevered free cash flow for five to ten years, discount it at WACC, add a terminal value for everything beyond the forecast, sum to enterprise value, then bridge to equity value and divide by diluted shares.

   Then walk it

   1. Build unlevered free cash flow: EBIT, taxed, plus D&A, less CapEx, less the change in working capital.
   2. Discount at WACC, because unlevered cash flow belongs to both debt and equity holders. Use mid-year convention if cash arrives through the year.
   3. Terminal value two ways: Gordon growth on the final year cash flow, or an exit multiple on terminal EBITDA. I would run both and check they agree.
   4. Sum the discounted cash flows and the discounted terminal value to get enterprise value.
   5. Bridge down: less net debt, less preferred, less minority interest, plus non-operating assets, to get equity value. Divide by diluted shares for value per share.
   6. Then say the honest part: terminal value is usually 60 to 80 percent of the total, so the answer is mostly a function of the growth rate and discount rate, and I would sensitise both.

   Where candidates lose it

   Delivering it as a memorised list with no acknowledgement that terminal value dominates. Every candidate can recite the steps. The one who volunteers that most of the value sits in an assumption, and offers to sensitise it, sounds like someone who has actually built one.

   Expect next

   • What are the main drivers or sensitivities in your DCF?
   • What discount rate would you use and why?
   • When is a DCF the wrong tool?

   Reported by candidates at Goldman Sachs (Investment Banking, New York, 2026); Deutsche Bank (Investment Banking, Honolulu, 2025); Barclays (Investment Banking, New York, 2025); Truist Securities (Corporate Banking, Atlanta, 2025); Houlihan Lokey (Debt Capital Markets, Los Angeles, 2025); Credit Suisse (Investment Banking, São Paulo, 2021). Source: Wall Street Oasis.

2. 016What are the main drivers or sensitivities in a DCF?ValuationIntermediatetechnicalTD SecuritiesInvestment Banking · New York · 2026Moelis & CompanyInvestment Banking · New York · 2026

   Say this

   The discount rate and the terminal value assumption, by a wide margin. After those, the revenue growth and margin path in the forecast years, then CapEx and working capital intensity.

   Then walk it

   1. WACC dominates because it compounds. A 100 basis point move in WACC can swing value 15 to 20 percent for a long-duration business.
   2. Terminal value is the other big one, since it is usually 60 to 80 percent of enterprise value. A 50 basis point change in perpetuity growth moves the answer materially.
   3. Inside the forecast, margin matters more than revenue for most mature businesses, because a margin point drops straight to cash.
   4. CapEx and working capital intensity matter most for capital-hungry or fast-growing companies, where growth consumes cash.
   5. The standard output is a two-way sensitivity table, WACC against exit multiple or against perpetuity growth. That grid is what actually goes in the deck, not a single point value.

   Where candidates lose it

   Listing revenue growth first. It feels intuitive but it is wrong for most businesses; discount rate and terminal value swamp it. Also, saying 'a DCF gives you the intrinsic value' as if it were one number, rather than a range you present as a football field.

   Expect next

   • Given a $10 change in revenue, COGS, or CapEx, which has the biggest impact?
   • How do you pick the perpetuity growth rate?
   • What would you do if the DCF value is miles above the trading price?

   Reported by candidates at TD Securities (Investment Banking, New York, 2026); Moelis & Company (Investment Banking, New York, 2026). Source: Wall Street Oasis.

3. 017Given a $10 change in revenue, COGS, or CapEx, which has the highest impact on a DCF?ValuationHardtechnicalMizuhoInvestment Banking · New York · 2026

   Say this

   CapEx, because $10 of CapEx reduces cash flow by the full $10 with no tax offset. Revenue and COGS both flow through the income statement, so their effect is only $10 times one minus the tax rate.

   Then walk it

   1. A $10 increase in CapEx is a straight $10 reduction in unlevered free cash flow that year. Dollar for dollar.
   2. A $10 increase in revenue lifts EBIT by $10 only if there is no incremental cost, and after a 25% tax it is worth $7.50 of cash flow.
   3. A $10 increase in COGS reduces EBIT by $10 and costs $7.50 of cash flow after tax.
   4. So per dollar, CapEx bites hardest in the year it happens.
   5. But over the full forecast the ranking can flip, because a revenue change usually persists and compounds into the terminal value, while a one-off CapEx spike does not. If the question means a permanent change, revenue wins.

   Where candidates lose it

   Answering the arithmetic without asking whether the change is one-off or permanent. The interviewer is probing whether you understand that terminal value capitalises recurring changes. Ask the clarifying question, then answer both cases.

   Expect next

   • Is that change one-time or permanent in your answer?
   • What if the CapEx is growth CapEx that lifts future revenue?
   • Which one would you sensitise in the deck?

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

4. 018What is WACC and how do you calculate it?ValuationCorephone / HireVueCitiGeneralist · New York · 2026

   Say this

   It is the blended after-tax cost of a company's capital, weighted by the market value of each piece. Cost of equity times the equity weight, plus after-tax cost of debt times the debt weight.

   Then walk it

   1. Cost of equity comes from CAPM: risk-free rate plus beta times the equity risk premium, with a size or country premium if the situation calls for it.
   2. Cost of debt is the yield the company would pay on new debt today, not the coupon on its old debt, and you multiply it by one minus the tax rate because interest is deductible.
   3. Weights use market values, not book. Market capitalisation for equity, and market value of debt, which for most investment grade paper is close enough to book.
   4. Use target capital structure rather than today's snapshot if today's is temporarily distorted.
   5. The honest caveat is beta. It is estimated from noisy historical data, so I would cross-check against a peer set rather than trusting one regression.

   Where candidates lose it

   Using the coupon on existing debt as the cost of debt, or using book equity in the weights. Both are common and both are wrong. WACC is forward-looking and market-based.

   Expect next

   • Why do you unlever and relever beta?
   • Can debt ever be more expensive than equity?
   • What happens to WACC as you add leverage?

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

5. 019Why do you unlever and relever beta, and why does it matter?ValuationIntermediatetechnicalHWHarris WilliamsInvestment Banking · Los Angeles · 2025

   Say this

   Observed beta reflects both the business risk and the leverage of each peer. You unlever to strip out their capital structures so you are comparing pure business risk, then relever at your target's structure.

   Then walk it

   1. Pull raw betas for the peer set. Each one is contaminated by that company's own debt load.
   2. Unlever each: asset beta equals equity beta divided by one plus one minus tax times debt over equity. Now you have pure business risk.
   3. Take the median or mean of the unlevered betas. Median is safer because one over-levered peer can drag a mean badly.
   4. Relever at your target's capital structure, or its target structure if you expect it to change.
   5. It matters because skipping it means you have imported someone else's leverage into your cost of equity. In an LBO, where structure changes by design, getting this wrong makes the whole discount rate meaningless.

   Where candidates lose it

   Knowing the formula but not the purpose. If asked 'why does it matter', the answer is comparability of business risk. Say that first, then the mechanics.

   Expect next

   • Would you use median or mean of the unlevered betas?
   • What is the beta of a slot machine?
   • How would you get a beta for a private company?

   Reported by candidates at Harris Williams (Investment Banking, Los Angeles, 2025). Source: Wall Street Oasis.

6. 020What is the beta of a slot machine?ValuationHardsuperdayRothschild & CoMergers and Acquisitions · New York · 2021Rothschild & CoGeneralist · New York · 2026

   Say this

   Zero. A slot machine's payout is random but the randomness is entirely idiosyncratic, and beta only measures the part of risk that moves with the market. Uncorrelated risk carries no beta.

   Then walk it

   1. Beta is covariance with the market divided by the variance of the market. If the payout is independent of the market, the covariance is zero, so beta is zero.
   2. The machine is enormously risky in a standard deviation sense. That is exactly the point: total volatility and systematic risk are different things.
   3. This is CAPM's central claim. The market only pays you for risk you cannot diversify away, and pure gambling risk diversifies to nothing across many pulls.
   4. The sharp extension: a casino's equity beta is clearly not zero, because discretionary gambling spend rises and falls with the economy. The machine's payout is uncorrelated; the volume of people playing it is not.
   5. So the answer is zero for the mechanism, positive for the business built on it.

   Where candidates lose it

   Answering 'very high, because it is so risky'. That confuses volatility with systematic risk and tells the interviewer you do not really understand CAPM. Get to zero fast, then earn the extra credit with the casino distinction.

   Expect next

   • So why is a casino's beta not zero?
   • How would you value your favourite animal?
   • What is your personal beta?

   Reported by candidates at Rothschild & Co (Mergers and Acquisitions, New York, 2021); Rothschild & Co (Generalist, New York, 2026). Source: Wall Street Oasis.

7. 021What are the main valuation methodologies, with the pros and cons of each?ValuationCoretechnicalCenterview PartnersInvestment Banking · Menlo Park · 2026Piper SandlerInvestment Banking · New York · 2026InvescoAsset Management · New York · 2023

   Say this

   Three core ones: comparable companies, precedent transactions and DCF. Comps tell you what the market pays today, precedents tell you what buyers paid including control, and a DCF tells you what the cash flows are worth on your own assumptions.

   Then walk it

   1. Trading comps: fast, market-based, easy to defend. But no two companies are truly comparable, and if the whole sector is mispriced your answer inherits that.
   2. Precedent transactions: captures the control premium and what strategic buyers actually paid. But deals are stale, each had its own circumstances, and disclosure is patchy.
   3. DCF: the only method grounded in the actual economics, and it forces you to state your assumptions. But it is enormously sensitive to WACC and terminal value, so it can be made to say almost anything.
   4. Situational ones sit alongside: LBO analysis for a floor value a sponsor would pay, sum of the parts for conglomerates, NAV for asset-heavy or real estate businesses, and dividend discount for banks.
   5. In practice you show all of them as a football field and argue for a range, because the overlap between methods is more persuasive than any single number.

   Where candidates lose it

   Listing the three and stopping when the question explicitly asked for pros and cons. Also, claiming DCF is 'the most accurate'. It is the most theoretically sound and the most easily manipulated, and saying both is what makes you sound credible.

   Expect next

   • Rank the four methodologies from highest to lowest value and explain why.
   • Which would you weight most for a company like this?
   • When would you not use a DCF at all?

   Reported by candidates at Centerview Partners (Investment Banking, Menlo Park, 2026); Piper Sandler (Investment Banking, New York, 2026); Invesco (Asset Management, New York, 2023). Source: Wall Street Oasis.

8. 022Rank the valuation methodologies from highest to lowest and explain why.ValuationIntermediatesuperdayNomuraInvestment Banking · New York · 2026

   Say this

   The usual ordering is precedent transactions highest, then DCF, then trading comps, with an LBO analysis lowest. But I would say upfront that this is a tendency, not a rule, and I can construct cases where it inverts.

   Then walk it

   1. Precedents sit highest because they include a control premium and often synergies a strategic buyer was willing to pay for.
   2. DCF usually sits above trading comps because sell-side forecasts tend to be optimistic, and because you are capturing the full life of the cash flows.
   3. Trading comps reflect minority stakes with no control, so they exclude the premium.
   4. LBO analysis is normally the floor, because a sponsor needs a target return and cannot pay for synergies it does not have.
   5. The inversions are the interesting part. In a frothy market, trading comps can exceed precedents from a downturn. And a strategic with real cost synergies can beat any sponsor, which is why the sponsor floor is not always the floor.

   Where candidates lose it

   Delivering the ranking as gospel. Interviewers ask this specifically to see whether you understand the logic or memorised a ladder. Name the ordering, give the reason for each rung, then volunteer a case where it flips.

   Expect next

   • Give me a case where trading comps exceed precedents.
   • Would Blackstone or Nike pay more to acquire Adidas?
   • Who typically pays more, a sponsor or a strategic?

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

9. 023Where is the premium baked in in precedent transactions?ValuationIntermediatetechnicalUBSInvestment Banking · New York · 2026

   Say this

   In the numerator. The transaction value is the price actually paid to take control, which already includes whatever premium the buyer offered over the unaffected share price, so the resulting multiple is a control multiple.

   Then walk it

   1. You build the multiple as transaction enterprise value over the target's EBITDA at the time. The EV is based on the offer price, not the pre-deal trading price.
   2. So the premium is inside the numerator and therefore inside the multiple itself. You do not add a premium on top afterwards.
   3. That is exactly why precedent multiples run above trading multiples for the same sector.
   4. The measurement subtlety: you compute the premium against the unaffected price, typically one day and thirty days before the first leak or announcement, not against the price after the rumour has already moved the stock.
   5. And the practical caution: if the precedent included large buyer-specific synergies, that multiple overstates what a financial buyer would pay for your client.

   Where candidates lose it

   Applying a control premium on top of a precedent transaction multiple. That double-counts and it is a genuine analyst error, not just an interview slip. Say explicitly that the premium is already in the multiple.

   Expect next

   • Against what price do you measure the premium?
   • Why do precedent multiples exceed trading multiples?
   • How stale is too stale for a precedent?

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

10. 024Walk me through how you would find comps and precedents for a company.ValuationIntermediatetechnicalEvercoreInvestment Banking · Menlo Park · 2025

    Say this

    Start from what the business actually does and who it competes with, then screen on size, growth, margin and geography. For precedents, screen deals in the same sub-sector over the last three to five years, then throw out the ones with special circumstances.

    Then walk it

    1. First pass on business model, not SIC code. A software company selling to hospitals belongs with healthcare IT, not with enterprise software generally.
    2. Practical sources: the target's own filings name its competitors, equity research initiation reports carry a comp set, and any prior deal in the space has a fairness opinion with a comp list in it.
    3. Then screen for comparability on scale, growth rate, margin profile and end-market mix. A company growing 30 percent does not belong with one growing 3 percent, whatever the sector.
    4. For precedents, filter on date, size and deal type, and separate strategic buyers from sponsors, because they pay differently.
    5. Last step is the judgement call: exclude distressed sales, minority stakes and deals with unusual structures, and be ready to defend every exclusion, because the client will ask.

    Where candidates lose it

    Saying 'I would pull them from Capital IQ' and stopping. The screen is the easy part; the defensible judgement about who belongs in the set is the job. Name your inclusion criteria and your exclusions.

    Expect next

    • How many comps is the right number?
    • Your best comp trades at a huge premium to the rest. What do you do?
    • Build me a buyer universe for this company.

    Reported by candidates at Evercore (Investment Banking, Menlo Park, 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.