Preparing for Investment Banking and Private Equity Interviews: Tips and Strategies

By Elie Zakhour

A career in investment banking and private equity are exciting paths to follow in the finance industry. Investment banking revolves around providing financial advisory services to entities. While Private equity focus on investing in companies with the purpose of generating a large amount of returns.

A career in investment banking and private equity offers a lot of benefits, such as receiving large compensation and the opportunity to work with top-tier clients. However, it’s important to note that breaking into this industry is not easy and requires good preparation before attending interviews.

On the one hand, investment banking interview questions include analyzing financial statements, conducting due diligence, understanding mergers and acquisitions, and evaluating capital raising strategies.

On the other hand, private equity interview questions include assessing a candidate’s knowledge of investment strategies, investment thesis development, deal sourcing, and portfolio management.

Therefore, when applying for a job in this industry, applicants must be well prepared and understand the financial concepts very well, and to ensure that, here are some tips and strategies to help you throughout your journey of landing your dream job:

1. Research the firm

Before the interview, it is essential to research the firm and familiarize yourself with its work and its mission. This will show that you are genuinely interested in this company and demonstrates that you have taken the time to understand its operations, challenges, and future plans. In addition, it enables you to ask insightful questions during the interview.

On the contrary, going into an interview and not knowing what the company actually does can have a negative impact on your application.

2. Know your resume

A common question from interviewers is to ask you, “Walk me through your resume.” It is essential that you are proficient in explaining and elaborating on the information provided in your resume. This demonstrates your ability to effectively communicate your qualifications, experiences, and accomplishments to the interviewer.

Additionally, being ready to explain your resume and talk about your achievements will boost your confidence and enable you to communicate and showcase your skills effectively. This level of preparation will undoubtedly catch the attention of the interviewer and will make you stand out from other applicants, giving you a competitive edge.

3. Financial Knowledge

Thinking that you will only be asked about financial modeling is not quite true. Entry-level jobs involve very basic duties. Therefore, familiarizing yourself with the financial industry and having a broad understanding of how it works is a wise step before your interview. 

Moreover, mastering your understanding of the relationship between financial statements is crucial. It involves developing the skills to predict how changes in one section of a statement will impact the other statements.

4. Prepare private equity common questions

Private equity firms are known to be among the most difficult to break into within the finance industry. Hence, before your interview at a private equity firm, it’s important to study and prepare for private equity interview questions thoroughly.

1. Technical Private Equity Interview Questions

There is a huge amount of technical questions that could be asked. Below are a few that are most common:

• Can you explain the concept of leverage buyouts (LBOs) and how they are used in private equity?
• What are the most important factors in a merger & acquisition model?
• Why do private equity firms use leverage?

2. Behavioral questions

Private equity firms take this part of the interview very seriously, as it is crucial for candidates to possess a strong work ethic.

• Walk me through your resume.
• Why do you want to work in private equity?
• Tell me a bit about yourself and your personality.
• Do you take risks in your personal life? And how do you manage it?

5. Prepare investment banking common questions

Investment banking interview questions and private equity interview questions are often similar, typically consisting of three main types: introductory, technical, and behavioral.

1. Introductory Interview Questions

This part of the interview is almost the same as any other interview. You will be asked questions about yourself so that they get to know you better, and you can also expect to be asked the popular question, “Why investment banking?”

2. Technical questions

In this section of the interview, you can expect to be asked about valuation, accounting, IPOs, mergers and acquisitions (M&A), corporate finance, and valuation. Here are a few common questions:

• How do you value a company?
• What are the main financial statements?
• Walk me through a discounted cash flow (DCF) analysis
• What is the formula for calculating WACC?
• When should a company consider issuing debt instead of equity?
• What is the formula for enterprise value?
• How do you calculate the WACC?

4. Behavioral Questions

These questions are used to assess a candidate’s past experiences, behavior, and decision-making skills. For example, questions that might be asked are:

• How do you prioritize projects under pressure?
• Tell me about a time when you faced a major setback or failure in a project. How did you recover from it, and what did you learn from the experience?
• Can you give me an example of a time when you had to make a difficult decision with incomplete information?

6. Practice with mock interviews

Nothing is better than practicing with a friend before your actual interview. This approach is a great way to boost your confidence and prepare for the real thing. Your friend can give you constructive feedback on your answers, help you identify areas where you need to improve, and make you feel more comfortable in the interview setting.

Mock interviews are highly recommended for people seeking a career in this fiercely competitive industry, as they can greatly enhance your interview skills and significantly increase your chances of perfection.

7. Networking

Networking plays an essential role in building a successful career in investment banking and private equity. Relationships are key in this industry, where lucrative deals and job openings are frequently passed around by word of mouth.

Building relationships with individuals in the investment banking sector will lead to recommendations and referrals. Strong professional contacts can open doors to internships and job interviews that might not be available through conventional application procedures.

More importantly, through networking, you have the chance to meet professional individuals who can help you along the way in your career. These people can help you become the better version of yourself by providing expert advice and sharing their own experiences.