Today we’re going to explain how to prepare for investment banking interviews, step-by-step.
And here’s one of the first things you’ll want to know:
Behavioral questions are by far the most common type of question, accounting for 60% of the 304 questions reported, so you’ll want to pay special attention to the frequently asked behavioral questions in section 3 below.
Now let’s dive straight into the first preparation step.
- Understand the interview process and timeline
- Research your target firm
- Prep answers to common questions
- Practice out loud
- Do mock interviews
You should begin your preparation for IB interviews by familiarizing yourself with the typical interview process. Knowing the stages to expect will help you get into the right preparation mindset.
Here we’ll focus primarily on investment banking (IBD) roles, but the below steps likely have some overlap with the steps for other roles at Goldman Sachs, JP Morgan, etc.
The interview process typically takes 3-6 weeks to complete, but in some cases it may take 3 months or even longer, so be prepared for an extensive process.
Whether applying for a full-time position or an internship program, IBD candidates will typically go through 4 steps:
- Application and resume
- Aptitude test (for some candidates)
- HireVue interview
- Final-round interviews / Super day
Now let’s examine each of those steps in more detail.
1.1 Application and resume
There are three main ways that the interview process begins:
- You’ll apply on your target firm’s website
- You’ll apply through an event or career fair
- A recruiter will reach out to you
Regardless of which of these starts your application journey, you’ll want to be ready with a polished resume that is targeted specifically to the firm to which you’re applying (more on firm-specific research in section 2 below).
It’s also important to spend some time learning about the specific division within your target company. If you don’t have a clear perspective on the division where you want to work within the company, then this can be a red flag for recruiters.
You should also understand the teams that exist within your target division. This will demonstrate that you’re highly motivated and familiar with how the firm operates.
If you really want to get your foot in the door, another way to set yourself apart is by attending career fairs or events hosted by your target firm. Try to make genuine connections with people from the company.
Then, when you go to apply, specifically name drop the people you’ve met in your cover letter. You could even write in a quote you heard from them, or mention what you learned from them about the company.
1.2 Aptitude test
If your application meets your target firm’s basic requirements, then you’ll move onto the next round of the process.
For some candidates, that means taking an online aptitude test. Whether or not you’ll be asked to take an assessment like this depends on a few conditions, including the specific firm you’ve applied to, and your level of experience.
Either way, it helps to be aware of this step, just in case you are asked to do it.
It’s also worth mentioning that the format of this test varies. For example, Morgan Stanley uses aptitude tests with the following topics:
- Verbal reasoning
- Numerical reasoning
- Logical reasoning
- Accuracy (error-checking)
On the other hand, JP Morgan uses something called a “pymetrics test” that assesses candidates using a series of digital games.
Generally speaking, the best way to prepare for aptitude tests is to practice with similar questions. You can do that using online test providers, like this one. You could also consider practicing with sample GMAT questions, because aptitude tests often have some similarities with GMAT style questions.
1.3 HireVue video interview
The next step is the HireVue video interview.
HireVue is a digital tool that allows you to record your responses to a series of interview questions, without having an interviewer on the other side of the camera.
You’ll be asked 3-6 questions during the interview. For each question, you’ll have a few moments to prepare your answer, and then you’ll have a time limit of 2-3 minutes to give your answer on camera.
You’ll only be allowed one opportunity to re-record each answer, so we’d recommend preparing answers to common questions in advance. You can get started with the example questions listed later in this article. You can also take unlimited practice questions within HireVue before starting your actual interview, which we strongly encourage you to do.
The HireVue interview mostly contains common behavioral questions like “why investment banking?” and “tell me about a time…” style questions. In addition, some candidates get business sense questions or questions specific to the department to which they’ve applied. For example, you might get a question like “tell us about a recent M&A deal”.
For some additional tips on the HireVue interview, check out this video produced by Goldman Sachs:
We'll go deeper into common behavioral and business sense questions in section 3 of this guide.
1.4 Final-round interviews / Super Day
If you do well enough on the previous steps, you’ll be invited to the final round of interviews.
For entry level positions (internships and graduate hires) this may take the form of a “Super Day” (or “Assessment Centre” in the UK). This is where a large number of candidates spend the day interviewing at the firm’s office or a conference center, although due to COVID-19 this is now normally done on Zoom.
For a Super Day, there are typically 2-5 interviews, which should each last around 30 minutes. And in every interview, you’ll usually face at least two interviewers.
In some cases, the Super Day may also include more unique interview formats. For example, Morgan Stanley uses a group exercise and sometimes an individual presentation to evaluate candidates.
If you’re a more experienced hire, you probably won’t be invited to a Super Day. Instead, your final-round interview will consist of at least 3 back-to-back interviews with team members of varying seniority. Each interview should last around 30 minutes.
Now that you know what to expect from the interview process, let's talk about a critical preparation step that is sometimes overlooked.
It’s very common for interviewers at leading investment banks to ask questions that test whether a candidate wants to work for THEM over the other firms in the industry.
For example, you might be asked questions like these (note: these are real interview questions reported on Glassdoor, we’ve just paraphrased them for illustration):
- Why do you want to work for Firm X? (e.g. Goldman Sachs)
- What makes Firm X different to other banks?
- How would you describe Firm X and what we do?
- What is something that you recently heard about Firm X? And why is it important?
As you can see from these questions, you’ll need to be prepared to articulate what you like about the specific firm you’re interviewing with, even if you’ve applied for multiple companies.
To help you get ready, we recommend the following steps to research each of your target firms prior to your interviews.
2.1 Prepare a unique answer to the “why Firm X?” question
First, you should outline and rehearse an answer to the “why Firm X?” question. This is the single most common question asked in investment banking interviews, so it’s essential that you do this at some point during your preparation anyway.
When you begin to outline your answer, you should be very intentional to give UNIQUE reasons for wanting to work at your target firm. To be clear, that means the reasons you give should be things that ONLY apply to that particular firm.
One good reason to include, are the names of current or former employees of the firm who you know, and what impact they’ve had on you. This is a powerful technique because it is naturally firm-specific, and it makes a real personal connection between you and someone at the company.
To get some more ideas of what to include in your answer, check out the sample answers for this question that we’ve written for each of the below firms:
2.2 Study the strategy or market position of the firm
It’s also helpful to have a broad understanding of the firm, and their position in the investment banking industry.
Reading a strategy report about your target firm is a great way to start familiarizing yourself with this topic. Here are a few good resources:
- Goldman Sachs strategy teardown (by CB Insights)
- JP Morgan strategy teardown (by CB Insights)
- Morgan Stanley vs. Goldman Sachs (by Investopedia)
Given that we’re talking about investment banking roles, you may also want to get a general feel for the financial statements of your target firm, which are easy to find online for any publicly traded investment bank. This is probably not strictly necessary though, so prioritize other preparation steps first.
2.3 Familiarize yourself with the firm’s values
Most investment banks have a list of values or a mission statement published on their website.
You’re unlikely to be asked specifically about one of the firm’s values, but it can be helpful to know them, because it can help you frame your answers in a way that is aligned with how the firm operates.
Here are relevant pages for the three leading firms:
- Goldman Sachs purpose and values (by Goldman Sachs)
- JP Morgan “who we are” (by JP Morgan)
- Morgan Stanley core values (by Morgan Stanley)
2.4 Analyze one deal by the firm in-depth
At some point during the interview process, you’ll probably encounter a question related to deals. For example, “tell me about a recent transaction” or something like that.
This is not inherently a firm-specific question, but if you’re applying to Goldman Sachs (for instance) it would be ideal to be ready to discuss a recent deal that Goldman Sachs completed.
So, you should prepare to discuss at least one recent IB transaction from your target firm in-depth. Be ready to give your opinion on whether the deal was a good (or bad) move, and memorize some key numbers to back up your analysis. If you’re applying for a particular group within your target firm, it’s even better to discuss deals relevant to that group.
You can find information about recent deals by reading the Investment Banking section of the Financial Times, which frequently covers stories involving leading firms, like Goldman Sachs, JP Morgan, and Morgan Stanley. We’ve also found this guide on preparing for deal interview questions to be really helpful.
2.5 Brush up on recent news and insights
Finally, being up to speed on recent news or insights related to your target firm can help you avoid getting stumped by questions related to current events.
To stay up to speed, consider subscribing to any newsletter (or similar) published by your target firm. For example, these types of resources:
- Goldman Sachs newsletter (by Goldman Sachs)
- JP Morgan weekly brief (by JP Morgan)
- Morgan Stanley insights (by Morgan Stanely)
You could also set-up news alerts for your target firm, or simply keep an eye out for stories related to your target firm in a more general news publication. If you don’t have a favorite source already, then consider trying The Economist or the Morning Brew newsletter.
Now let’s get into what is probably the most important step in your interview preparation: drafting answers to common questions.
There are 3 broad categories of questions that you’ll face in your investment banking interviews, and they are as follows:
- Behavioral questions
- Technical questions
- Business sense questions
And here’s a quick breakdown of which questions are most frequently asked:
These numbers are useful, because it gives you a roadmap of which types of questions to prepare for first.
Before we dive into the list, just a reminder that all of the questions below are actually REAL interview questions that were reported on Glassdoor, by analyst candidates for Goldman Sachs, JP Morgan, or Morgan Stanley. We've just edited the wording or grammar in some cases to make the questions easier to understand.
Now let’s get into it!
3.1 Behavioral questions (60%)
Behavioral questions are by far the most common type of question you’ll face in your investment banking interviews. In fact, 42% of all questions reported (across categories) can be boiled down to just the 10 behavioral questions listed below:
- Why Firm X? (i.e. Why Goldman Sachs?)
- Why investment banking?
- Tell me about a time you worked in a team
- Walk me through your resume
- Tell me about yourself
- Why should we hire you?
- Why this job?
- What are your strengths and weaknesses?
- Tell us about a time you had a problem and how you solved it
- What was your greatest challenge?
For a much more extensive list of behavioral interview questions, including sample answers for many of the above questions, you can visit any of the three guides below. These guides cover the most common behavioral questions at specific firms:
- Goldman Sachs behavioral interview
- JP Morgan behavioral interview
- Morgan Stanley behavioral interview
3.2 Technical questions (26%)
Technical questions are probably the most intimidating question type for candidates, and it can be tough to know where to start. If you’re not already familiar, “technical” here is an umbrella term that’s used to describe valuation, accounting, and a few other (less common) question sub-types.
Here’s the good news: we’ve previously conducted an analysis of the technical questions asked in analyst interviews at Goldman Sachs, JP Morgan, and Morgan Stanley. From that analysis, we learned that the 14 questions below account for 88% of all technical questions reported, making this list an excellent starting point for preparation.
- Walk me through a DCF
- What are the main methods of valuing a company?
- How does X affect the financial statements?
- How would you value X company?
- Determine if an acquisition is accretive or dilutive
- Build an LBO model
- Walk me through the financial statements
- What is enterprise value?
- How do you calculate / adjust EBITDA?
- How do you calculate WACC?
- When would you use DCF vs. other valuation methods?
- How do you calculate cost of debt and cost of equity?
- Explain minority interest in layman's terms
- What is an LBO and what are its value drivers?
You can learn more about each question above, and get an overview of how to solve them, in our separate technical questions interview guide.
Our investment banking interview cheat sheet also provides a helpful overview of most of these technical questions.
3.3 Business sense questions (15%)
This category is essentially a “catch all” list of the less common question types that don’t fall under the behavioral or technical categories.
For the purposes of preparation, we’ve split this into 5 subcategories, and you can see example questions from each subcategory below.
- Name one story in the news and describe how it’s important to you
- How do you expect current trade policy and federal reserve policy to impact the markets over the next 12 months?
- Describe the local economy in layman’s terms
- Tell me about a recent M&A transaction and what you thought about it
- Tell us about a recent private equity deal
- What deals has our group done that you’ve liked, and why?
- What is something you recently heard about our company (i.e. Goldman, JPM, etc.)? And why is it important?
- What makes our bank different to other banks?
- What is investment banking?
- What are the requirements for a good investment?
- What stock would you long and which would you hedge?
- Describe Solar City’s business model
- How many tennis balls can you fit in a Tesla?
- Which number is closest to 27 squared: 600, 700, 800?
- T-Mobile is planning on placing orders for the new iPhone, how would you estimate the number of phones they should order?
To learn more about these types of questions, visit our separate business sense interview guide.
After you've written everything down, a great way to practice your answers is to interview yourself out loud. This may sound strange, but it will significantly improve the way you communicate during an interview.
You should be able to tell each prepared answer and story from your memory bank naturally, neither missing key details nor memorizing them word-for-word.
Play the role of both the candidate and the interviewer, asking questions and answering them, just like two people would in an interview.
Don't skip this step!
It really makes a huge difference, and it will help you to get your thoughts straight for each of the most common interview questions we covered in the previous section.
Then, once you can consistently answer common questions without getting stuck or referring to any notes, then you can move onto mock interviews.
Practicing by yourself is a critical step, but you are naturally a biased interviewer (for yourself). And solo practice doesn't do a great job of replicating realistic interview conditions.
That's why you should also do some mock interviews.
Mock interviews are much closer to the real interview experience. It will help you become more comfortable and the feedback you get from an interview partner could help you avoid mistakes that you wouldn’t notice on your own.
5.1 Practice with peers
You can practice with a friend or family member to start. This will help you polish your stories and catch communication mistakes.
However, if your interview partner isn’t an experienced IB ex-interviewer, then they won’t be able to give you the kind of targeted feedback that will help set you apart from other investment banking candidates.
That’s why we recommend you also practice with ex-interviewers from leading investment banks.
5.2 Practice with ex-interviewers
If you know someone who runs interviews at Goldman Sachs or another investment bank, then that’s amazing! They'll be a great person to practice interviews with.
But most of us don’t, and it can be REALLY tough to make a new connection with an investment banker. And even if you do have a good connection already, it might also be difficult to practice multiple hours with that person unless you know them extremely well.
Here's the good news. We want to help you make these connections. We've launched a coaching service where you can practice one on one with ex-interviewers from finance companies like Goldman Sachs, JP Morgan, and Morgan Stanley. Learn more and start scheduling sessions today.