INVESTMENT BANKING RECRUITING ASSOCIATE INTERVIEW GUIDE

Created by modern guild Industry Experts & Career Coaches, Tara Kurian & Aaron Kurian Spring 2013

This document has been created by modern guild Acceleration Finance Career Coaches & Industry Experts that have gone through the rigorous associate investment banking recruiting process. The material is meant to provide assistance and preparation for modern guild protégés who are about to go through the process.

Table of Contents RECRUITING OVERVIEW ............................................................................................................................... 2 WHAT YOU NEED TO KNOW BEFORE YOU START ........................................................................................ 4 THE GROUP ............................................................................................................................................... 4 YOUR PITCH .............................................................................................................................................. 4 INFORMATIONAL INTERVIEWS ..................................................................................................................... 6 QUESTIONS YOU ARE VERY LIKELY GOING TO BE ASKED IN AN INFORMATIONAL INTERVIEW ............... 6 SAMPLE INFORMATIONAL INTERVIEW QUESTIONS YOU CAN ASK .......................................................... 7 THE INTERVIEW ............................................................................................................................................ 8 DRESS CODE ................................................................................................................................................. 9 WOMEN .................................................................................................................................................... 9 MEN .......................................................................................................................................................... 9 COMMONLY ASKED INTERVIEW QUESTIONS ............................................................................................. 10 ADDITIONAL COMMONLY ASKED INTERVIEW QUESTIONS .................................................................... 10 ADDITIONAL INTERVIEW RESOURCES .................................................................................................... 11 GENERAL ADVICE AND ADDITIONAL INFORMATION ................................................................................. 12

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RECRUITING OVERVIEW There is good news and bad news with investment banking. The job is one of the most interesting and rewarding careers in Finance. No two days will be the same and you’ll always have something to do. Banking is a client service business and provides the opportunity to travel the world meeting with clients and working alongside extremely talented individuals. The business is driven by deal transactions, and bankers will always be in search of securing the next deal. There is a lot of work that goes into the deal, but the positive rewards are exponential. The skillset and amounts of responsibility will open several doors for you should you decide to leave banking and pursue another position in Finance. We won’t sugarcoat the recruiting process. If you do not attend a core recruiting school for the banks, your efforts will be self-­‐directed and you will most likely shell out for several flights to New York in order to network with bankers. While this is an informal and tough process, you have the ability to showcase your perseverance and desire to work in banking. A banker likes nothing more than to meet a qualified candidate eager to work in the industry. This is a positive for you! Many banks recruit heavily for their summer internship programs to feed the full-­‐time associate pool. Hence, banks may not have formal recruiting processes for their full-­‐time associate hiring and instead focus their efforts. If you are pursuing a full-­‐time position, the timing will be accelerated with offers given as early as November. For the summer internship process, you need to be aware of what you are up against. Core recruiting schools have a formal interview process that begins in August or September and goes through January or February of the following year. These schools will have the banks come onto campus to deliver a firm-­‐wide presentation and allow students to network with current bankers. Following firm-­‐wide presentations, informational interviews, initiated by the students, are conducted. Schools that are close to New York often have students conducting informational interviews face-­‐to-­‐face.

Below is a sample summer internship timeline of what a core recruiting school may go through.

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Firm-­‐wide presentabons

• September -­‐ October

Informabonal Interviews

• October -­‐ November

Invite Only Events

• November -­‐ December

Submit Resumes/ Cover Leeers

• November -­‐ December

Interviews and Offers

• January -­‐ May

Knowing this process gives you awareness of when you need to start your own networking and interview process for your summer internship or full-­‐time associate position.

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WHAT YOU NEED TO KNOW BEFORE YOU START This section is to help you identify the key areas before you start the interview process. You should read this section before reaching out to people.

THE GROUP Identify if you want to work within a product group or an industry coverage group. Knowing this will streamline and minimize your networking efforts. • Product groups – Product groups are typically less client facing than industry groups and will support an array of industries. The types of groups can vary between the banks, but the main groups will be: o Equity Capital Markets o Debt Capital Markets o Leveraged Finance o M&A* o Financial Sponsor* • Industry coverage groups – Industry coverage groups are client facing and serve as the main point of contact between the bank and the client. Industry coverage will specialize in an industry but support a variety of products. Again the groups will vary across banks, but the main ones will be: o Consumer & Retail o Energy & Power o Industrials o Financial Institutions o Gaming, Leisure and Transportation o Healthcare o Media & Telecom o Real Estate o Technology *M&A and Financial Sponsors can be a hybrid of product and industry coverage. Some banks have an M&A function within each industry group while others keep it as a stand-­‐alone product group.

YOUR PITCH You should have a pitch that summarizes your background, interest in banking, and your interest in working for a particular group within the bank. Bankers have short and varying attention spans, so you need to have multiple versions of your pitch for different situations. • 2-­‐minute pitch – used during informational and formal interviews. Concisely explain your background before business school, what has brought you to banking, and a few thoughts on why you feel you would be a good fit within that bank and/or group.

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30/60-­‐second pitch – used at networking events and potentially in formal interviews when requested by the banker. Keep the format the same as the 2-­‐minute pitch, however only highlight the key items such as your previous job and the group(s) you are pursuing within the bank.

We cannot stress enough the importance of practicing your pitch. During an interview, a banker will try to make you nervous; having a perfected pitch will help set you apart from other candidates. It should sound natural and not too rehearsed. Below is an example of a 2-­‐minute pitch. Hi, my name is Charlie Brown and I am from Greensboro, North Carolina. I’ve always enjoyed math and when it came time to decide colleges, I found Georgia Tech to be a natural fit. I received a degree in Industrial Engineering. One of my most favorite activities while at Tech was being a Math TA; I know, quite a nerd! But what I discovered was that I really enjoyed working with people to solve a problem. When I graduated, I decided to pursue business consulting with Deloitte Consulting in Atlanta. Deloitte has a 2-­‐year rotational program for analysts which allowed me to work within a variety of industries and business functions. I’ve worked with clients in federal and state governments, consumer products, pharmaceuticals, and healthcare. On the majority of these projects I worked with the Finance organization and became increasingly interested in the role Finance played within the companies. I think it was similar to being an engineer and figuring out the pieces of the puzzle that Finance supplied to the rest of the organization. It was then that I realized I wanted to make the transition from consulting into investment banking and work with clients to help them solve their Finance-­‐related problems. To make this transition, I looked at schools with stellar Finance programs that would provide me with the tools and resources to be successful. While I was a consultant, I spent the last two years of my time there working within the Consumer Products industries. With my experience in client service and within the consumer industry, I am pursuing the Consumer & Retail group. I have done extensive research and know this bank’s C&R team is one of the best on the street. And that is what brings me here today. The key thing with any pitch is reading the interviewer’s body language. If (s)he appears bored, try to cut out the unnecessary details and emphasize why you are there and why you would be a good fit. A banker always likes to hear his/her bank is the best and that you have done your research into the league tables.

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INFORMATIONAL INTERVIEWS Informational interviews provide a two-­‐way opportunity for you to get to know the bank and for the bank to get to know you. They are scheduled and initiated by YOU. Do not schedule an informational interview unless you are prepared for a formal interview. Bankers may say these are informal and you can ask whatever questions you like, but beware – these are most definitely interviews and can negatively impact your candidacy. We have provided sample questions you can ask in an informational interview.

Informationals can be conducted by a banker from any seniority level, though most commonly it will be with an associate or VP. Occasionally, and depending on the bank, a managing director may conduct the interview or even an analyst. Be prepared to receive tough questions from bankers in an informational. If you are coming from a non-­‐ core school, this may be an opportunity for the banker to test you on anything and everything you may receive in a formal interview. Questions can range from tracing a depreciation change across the three statements to grilling you about why you want to do banking.

The best way to prepare for these informationals is to practice, practice, practice. Work together with others from your school who are also interested in banking. Working together is a must. All of us who went through this process will agree that you cannot handle working on this alone. You will be most successful when working in teams.

In addition to knowing your pitch and technical, be up to date on current events, especially recent deals that particular bank has participated in.

Phone Networking Phone call informational interviews may be most practical given the difference in locations. Schedule phone calls only when you cannot make it in person. We recommend making at least one trip to New York to meet with bankers as face-­‐to-­‐face interactions are always preferred.

When conducting the phone call, keep in mind you may be expected to lead the call. Let the conversation flow naturally but also have specific questions in mind that you would like to ask. We recommend keeping the conversation limited to 30 minutes or less, but at least 10 minutes. Prepare 5-­‐6 questions that you would like answered that you can quickly ask should a conversation lull come up.

QUESTIONS YOU ARE VERY LIKELY GOING TO BE ASKED IN AN INFORMATIONAL INTERVIEW • • • • • • Walk me through your resume Tell me about yourself How do you like business school? Why are you here? What classes are you taking? What groups are you interested in? Page 6 of 12

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How would you describe the landscape of investment banking? Considering the current economic environment, why are you still interested in investment banking? What questions do you have for me?

SAMPLE INFORMATIONAL INTERVIEW QUESTIONS YOU CAN ASK The informational is an opportunity for you to learn more about the bank and highlight that you are aware of what the job will entail. Here are a few sample questions you can ask: • • • • • • Why did you choose to join Bank X? What has been your favorite deal to work on? What sets an average summer associate apart from an outstanding one? What are the qualities that you feel make a great summer associate? How many summer associates were hired into the group last summer? I am very interested in this Group at this Bank. Is there anyone else you recommend I speak with?

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THE INTERVIEW Bankers use the interview to help them answer key questions about you: • Will you be able to do the job? (Level of competence and aware of the long hours) • Are you likeable and dependable? (Level of fit) • Will you seriously consider an offer? (Level of interest) They will be searching if you have any of the common qualities seen in successful bankers: • Excellence o Record of success / high achiever o Demonstrable intellectual capacity o High standards / ambition / drive to excel • Presence and Professionalism o Inspiring trust / confidence in others (particularly clients) o Articulate o Good judgment o Commercial sense • Attitude o Pleasant to be around o Sense of humor o Commitment to learning new things o Motivated and hard working • Teamwork o Communicates and works well with others o Respectful to those above and below o Adaptable • Leadership o Initiative (ability to make contributions and add value) o Ability to get results • Dependability o Attention to detail o Ability to work hard, multi-­‐task, and handle pressure o Integrity In preparing for the interview with a bank, it may be helpful to create a “cheat sheet” that contains a few tidbits on the bank, listing of bankers you’ve spoken with, and anecdotes from your resume. Bank tidbits could include market cap, stock price, key leadership (i.e., CEO), and recent deals.

Be prepared to answer both behavioral and technical questions, as well as bank specific questions including something along the lines of “Why this bank over another bank on the street?”

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DRESS CODE We’ve compiled a few tips for the interview – remember you always present an image to the banker at each interaction – make it a good one!

WOMEN • A pant suit or skirt suit are both appropriate. You can’t go wrong with a black, navy, or dark gray solid colored suit. Pairing your suit with a solid white or standard color (i.e., blue) dress blouse or collared long sleeve shirt works best. Remember to wear deodorant and perfume. The interview rooms are small and overpowering smells become very evident very quickly. Conservative dress shoes that are closed in the front and back, solid color to best match your suit are appropriate. It’s often recommended to wear heels, just nothing too high. If you have belt loops on your skirt or pants, wear a belt.

Fingernail polish should be tasteful and professional. Avoid bold and bright colors. If you don’t like polish, make sure your nails are groomed. Your hair should be done that best suits you and will not get in the way. It’s been recommended to wear your hair off and away from your face, such as pulled up. Hair that’s down and in the face can become a distraction for both you and your interviewer. Jewelry should be tasteful and appropriate. A pearl necklace and/or earrings always looks nice.

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MEN • A suit in black, dark/navy blue or dark gray paired with a white collared shirt works best. Try to avoid anything that is too flashy, such as strong pinstripes. Also avoid wearing pants and a blazer that are not the same colors – it’s best to invest in a suit or two for interviewing. Remember to wear deodorant and cologne. The interview rooms are small and overpowering smells become very evident very quickly. A silk or silk-­‐blend tie looks best with a suit because the silk makes a nice knot than other fabrics. The tie should end in the center of your belt buckle (and not above the waste or down to your crotch!) Your socks should match the color of your suit and should be dress socks. Shoes should be polished and match the color of your suit. Conservative wingtip or cap-­‐toe are always good choices. If you have belt loops on your skirt or pants, wear a belt.

Your hair should be neatly trimmed or cut prior to the interview. Clean-­‐shaven is recommended, or at least well-­‐groomed facial hair.

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COMMONLY ASKED INTERVIEW QUESTIONS The interview will most likely be separated into behavioral “fit” questions and technical questions. Though keep in mind that even during the technical questioning, you are being evaluated on your “fit” for the bank and/or group. One other key thing to keep in mind: you are in the driver’s seat when asked a question. You can reveal as much or as little as you want and drive the conversation wherever you’d like. Try to stay on a topic that is relevant to the banker across from you. A note of caution: do not talk about something if you are not 100% confident in the facts. The worst interviews are when candidates attempt to talk about a topic they are not wholly familiar with and is called out by the banker. • Walk me through your resume. This question, or a variation, will come up at some point during the interview. This can be similar to your pitch you developed. Remember to practice! A bad walk-­‐through rambles and attempts to explain every bullet on your resume.

Why do you want to work in investment banking? Be prepared for this question, especially if your pitch is not convincing enough. Be sure to highlight the qualities you have that are suited for investment banking. It’s also helpful to acknowledge you are aware of the long hours and dedication the job requires. Why do you want to work for our bank? This is your opportunity to highlight all of the information you have learned throughout your informational interviews and networking.

What groups are you interested in? This may or may not come up, but prepared to mention at least a product versus industry group. Can you describe to me what you think an associate’s role is. With this question you can demonstrate what you know about the role of the associate on a deal team. Many bankers refer to the associate at the team’s “quarterback”, serving as the intermediary between senior and junior bankers and ensuring all things are completed accurately and on time for the deal. What is your biggest weakness? Use an anecdote to describe your weakness, and make sure to end on how you are working on improving your weakness. Everyone has weak spots but you should always talk about how you are improving upon them. What would your friends or classmates say about you? Another variation is what would a subordinate or manager from your previous job would say. You are in the driver’s seat with this question. Focus on the qualities that are relevant to the associate position, such as good team player, attention to detail, etc.

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ADDITIONAL COMMONLY ASKED INTERVIEW QUESTIONS Below are additional questions that students have received in interviews, including brainteasers • • • • Describe a current event or deal in the market that you’ve been following. What classes are you taking to best prepare you for the summer (or full-­‐time)? Why should I hire you over one of your classmates? How do you value a company?

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If you only had one financial statement to value a company, which one would you select and why? Walk me through the major line items of a Cash Flow Statement. What is EBITDA? Walk me through a DCF. Is the cash flow levered or unlevered? When you change the debt/equity ratio, how does this impact the WACC? Why would a company choose to issue debt over equity? What are the pros and cons of using EBITDA as a proxy for free cash flow? There are 10 people in a room and they all shake hands once. How many handshakes were there? It’s 3:15 – what’s the angle between the two hands on the clock. You have a 3 liter jug, a 5 liter jug and continuously running hose of water. How would you get exactly 4 liters of water in the 5 liter jug? What is the sum of the numbers 1 through 100? What industry would be more focused on P/E multiples versus EV/EBITDA? In an all-­‐stock transaction, would the deal be accretive or dilutive? What about an all-­‐cash deal? What would you pick: a car bought with a loan at 0% interest or a car purchased today in cash with a $2,500 discount? Deferred revenue is $100 and decreases to $50. What is the impact of this $50 reduction across the three financial statements?

ADDITIONAL INTERVIEW RESOURCES We recommend you thoroughly read and review “The 400 Investment Banking Interview Questions & Answers You Need to Know; Breaking in to Wall Street” by Mergers & Inquisitions. http://breakingintowallstreet.com; http://www.mergergsandinquisitions.com. This complete guide has behavioral and technical questions and answers and is a great resource to prepare for interviews. Another resource is Wall Street Oasis, http://www.wallstreetoasis.com/

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GENERAL ADVICE AND ADDITIONAL INFORMATION

Contact Information You should create a spreadsheet of bankers you have met, spoken with, emailed and waiting a response, etc. This may sound like overkill now, but trust us, keeping track of all of your conversations is critical. An interviewer may often ask, “Who have you met within the group or reached out to over the last several months to indicate your interest?” You should also include a few names of the bankers you have met in your cover letter. A sample spreadsheet would contain the banker’s name, contact information, date met, the bank, and any identifying notes that you can reference at a later date such as married with a 5-­‐month old son. Remember, investment banking is at its core a client service business. Thank You Emails After every interaction with a banker, follow-­‐up with a thank you email within 24-­‐48 hours (Monday following a Friday interaction is fine). Keep emails relatively short as it will be most likely read on a Blackberry. Personalize the message to help the banker remember who you are. Spellcheck the email before sending and always make sure you are sending it to the correct person! Dress Code All events should be business formal unless otherwise stated. This is your opportunity to showcase yourself as a young professional with several years of business experience.

Other Items • Stay calm and collected throughout the interview and/or networking session • You will not be a good fit for every bank so do not try to force a fit. You will find a fit somewhere • The interview process is an emotional rollercoaster that everyone goes through, with ups and downs. You aren’t the only one! • Be positive and keep a good attitude. This definitely shows throughout the process and will help you stand out • Don’t be afraid to take a position on a topic and maintain the discussion but never, never argue with a banker • Over-­‐prepare for any situation; it’s much better than being under-­‐prepared

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