INVESTMENT BANKING INTERVIEWS 4Th Edition ★

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Beat the Street®: Investment Banking Interviews

2011 edition Beat the Street®: Investment Banking Interviews

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Beat the Street®: Investment Banking Interviews

4th Edition ISBN: 978-1-58207-949-3

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All illustrations by mckibillo

Beat the Street®: Investment Banking Interviews

ChaPter 1 2 3

1 I-BankIng 5 the IntervIeW 15 the IntervIeW IntervIeWS ProceSS unPlugged at a glance

6 Overview 16 Preparing Yourself for the Beauty Contest 6 The Bottom Line 16 Research 7 The Process 17 Rehearse 12 Alternatives to “The Process” 18 Review

26 Investment Banker Lingo

Beat the Street®: Investment Banking Interviews 4 5 6 31 IntervIeW 55 IntervIeW 77 a Student’S PreP guIde WorkBook PerSPectIve

32 The Judge’s 56 Sample Q&A 78 Note to the Reader Scorecard 71 I-Banking vs 78 First and 36 Acing the Interview Management Foremost: Things Consulting You Should Know 38 Round One: First Interview 72 Never Let Down 79 Getting the Your Guard Interview 41 The Airplane Test 73 Q&A Thought 81 Before the 42 Round Two Balloons Interview and Beyond 82 At the 44 Your Final Interview Interview 84 After the 47 A Few Words Interview on the Stress Interview 84 Concluding Remarks 48 Your Turn to Ask Beat the Street®: the Questions

Investment Banking 49 Denouement Interviews 51 The Offer

52 Salary Negotiations contents

I-Banking Interviews At A Glance 1 Beat the Street®: Investment Banking Interviews

I-banking

CHA P TER 1 A GLANCE AT interviews AT A GLANCE Investment Banking Breakdown Each of the following areas will typically have a different interview process (you must know which you are applying for!): • Corporate Finance (CorpFin) CHA P TER 2 THE INTERVIEW PROCESS • Sales • Trading • Research

The Three Rs to Prepare for Your Interview • Research—know the industry and the company inside out.

CHA P TER 3 THE INTERVIEW UNPLUGGED • Rehearse—practice for the questions you know you’ll get. • Review—make sure that you know your finance and accounting tools.

The First-Round Interview • Treat it as a conversation. • Prepare examples from your past that highlight CHA P TER 4 INTERVIEW PREP GUIDE your skills. • Show enthusiasm for the company and the industry.

The Second-Round Interview and Beyond • If you can, get tips from your first-round interviewer. • Act conservatively at social events.

CHA P TER 5 INTERVIEW WORKBOOK • Be polite, courteous, and humble.

Final Interviews • Model your behavior on that of the people you’ve met from the firm. • Convey why you want to work at the firm, and only that firm. • Make everything in your past relate to I-banking. CHA P TER 6 A STUDENT’S PERSPECTIVE

2 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1 THE INTERVIEW CHA P TER 2 PROCESS THE INTERVIEW UNPLUGGED CHA P TER 3 PREP GUIDE INTERVIEW CHA P TER 4

WORKBOOK INTERVIEW CHA P TER 5

PERSPECTIVE A STUDENT’S CHA P TER 6

WETFEET INSIDER GUIDE 3

The Interview Process

Overview...... 6

The Bottom Line...... 6

The Process...... 7 2 Alternatives to “The Process”...... 12 Beat the Street®: Investment Banking Interviews

Overview In this guide we will try to explain the process and › Congratulations. You’re about to grad- help you prepare to face the situations you’re likely to CHA P TER 1 A GLANCE AT uate with honors from a top-tier undergraduate or encounter. MBA program. You were president of the debate soci- Our number one recommendation? Get ready to ety, have played the stock market since age three, and sell yourself! Much of banking is about old-fashioned read The Wall Street Journal cover to cover every morn- selling, and it starts during the interview process. It ing (starting with the section “Money & Investing,” doesn’t matter which area of banking or position you’re your favorite). You desperately want to be an invest- pursuing. Interviewers tell us that they will be looking ment banker and consider yourself an ideal candidate. at your enthusiasm for the profession and their firm Your GPA never once dipped below a 3.6 and you aced plus evidence of your desire to work hard, embrace CHA P TER 2 THE INTERVIEW PROCESS every standardized test thrown your way without so challenges, and learn quickly. They want to see self- much as a single prep course. You are a natural-born confidence, proof that you can juggle multiple complex leader. You are well-groomed and have never been projects, and a can-do attitude. rejected from anything you have ever applied to. You Positions vary significantly in investment banking. are a shoo-in at any firm. Right? The candidate who’s the perfect fit for one job doesn’t Wrong. Unfortunately (or fortunately, if this doesn’t necessarily have the makeup for other ones. Therefore, quite describe your accomplishments to date), for the it’s critical that you know the position you want before

CHA P TER 3 THE INTERVIEW UNPLUGGED first time in your life, all this is not enough. Have you you start interviewing. given thought to how your hand feels when someone Firms have different cultures, too. You should know shakes it? Or how you would react if an interviewer which one is right for you. To determine this, you’ll started to read the paper at the exact moment you need to take an honest look at yourself. Where do you

entered the room? Can you do a back-of-the-envelope excel? What are your weaknesses? What’s your preferred valuation of a company? Do you know what an work environment and management style? If you can investment banker does and why you want to become answer these questions, you’re more likely to make one? Do you know how to sell your biggest weakness as a wise career decision; walk in blindly and you risk CHA P TER 4 INTERVIEW PREP GUIDE a strength? Can you differentiate one investment bank making the wrong choice. from another? If you hesitated and had to think about any of those questions, then you’re not ready for your investment banking interview. The key word here is preparation. The Bottom Line That’s where WetFeet comes in. This Insider Guide › Investment banking interviews are is designed to help you understand and prepare for the highly competitive. In the end, what will likely set

CHA P TER 5 INTERVIEW WORKBOOK investment banking interview process. In researching you apart from the rest of the field is your ability to this guide, we interviewed recruiters at most of the convince interviewers that you are fully committed to leading investment banking firms, including Credit this career and that you have the right skills and per- Suisse, Goldman Sachs, JPMorgan Chase, Merrill sonality to succeed. Read any firm-specific literature Lynch, Morgan Stanley, and others. In addition, you can find (including, of course, the WetFeet Insider we surveyed hundreds of people like you: WetFeet Guides on various investment banks), talk to friends customers who have gone through the investment and alumni in investment banking, and bone up on banking interview process. Then we came up with a your finance. CHA P TER 6 A STUDENT’S PERSPECTIVE number of common themes and interview techniques.

6 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1 The Process whom they see as their competition, and what they feel › The biggest feeders for most investment is unique about their organization. (Memorize their banks are the undergraduate and MBA programs at answers to this last question. At a future interview, this top universities around the country. In good years, will gain you points.) Goldman, Merrill, Morgan Stanley, and the others hire While milling around the food tables afterwards, thousands of candidates from these programs. For the engage an analyst or associate in conversation. They THE INTERVIEW

most part, the recruiting efforts on campus follow a rel- are currently in the thick of the job and are therefore CHA P TER 2 atively structured process, as outlined below. Moreover, among your best sources of information. Even if you’re PROCESS there is little variation among firms—most will come unable to lob a question or two in their direction, on campus in rapid succession. Although firms do keep within earshot and listen to their answers to occasionally make exceptions, most hire the bulk of other people’s questions. Ask for names and work their candidates through the process described. So if numbers (get business cards when you can), and find you want to land one of these jobs, you should acquaint out whether these contacts would be willing to speak THE INTERVIEW yourself with the schedule and make sure that you don’t to you over the phone. (If they’re swarmed on campus UNPLUGGED miss the resume drop-off deadline. by job seekers, this is often a better way to get their CHA P TER 3 attention.) Try to remember any details the analyst or Recruiting Season associate divulges. These may come in handy in future MBA interviews. 2nd-Year Undergrads Summer MBAs Interns Step Two: Researching Campus Info Oct.–Nov. Jan. Sept.–Oct. Sessions the Job Areas PREP GUIDE INTERVIEW Resume Still think you want to do this? The first step: Begin CHA P TER 4 Nov.–Jan. Jan.–Feb. Oct. Selection researching the different areas within investment First Dec.–Feb. Jan.–Feb. Nov.–Dec. banking and the positions available. We focus here Interviews on jobs for undergrads and MBAs, since these are the

Super Jan.–Mar. Feb.–Mar. Nov.–Jan. Saturday slots recruiters must fill by each August. Nevertheless, this information will also be useful for mid-career Step One: Campus candidates seeking to enter at a higher level. Basically, Information Sessions the work falls into four principal areas: corporate WORKBOOK INTERVIEW These informal information sessions are a time to eat finance, sales, trading, and research. These areas are so CHA P TER 5 well and learn about each firm and its recruiting process. different from one another that most banks won’t look (If your school is not on the tour, the information kindly upon people who apply for positions in more

session at a nearby school may still be open to you. Call than one area (the implication being that you don’t and ask permission; you will rarely be told to get lost.) know what you want to do). Make sure your clothes are wrinkle-free and show up on time. The recruiters generally bring a current associate Corporate Finance (aka CorpFin) PERSPECTIVE or analyst with them. After a brief speech, they take Corporate finance is an umbrella term for the work A STUDENT’S CHA P TER 6 questions. This is not the moment to impress them with involved in capital raising, underwriting, and financial your financial acumen; it’s a time to find out how many advisory services, including mergers and acquisitions. analysts or associates they’re hiring this year, when and Every year, corporate finance divisions conduct a formal how you should sign up for the first round of interviews, search for both undergraduates and graduate students,

WETFEET INSIDER GUIDE 7 Beat the Street®: Investment Banking Interviews

generally MBAs, to fill their training programs. they buy securities, such as mutual funds). The research Undergraduates are hired for two to three years departments spend their hours studying financial CHA P TER 1 A GLANCE AT and hold the title of analyst, while MBAs and other data, interviewing people in the industries they cover, graduate students and graduates are dubbed associates. writing about specific companies and the economy, Depending on the firm and its needs, an analyst or and making recommendations about purchasing and associate class numbers anywhere from 20 to 90 people. selling financial instruments. Good research is the After brief training in the fundamentals of accounting cornerstone of a bank’s selling franchise; basically, the and finance, analysts typically join an industry group. firm is selling its ideas—its research—which clients From that day on, they will work 80 to 120 hours purchase through their transaction costs. A limited per week. They will be responsible for gathering number of positions in research are available each year. CHA P TER 2 THE INTERVIEW PROCESS data, building and updating computer models, and Here’s a quick warning: Research departments reverse coordinating production—in other words, doing the the title hierarchy of CorpFin and M&A divisions. scut work—for lengthy transactions. Associates may do People coming in from college programs hold the title some of the above but also manage a flock of analysts of associate, while the stars pulling down seven-figure and participate in client relations. They have been hired salaries are analysts. not just for two interim years, but with the hope that This is nice work if you like reading and crunching they will remain with the bank for the long term. numbers, but not if you crave company. The research

CHA P TER 3 THE INTERVIEW UNPLUGGED associate’s job is solitary, although top analysts are Mergers and Acquisitions (aka M&A) frequently asked to make presentations. Depending on the bank, M&A may be a separate unit or it may fall within the corporate finance

arena. The work involves advising companies that wish to merge with, or acquire, others. As with CorpFin, M&A generally revolves around the deal of the moment and can be unpredictable. With its CHA P TER 4 INTERVIEW PREP GUIDE emphasis on comprehensive quantitative analysis and extensive back-and-forth with attorneys, M&A work is particularly unforgiving to bankers’ personal lives: The large-scale deals that are common here require long periods of intense work. M&A specialists will often be found poring over spreadsheets and proofreading memos well into the night. And just because a big

CHA P TER 5 INTERVIEW WORKBOOK transaction has been finalized, that’s no guarantee of downtime: It isn’t unusual for bankers to move from one big project to another without coming up for air. Hiring practices vary from bank to bank, but typically Sales and Trading (aka S&T) M&A divisions hire both undergrads and MBAs. Jobs in this area are split between institutional sales and trading and then broken down further between equity Research (stocks) and fixed income (bonds). If you want to be Investment banks are sell-side, meaning they’re involved a trader, you also have the choice between trading for CHA P TER 6 A STUDENT’S PERSPECTIVE in selling securities (as opposed to buy-side, meaning the firm—proprietary trading—or trading for clients.

8 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1

With the former, you’re investing for one or more of the former Wall Street master of the universe called a PSD firm’s funds or other investment vehicles. In the latter, (Poor, Smart, and a Desperate desire to be rich) degree. you’re trying to generate returns for outside funds, Bottom line: Produce and no one will care where you organizations, and even high-net-worth individuals. went to school. Both require the same skills: self-confidence, an ability to act quickly and decisively, and a keen understanding THE INTERVIEW

of financial markets. Career Fairs CHA P TER 2 At most banks, undergraduates and graduates join PROCESS a training program and then begin a series of rotations We can sum up the you should already notion of one-stop have suspected: until they find a permanent home. Unlike CorpFin, job shopping at a No one considers a where your education and title count for a lot, on the career fair with a resume submitted sales and trading floor only one thing matters: making familiar phrase: “If it at a fair as an official sounds too good to application. A former money for the firm. Hours are driven by the market— be true, it probably investment banking THE INTERVIEW when the market where you work is in session, you’re is.” The idea that analyst who used to UNPLUGGED on. The trading floor is a poor choice for anyone with you could give your represent a firm at CHA P TER 3 genteel sensibilities: It’s definitely more rough-and- resume to 100-plus career fairs recalls companies in a single that the recruiter tumble than other areas of banking. The atmosphere is meeting place, go usually trashed all fast-paced and rugged, and traders may not have time home, relax, and the resumes she’d for more than a few bites of their lunch. But the hours wait for calls is a collected before job seeker’s pipe she returned to the are more reasonable. You are likely to be heading home dream. Investment office. Instead, use by 6 p.m. while your CorpFin colleagues still have banking recruiters the fairs to gather

acknowledge what information. PREP GUIDE INTERVIEW hours to go on their workdays. CHA P TER 4 With the exception of a few bulge-bracket firms, the recruiting process for sales and trading is not as formal as it is in investment banking. Recruiters pay Step Three: Resume Preparation less attention to top-tier schools. Be prepared to cover Now that you’ve targeted your desired area within expenses to New York for your first interview. investment banking, it’s essential to distinguish Nor is there much formal training. Quite simply, in yourself from your peers with a well-crafted one- sales, you sell. You spend agonizing weeks, sometimes page synopsis of your academic, extracurricular, and WORKBOOK INTERVIEW months, smiling and dialing your way through the professional experience. Remember that banking is CHA P TER 5 phone book on cold calls to complete strangers. The about selling, and your resume is like a salesperson’s school-of-hard-knocks culture makes sales and trading talk sheet. Highlight your strengths and abilities,

jobs less coveted than other banking positions. In the and show your suitability for your targeted job words of one S&T recruiter: “There are fewer people area. Since the competition officially begins once pandering to get in here.” Still, it isn’t a cakewalk: you drop your resume off at the career center or Traders are perhaps more wary than other bankers send it to the firm’s headquarters, and since the top PERSPECTIVE about whom they hire, since money paid to a junior banks receive thousands of resumes per season, this A STUDENT’S CHA P TER 6 person comes directly out of their own pockets. is the first hurdle. And it’s a tough one. Recruiters There are plenty of trading desks staffed by Harvard rarely spend more than a minute on a resume, and MBAs who spent summers in the Hamptons or on usually less than 20 seconds. Because of the avalanche the Cape. But more typically, traders boast what one of paper they receive, they look for red flags that

WETFEET INSIDER GUIDE 9 Beat the Street®: Investment Banking Interviews

will allow them to toss your resume in the wastebin. to be in investment banking, and why you want a job The goal of the resume is to win you a spot on the with this firm. Investment bankers deal with numbers CHA P TER 1 A GLANCE AT interview schedule. A current MBA student wisely all day, every day, so be ready to rattle off your SATs, advises: “There are so many aspects of this process GMATs (if interviewing for a graduate-level position), that you cannot control, so control what you can. Let and GPA. No need to explain why your math scores lag them know that you understand the rules of the game.” 22 points behind your verbal unless they ask, though In other words, don’t make mistakes that will allow if there are some obvious and odd discrepancies, have recruiters to disqualify you. plausible, brief answers ready. Do yourself a favor and A word of warning: Lying or misrepresenting do not exaggerate your academic and extracurricular yourself on your resume hardly ever goes unpunished. experiences: More often than not, the recruiter will be CHA P TER 2 THE INTERVIEW PROCESS Despite the legions of apparently unconnected bankers an alumnus of your school and can easily check your trawling Wall Street, the Street is in many ways like a claims. You may find little time to ask questions, but small town—people know each other and they love err on the safe side and prepare a few about the firm to gossip. Recruiting stories travel like wildfire. Even and the job itself. Make them good questions, not if you succeed in securing an offer with a false or lightweight puffballs—intelligent, careful queries that misleading resume, you may suffer the ignominious don’t require long answers. fate of having your offer revoked or withdrawn. CHA P TER 3 THE INTERVIEW UNPLUGGED Don’t test the limits—putting a favorable spin on a Top Resume Red Flags past accomplishment is different from fabricating one altogether. And don’t overstate your verifiable talents. Misspelled words or grammatically incorrect . sentences For example, it is not entirely impossible that someone along the interview chain will see a claim of proficiency . Incorrectly spelled firm name (watch where in a foreign tongue and choose to conduct the interview they put the commas!) in that language. In addition, many firms prepare a Extremely low GPAs (or one that is noticeably . absent) resume book of new recruits for distribution firm-wide. CHA P TER 4 INTERVIEW PREP GUIDE Trust us that anything suspicious or overstated on . Resumes that are unduly long your resume can be held against you by your potential colleagues. Misstated objectives (for example, “I want to . work for a small firm” in a letter to Merrill)

Step Four: The First Interview Bad mail merges, resulting in a different firm The recruiting tour bus arrives on campus to see what . on the cover letter than on the envelope the candidates look and sound like in a suit, under Long-winded sentences

CHA P TER 5 INTERVIEW WORKBOOK stress, in 30 minutes or less. (If your school is not on .

the tour, your interview will most likely be held at Colored paper and nontraditional fonts corporate headquarters.) For this first of what you hope . will be many conversations, you should dress well and be prepared to sell yourself. A human resources recruiter, junior associate, or, sometimes at headquarters, a mid- level banker will conduct the first interview. Insiders tell us interviewers are generally looking for CHA P TER 6 A STUDENT’S PERSPECTIVE you to communicate two points clearly: why you want

10 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1

Dos and Don’ts of Resume Preparation

DON’t Be creative: This is not an artistic profes- DO Copy your resume onto the best white or off- sion. Refrain from sending your resume on brightly white paper available (100% cotton bond). Many colored or marbled paper, using nontraditional insiders say that they’ve seen interviewers hold THE INTERVIEW fonts. their resumes up to the light: They’re checking to see that the interviewee has taken the trouble to CHA P TER 2 PROCESS use Crane paper (with the watermark seal facing text-side up, of course).

DON’t Lie about or exaggerate your past DO Include items that show off your quantitative skills: relevant course work, GMAT scores, math

experiences. THE INTERVIEW SAT scores, spreadsheet software and related

programs you know how to use. (Email and word- UNPLUGGED CHA P TER 3 processing programs don’t count).

DO Make the objective on your resume consistent DON’t Write salary requirements on the resume. with the firm and the position. Generalists need not apply. If you’re still uncertain whether your destiny lies in IT consulting or fixed-income trading, design two separate resumes. PREP GUIDE INTERVIEW CHA P TER 4

DO Proofread for typos, grammar, and sense. Typos DON’t Offer too much. You are far too young and will land you in the garbage before the recruiter inexperienced to have a resume that goes on for pages. A college or MBA student’s resume should has time to process your name. Subjects and verbs usually fit onto one page. must agree. Unless universally understood, abbreviations are almost always a bad idea. WORKBOOK INTERVIEW CHA P TER 5 DO Mention, without exaggerating, the foreign DON’t Lie about your foreign language skills. When an applicant claims fluency in a foreign languages you know. language, he or she should be prepared for at least one interview in that tongue. PERSPECTIVE A STUDENT’S CHA P TER 6

WETFEET INSIDER GUIDE 11 Beat the Street®: Investment Banking Interviews

Step Five: “Final” Interviews you their lives will be empty without you. You’ll be Within a day or so you will know if you were loved invited to a special dinner in New York. There, the CHA P TER 1 A GLANCE AT enough to get an invite to the final round. Whatever you firm will give you the hard sell and a date before which do, don’t let it go to your head. “Final” is a misnomer they would like you to decide. Enjoy the attention for here; this is merely the filter that separates the capable a while and then, if you’re sure about the decision, say from the extraordinary. After you’ve been notified by yes with enthusiasm. If you’re lucky enough to have phone, you’ll be flown to corporate headquarters and several suitors clamoring for you, say no to the rejects as thrown together with a small army of other hopefuls gently as possible: You never know when you may wish for an evening of wining and dining and a full day of to rekindle their interest. interviews. More than likely, you’ll be staying in a posh CHA P TER 2 THE INTERVIEW PROCESS Manhattan hotel. But you won’t see much of it. At this point, the firms assume that everyone Alternatives to assembled is capable of doing the job. Now they’re assessing your personality, your behavior in a social “The Process” and professional context, and whether you are the › Not in school? A foreign student? Recruiter right match. This is your moment to emerge from the doesn’t come to your school? You can still get an inter- pack and demonstrate your own unique qualities. Be view. And you can still get a job in I-banking. Here’s

CHA P TER 3 THE INTERVIEW UNPLUGGED yourself and stay focused. what our insiders recommend if you fall into one of You will meet with roughly six or seven bankers these categories. of varying seniority for half an hour or more each. Sometimes you’ll be grilled one-on-one, other times Mid-career Hires

two-on-one. Here’s what they’re looking for: how If you already work on Wall Street, you know where you’d fit in at Bank X; why you want to work at Bank to go—and you’re probably not reading this guide. If X (instead of equally good Banks Y and Z); whether you’re coming from another industry, you’ll probably you can crunch numbers accurately and never miss a have a tougher time. Everyone is happy to hire lawyers CHA P TER 4 INTERVIEW PREP GUIDE typo; and, perhaps most important, the likelihood that who are fully proficient in banking or, on the research you’d accept an offer (bankers don’t appreciate having side, people with deep industry experience. And a their egos bruised by a recruit’s “No, thank you”). few firms are willing to take a chance on a brilliant Your potential colleagues also want to make sure they academic. But most tend to fill the gaps in their analyst wouldn’t hate sharing office or airplane space with you. and associate pools with men and women who have worked in a similar capacity for competitors. If you Step Six: The Offer are a lateral hire, the good news is that you don’t have

CHA P TER 5 INTERVIEW WORKBOOK and Courting Process to suffer at your current job waiting out the long If you’ve successfully demonstrated your fealty and recruiting season. Throughout the year, recruiters scurry ability, the phone will ring several days after the final around to replace those analysts or associates who round of interviews. (Some firms conduct third-round have either defected or fallen off the corporate track. interviews, which are typically similar to the second Because lateral hires are typically not interviewed round, before extending offers.) In most cases, it makes during the normal training-program season, they sense to remain polite and noncommittal. You will field usually begin their new jobs without much, if any, phone calls from several members of the firm telling formal training. CHA P TER 6 A STUDENT’S PERSPECTIVE

12 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1

Foreign Students of your school who work on the Street. Ask lots of For foreign nationals who lack the right visa status thoughtful, informed questions and demonstrate your to work in the U.S. after attending an American commitment to investment banking. Keep in mind university, the process is less complicated than you that, like the S&T hopefuls, you will probably have to might think. Investment banking is an increasingly fly yourself to headquarters (most likely New York) on global enterprise. Recruiters unanimously agree that your own nickel and pay for your lodging. This show of THE INTERVIEW

candidates who are not U.S. citizens are treated the initiative may just be your ticket in. Remember: Being CHA P TER 2 same as any other applicant; your working status is not hungry for an investment banking job is at least as PROCESS an issue. In fact, your proficiency in several languages important as having a top-tier school on your resume. and close ties to your own country may give you a What really makes a candidate stand out is enthusiasm highly desirable edge. If you receive an offer, the firm and commitment to the work. One recruiter told will arrange your visa and, after a given number of us of a candidate she hired from a school where the years, your green card. firm does not recruit: “On top of her excellent THE INTERVIEW academic and professional experience, I was so UNPLUGGED Help! impressed with her initiative to seek out several people CHA P TER 3 “I don’t have a prestigious undergraduate degree and/or in the firm. She demonstrated a genuine interest I attend a second-tier MBA program. Is all hope lost?” in investment banking when she flew to New York No. If the top firms’ analysts all appear to be to meet with us and several other firms over her summa econ graduates of U.S. News & World Report’s Thanksgiving break.” Top 10, or if the associate class seems to have been Most insiders concede, however, that candidates culled from the ranks of former analysts or the Penn from lesser-known schools need to have either stellar PREP GUIDE INTERVIEW and Harvard Clubs, you’re not far off. Investment work experience or the ability to fill a unique need CHA P TER 4 banking firms are disproportionately staffed with at the firm, particularly for CorpFin positions. It Ivy Leaguers and top-tier MBA graduates who get also helps if they have previously worked with someone scooped up on the recruiting tour. But there is no in the firm who can serve as a reference. At the same need to give up just because the scoop never came time, several recruiters for sales and trading for you. There is a way in, albeit a more difficult one. reveal that they interview—and hire—many If you’re going to be the exception, you need well- graduates from no-name undergraduate schools honed interviewing tactics. Preparation, strategy, and or MBA programs. One insider explains that if WORKBOOK INTERVIEW aggressive but discriminating networking will all help you went to a lesser known institution you CHA P TER 5 get you the job. need to be prepared to give a valid reason. The The first step is networking. Do not waste your best reason, as you might guess, is that you received

time blindly sending your resume to every firm. Focus a full scholarship. And if you’ve already had a lot instead on setting up appointments with industry of relevant experience, the good news is that where insiders, either through introductions from friends you went to school has much less impact on your (or even friends of friends) or by targeting alumni candidacy. PERSPECTIVE A STUDENT’S CHA P TER 6

WETFEET INSIDER GUIDE 13

The Interview Unplugged

Preparing Yourself for the Beauty Contest...... 16 Research...... 16 Rehearse...... 17 Review...... 18 3 Investment Banker Lingo...... 26 Beat the Street®: Investment Banking Interviews

Preparing impress your interviewer with your knowledge of the company’s business mix.

CHA P TER 1 A GLANCE AT Yourself for the Beauty Contest Research Tips › Okay, you’ve read the brochures, surfed the Web, and talked to alums working on the Street, and Good Sources of Information about Banks

you’ve decided that you want to find your own place Second-year MBAs who worked as in the world of high finance. How can you land one summer interns in the industry of these jobs? The same way you’d go about doing the First-year associates who are alums of your school job once you’re there: with careful preparation and CHA P TER 2 THE INTERVIEW PROCESS Classmates who worked on the Street attention to detail. We call this the Three Rs: Research, before business school

Rehearse, Review. Friends of friends who work on the Street

Any alums of your school

Research WetFeet Insider Guides › The first step in any successful job search is research. Not only do you need to know the positions, Other Sources That May Also Be Helpful

CHA P TER 3 THE INTERVIEW UNPLUGGED you also need to know the players and their distin- Company websites guishing characteristics. Why? Because, as we’ve said before, you’ll need to convince your interviewer that Company representatives at info sessions and career fairs you are the perfect person for the particular job at his Day-on-the-job programs

or her bank. Your resume, your answers—indeed, your entire persona—must be steeped in corporate finance Informational interviews with current employees (or whatever job area you’ve selected). And although Business publications including The Wall Street Journal, the jobs within each area tend to be numbingly similar Institutional Investor, and others CHA P TER 4 INTERVIEW PREP GUIDE at all firms, each institution has its own culture and expects applicants to be aware of this. It is also worth If you’re concerned about other issues, such as learning the differences among firms so you can be sure friendliness to women or minorities, you may have a to find a good fit. harder time. These topics can be sensitive. Recruiting For instance, let’s say you speak several languages material would have you believe that a harmonious and the international aspects of investment banking rainbow coalition reigns throughout, from the research are one of your chief reasons for reading this far. cubicles to the trading desks. To get the real story,

CHA P TER 5 INTERVIEW WORKBOOK Every bank describes itself as global these days, but you’ll want to talk to real employees. You’ll want the number of overseas offices, how much revenue to read about companies in the press (and WetFeet these outposts generate, and how many U.S. citizens guides) and see if they come up in Fortune’s “100 actually get to work in them may vary. In fact, the Best” list. Unfortunately, the reality at many firms is list of firms likely to send you abroad is quite short. far from the glossy image they try to project. Also, If this is your goal, it will take you only a few minutes be wary of the term “entrepreneurial,” which appears to learn everything you need to know from a firm’s frequently in investment banks’ self-descriptions. For annual report. You’ll determine which firms offer those of you who have worked with real entrepreneurs, CHA P TER 6 A STUDENT’S PERSPECTIVE the best opportunities abroad. You’ll also be able to you know that investment banks are about as close to

16 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1 the genuine article as GM is to a startup. In banking selves. According to our conversations with recruiters, lingo, “entrepreneurial” means being able to shine in a schedule of ten people, several will get knocked with little oversight. At certain firms, it may mean out of the competition because they were unable to doing every possible type of work from picking up explain their accomplishments clearly and effectively someone’s dry cleaning to meeting with the client’s top and relate them to a specific job. Make sure you don’t management. And never complaining. Or bragging. become a statistic. The best way to do this? Practice THE INTERVIEW

Real entrepreneurs tend to do poorly in investment your pitch! It may sound dumb, but we recommend CHA P TER 2 banking, because they’re too independent and don’t like writing out an “elevator pitch” about who you are and PROCESS working under layers of people. what you’ve done. In other words, imagine that you get on an elevator with the president of the company. You have his undivided attention for about the next Rehearse 15 seconds, before he steps off the elevator. Your pitch › Investment banking interviews aren’t has to be short and convincing. The key elements THE INTERVIEW a mystery. You already know what 75 percent of here are to convey your past accomplishments clearly, UNPLUGGED the interview will be: questions about you and your succinctly, and in a way that emphasizes the unique CHA P TER 3 accomplishments. You may think this is the easy part. reasons why you would be the perfect candidate for But most people have a hard time talking about them- the job.

the wetfeet interview coach

Write out your elevator pitch here.

Who are you, what have you done, and why does that make you the best person for the job? PREP GUIDE INTERVIEW CHA P TER 4

WORKBOOK INTERVIEW CHA P TER 5

PERSPECTIVE A STUDENT’S CHA P TER 6

WETFEET INSIDER GUIDE 17 Beat the Street®: Investment Banking Interviews

In addition to rehearsing your elevator pitch, do mention your interest in medieval Japanese history, you’ll want to try to anticipate and prepare for other it’s entirely possible that one of your interviewers will CHA P TER 1 A GLANCE AT scenarios you are almost certain to encounter. Not ask you what you think made the Tokugawa regime only will this help you perform better, it will also help so successful. At the same time, you might not want show your sensitivity to the realities of the profession. to mention interests that could offend someone. For Bankers are chronically short on time, so securing a example, politics, religion, and certain types of music banker’s undivided attention is a boon that should and art can hit the wrong nerve. If you have any not be wasted. Come prepared. What does that mean? doubts, it’s probably a good indication that you should Here are a few suggestions from our interviewees: avoid a subject. • Prep yourself to discuss anything and everything CHA P TER 2 THE INTERVIEW PROCESS that appears on your resume (and make sure you can account meaningfully for any time gaps). Review › Get out your old textbooks; it’s time to review. • Be prepared to explain convincingly why your Insiders tell us that investment banking interviews “greatest weakness” is actually a strength. don’t usually involve the same heavy-duty case questions found in consulting interviews, but you’re still • Practice your handshake (firm, but not vise-like) and going to need to know your way around basic corpo-

CHA P TER 3 THE INTERVIEW UNPLUGGED your ability to talk and listen while looking directly rate finance and accounting issues—especially if you’re into your interviewer’s eyes. coming from B-school. (Undergrads, breathe easy: You can impress your interviewer by knowing this stuff, but • Get comfortable with basic valuation frameworks— it’s not de rigueur.) You should review basic concepts

understanding fundamentals is more important from CorpFin and Accounting 101. To help you with than mastering lingo at the interview stage. this, WetFeet has dusted off an old finance textbook and prepared a quick review of basic finance tricks that • Draft specific questions for your interviewers that might help you in your interview. CHA P TER 4 INTERVIEW PREP GUIDE will demonstrate your interest in their firm. Valuing a Company • Read The Wall Street Journal and Business Week to Company valuation is perhaps the most important familiarize yourself with current business condi- service provided by investment banks’ corporate tions. You’ll need to know at least the companies finance groups. Indeed, it underlies taking companies involved in any sizable deal. public, buying or selling companies, and deciding whether to repurchase stock. Accordingly, many

CHA P TER 5 INTERVIEW WORKBOOK Because of the long hours bankers log at the office interviewers will ask candidates—typically MBAs, and with one another, candidates are often asked about though undergraduates who claim some prior valuation the items on their resumes that might indicate whether experience may get these questions as well—to walk they’d be an interesting and entertaining company through the valuation of a hypothetical enterprise. late at night. You may want to include something MBAs bucking for associate positions will be held to more than the standard blue-pin-striped-suit sort of a higher standard than undergrads vying for analyst accomplishment on your resume. The usual place for openings, since MBA candidates who have been analysts this is in an “Other” section, which should appear at will have had some experience with valuation. They will CHA P TER 6 A STUDENT’S PERSPECTIVE the bottom of the resume. Remember, though: If you also have covered valuation in classes. Undergrads

18 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1 taking high-level business classes, or who have served as value of a company, real bankers tell us that this method interns with financial services organizations, will have is rarely used as the key valuation technique in practice. also learned about valuation but to a lesser degree. Why? Relying on historical earnings or cash-flow growth Recruiters are generally more interested in evaluating to estimate future flows is dubious, particularly in candidates’ logical thinking than in having candidates industries undergoing rapid technological change or arrive at a particular number. However, you should consolidation, or experiencing heated competition. THE INTERVIEW

at least be aware of the different methods of valuing a Consider the case of the deregulated telecommunications CHA P TER 2 firm. Two of the key ones are discounted cash flow and industry: Fierce competition has made firms vulnerable PROCESS market multiples. to a reduction in future cash flows as more companies have rivaled for market share. Discounted Cash Flow The appropriate discount rate depends on the Theoretically, the most accurate valuation technique company’s likelihood of realizing projected cash is the discounted cash flow (DCF) method. The flows. Many times, this calculation uses the risk- THE INTERVIEW assumption underlying DCF analysis is that a firm is a adjusted rate of return for a peer company, especially UNPLUGGED collection of projects which each generate (or absorb) if the competitor’s stock is already traded in the public CHA P TER 3 cash. Because an investor is buying the rights to these market. While a constant discount rate is commonly projects, a firm’s value is determined by valuing the net used to calculate the value of future cash flows, an sum of their future cash flows. analyst should consider whether a firm’s discount rate Calculating DCF involves three steps: (1) estimating should vary over time, reflecting different risk levels for the future cash flows generated by a firm’s operations, each projected cash flow. (2) choosing a discount rate which reflects the perceived Taking the present value of, or discounting, future PREP GUIDE INTERVIEW uncertainty of those estimated cash flows, and (3) expected cash flows is relatively easy with either a CHA P TER 4 calculating the present value of projected cash flows. handheld calculator or a spreadsheet software program Determining projected future cash flows (known as (both of which will be provided by whichever bank pro forma cash flows) can be done several ways. An easy you join). If the pro forma cash flows are the same for way is to take the current year’s reported earnings (that the time period in question, the problem reduces to is, the company’s after-tax net income) and multiply by the present valuation of an annuity. If the cash flows some number such as the average earnings growth rate are different, then each cash flow must be discounted for the last five years. This gives projected net income individually and then summed to find the present value WORKBOOK INTERVIEW for next year. Usually, earnings are projected for the of the cash flow bundle. CHA P TER 5 first five to seven years, after which a terminal value is added. (The terminal value is equal to an annuity Market Multiples

beginning in a future year, discounted back to the While DCF is arguably the most theoretically accurate present.) Since accounting income is often a poor proxy means of valuing a company, in practice bankers rely for cash flow, analysts will carefully calculate free cash much more heavily on the market multiples method flow by starting with EBIT (earnings before interest to appraise firm value. (Often DCF is used as a PERSPECTIVE and taxes), taking out taxes on those earnings, and reality check on the accuracy of a multiples analysis.) A STUDENT’S CHA P TER 6 adding back interest, depreciation, amortization, and Fortunately for analysts and associates, the multiples other cash-affecting items. method is considerably easier and less time-consuming Although business school professors love the than DCF, and is more readily understood by clients. mathematical clarity of this means of calculating the Multiples analysis is predicated on the assumption

WETFEET INSIDER GUIDE 19 Beat the Street®: Investment Banking Interviews

Cash FLow Formulas CHA P TER 1 A GLANCE AT Discounted Cash Flow The basic formula for discounted cash flow analysis, in its most simple, is:

Free Cash Flow (year 1) + FCF (year 2) + . . . + FCF (year 5) + Terminal value

(1 + unlevered rate of return) (l + r)2 (l + r)5

Free Cash Flow = EBIT (earnings before interest and taxes) - estimated taxes on EBIT (at the company’s tax rate) + depreciation + amortization - capital expenditures and networking capital requirements -/+ any other changes that will cause the company to spend cash or

CHA P TER 2 THE INTERVIEW PROCESS will be a source of cash to the company (such as severance payments or an expected legal settlement)

Unlevered rate of return = (Risk-free rate of return + (stock beta * (return on market portfolio - risk-free rate of return)) The risk-free rate of return is the 1-year T-Bill rate, the stock beta comes from a standardized “beta book” produced by one of the big investment banks or Bloomberg, and the return on a market portfolio is the 52-week return on the S&P 500.

CHA P TER 3 THE INTERVIEW UNPLUGGED Terminal Value = Value of an annuity in year 5 or 7 discounted back to present.

that markets value similarly situated firms using the financials for the various comparable firms selected in

same metric or set of metrics, such as a multiple of step one, and searching for patterns in the numbers. revenue, cash flow, or accounting earnings. Thus, there (Typically, more-senior bankers will direct the analysts are essentially two steps to valuing a company using the and associates working with them on where to look multiples method: for patterns.) If you analyzed the pharmaceutical CHA P TER 4 INTERVIEW PREP GUIDE 1. Identify a set of comparable firms. industry, for instance, you would find that the market 2. Determine the appropriate multiples to be used. capitalizations for the major players have a multiple of revenue of about 2.5x to 5x. The market capitalization The first step is highly subjective; it involves assessing of firms in other industries may be a function of the core business (or businesses) of the company being different metrics: For example, department stores may valued, and identifying the publicly traded companies trade as a multiple of total retail outlets, self-storage with similar or identical core businesses. There is property operators may trade as a multiple of rental

CHA P TER 5 INTERVIEW WORKBOOK considerable art in appropriately defining a company’s income, and so on. core business, even when a firm is relatively focused. Multiples analysis is an iterative process—once But this assessment determines the comparison set of you complete step two, you must step back, analyze, companies, which in turn will determine the valuation. and evaluate whether you need to change any of The second step of multiple analysis involves the assumptions from step one. For instance, in the determining the appropriate metrics and multiples to pharmaceutical industry, Pfizer’s market capitalization use for valuation purposes. This entails setting out the toward the end of June 2002 was about 6.5x its market capitalizations (that is, share price multiplied by revenue. Obviously, if you were to include Pfizer in CHA P TER 6 A STUDENT’S PERSPECTIVE number of shares outstanding) and publicly reported your average revenue multiple, you would emerge with

20 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1 a larger valuation for the firm you are analyzing than acquisition cost of assets may misstate their current is probably warranted. Before discarding it, though, replacement cost or net realizable value, and that firms you must theorize why Pfizer’s multiple broke the have wide latitude in selecting from among various pattern. Perhaps its size justified a higher multiple. Or generally accepted accounting principles. it might have been its advantages as a first mover. You Even after accounting for these caveats, it is hard to should only use an “outlier” multiple if its presumed say what constitutes a healthy ratio. General wisdom THE INTERVIEW

explanation applies to the firm you are valuing. The suggests an average value of 2.0 and 1.0 for the CHA P TER 2 iterative process should continue until you have arrived Current Ratio and Acid Test Ratio, respectively. Higher PROCESS at a defensible valuation, substantiated by a DCF liquidity ratios are considered good, except in the analysis. It is mastering the art of multiples analysis case of the Cash Ratio—a very high Cash Ratio may that sets experienced bankers apart from their less suggest poor cash management (See next page for the experienced junior colleagues. Understanding at least formulas for theses ratios). Leverage ratios provide a the fundamental concept of multiples analysis at the measure of how much debt a firm uses. As with most THE INTERVIEW interview stage will give you a definite advantage things, debt is generally considered acceptable if used UNPLUGGED throughout the recruiting process. in moderation. High leverage ratios indicate a firm CHA P TER 3 that may be unable to repay interest and principal on Financial Ratios time, especially during a recession, when profits tend to Ratio analysis is an important part of any financial trend downward. However, many companies prefer to study of a firm. There are many categories of ratios, maintain higher leverage ratios because of the positive each serving a distinct purpose. It is unlikely that a impact on asset utilization and profitability ratios. candidate with no expressed familiarity with ratios PREP GUIDE INTERVIEW would be questioned about them in an interview. CHA P TER 4 Nevertheless, for the sake of thoroughness, you may want to brush up on the common financial ratios. (See Key financial Ratios box in the next column.)

Liquidity ratios: Used to evaluate a firm’s As with company valuation, interpreting financial short-term liquidity, measuring its ability to ratios is more an art than a science. Generally, ratios pay wages, short-term creditors, taxes, and are evaluated for a firm over time, or are compared interest on bonds without delay. with industry averages. Most research analysts do both. Leverage ratios: Used to evaluate a firm’s WORKBOOK INTERVIEW When comparing a particular ratio between periods creditworthiness from a long-term lender’s CHA P TER 5 for the same firm, you must recognize conditions that perspective. have changed between the periods being compared Profitability ratios: Used by prospective or

(different product lines or geographic markets served, existing shareholders to evaluate a firm’s changes in economic conditions, changes in prices). past earnings, its potential for future income Similarly, when comparing ratios of a particular firm to growth, and how much profit is paid out to shareholders in the form of dividends. those of similar firms, you need to see the differences PERSPECTIVE (in their methods of accounting, in their operations, Asset-utilization ratios: Used to evaluate the A STUDENT’S CHA P TER 6 in their types of financing, and so forth). Furthermore, productivity of firm assets. remember that ratios based on financial statement Source: Financial Statement Analysis: Theory, Application and Interpretation, 6th edition, by Leopold A. Bernstein and John J. Wild data are necessarily subject to the same criticisms as (Irwin / McGraw-Hill, 1997) financial statements generally—namely, that historical

WETFEET INSIDER GUIDE 21 Beat the Street®: Investment Banking Interviews

Financial Ratio Formulas

CHA P TER 1 A GLANCE AT Ratio Formula

Liquidity Ratios

Current CA / CL

Acid Test (aka Quick Test) [C + CE + MS + AR] / CL

Cash [C + CE] / CL

CHA P TER 2 THE INTERVIEW PROCESS Collection Period Average AR / [CS / 360]

Days to Sell Inventory Average I / [COR / 360]

Leverage Ratios

Total Debt to Total Capital [CL + LTL] / [EC + TL]

CHA P TER 3 THE INTERVIEW UNPLUGGED Long-Term Debt to Equity LTL / EC

Times Interest Earned [IBT + IE] / IE

Profitability and Investor Ratios

Gross Profit Ratio GP / NR

CHA P TER 4 INTERVIEW PREP GUIDE Net Income to Sales NI / NR

Dividend Yield DPS / MPPS

Price to Book Ratio MPPS / BVPS

Price to Earnings Ratio MPPS / EPS

Asset Utilization Ratios CHA P TER 5 INTERVIEW WORKBOOK

Sales to Fixed Assets NR / Average FA

Sales to Total Assets NR / Average TA

Sales to Inventories NR / Average I CHA P TER 6 A STUDENT’S PERSPECTIVE

22 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1 Financing Strategies Table of Abbreviations for Companies Financial Abbreviation Account Name Statement If you’re applying for an investment banking job, AR Accounts Receivable Balance Sheet your interviewers will assume that you have a solid understanding of the financial aspects of managing Book Value Per BVPS Balance Sheet THE INTERVIEW Share a company. Just in case you don’t, here’s the basic

C Cash Balance Sheet info. Generally speaking, companies obtain the CHA P TER 2 funds they need to sustain growth by selling stock PROCESS CA Current Assets Balance Sheet (equity) or borrowing (debt); by retaining earnings CE Cash Equivalents Balance Sheet (not distributing profits to shareholders); and/or by selling off (divesting) noncore, nonstrategic assets. CL Current Liabilities Balance Sheet The corporate finance group of an investment bank Income advises companies on how to most efficiently and cost- COR Cost of Revenue THE INTERVIEW Statement effectively finance growth. Corporate finance works Income UNPLUGGED

CS Credit Sales CHA P TER 3 Statement with salespeople, traders, and research analysts to DPS Dividends Per Share None determine the best ways a company might do this.

EC Equity Capital Balance Sheet Staying Abreast Income EPS Earnings Per Share of Current Events Statement It is imperative to stay on top of current events, financial FA Fixed Assets Balance Sheet and otherwise, both during the interview process and Income PREP GUIDE

GP Gross Profit INTERVIEW Statement beyond. Expect an interviewer to ask you about events CHA P TER 4 in the U.S. and abroad, especially financial activities. I Inventory Balance Sheet Almost everyone on the Street reads The Wall Street Income IBT Income Before Taxes Journal; even though it has become more of a generalist

Statement Income publication since Rupert Murdoch bought it in 2007, it’s IE Interest Expense Statement still a must-read for aspiring bankers. Other good sources Long-Term LTL Balance Sheet Liabilities include the Financial Times and The Economist, both Market Price Per valuable for their more international outlook.

MPPS None WORKBOOK INTERVIEW Share An investment banker must know how to read CHA P TER 5 Marketable MS Balance Sheet stock tables, too—after all, that’s where the money Securities Income is made. One of the most important, the New York NI Net Income Statement Stock Exchange Composite Transactions, provides Income NR Net Revenues information on stocks listed on the New York Stock Statement Exchange. Information is also provided for stocks TA Total Assets Balance Sheet traded on the American Stock Exchange and in PERSPECTIVE TL Total Liabilities Balance Sheet the over-the-counter market via the NASDAQ A STUDENT’S CHA P TER 6 (National Association of Securities Dealers Automatic TO Turnover None Quotations) system. While explanatory notes for tables Note: Automated per nasdaq.com and other sources. Per-share values are provided in The Wall Street Journalonline, it is

come from financial statement values, which are divided by the number of common shares outstanding. worthwhile illustrating how information is reported.

WETFEET INSIDER GUIDE 23 Beat the Street®: Investment Banking Interviews

Look below for an explanation of a listing for General assets such as depreciable equipment; and intangible Electric Company. assets like patents and trademarks. Liabilities include CHA P TER 1 A GLANCE AT current obligations such as accounts payable and General Accounting Information long-term debt. Shareholders’ equity consists of all the A public company must publicly disclose audited various types of stock outstanding plus accumulated financial information at the close of each quarter, and retained earnings. Relying exclusively on the balance must report a full 12 months of financial results at the sheet may be misleading: At times, firms engage in end of its fiscal year every year. Many companies file “window dressing” (actions taken to strengthen the their 12-month reports on a calendar-year basis; others balance sheet for a particular reporting date). In elect a 12-month period corresponding to their natural addition, because assets are recorded at their historical CHA P TER 2 THE INTERVIEW PROCESS production cycles. There are four primary financial values (their market values at the time they were first statements: balance sheet, income statement, cash flow acquired), when the market value of assets declines, statement, and statement of retained earnings. historical value overestimates the strength of the firm. Balance sheets may underestimate the financial health The Balance Sheet of a firm as well. For example, they don’t record assets The balance sheet is a snapshot, made on the reporting such as a talented, productive labor force, even though date, of a firm’s assets, liabilities, and equity. The asset superior firms are often market leaders in large part

CHA P TER 3 THE INTERVIEW UNPLUGGED column typically includes current or short-term assets because of their talented employees and managers. like cash, accounts receivable, and inventory; fixed

General Electric’s Stock Listing

52 Weeks 52 Weeks CHA P TER 4 INTERVIEW PREP GUIDE Hi Lo Stock Sym Div Yld % PE Vol 100s Hi Lo Close Net Chg

96⅞ 59 GenElec GE 1.20 1.5 31 96588 82¼ 78⅜ 81⅞ +6

The columns on the left reveal that “Div” is a measure of the dividend Multiply the volume number by 100

the stock traded in a range from $59 per share paid to shareholders. In to obtain an estimate of the number to $96.875 over the last 52 weeks. this case, shareholders were paid a of shares of this stock traded on the This price range has been adjusted healthy $1.20 per share. previous trading day. for various types of distributions to

CHA P TER 5 INTERVIEW WORKBOOK The dividend yield of 1.5 is a measure The stock traded on the previous shareholders, such as stock splits of the dividend amount relative to day within a range of $78.375 and and share dividends. (And if you the price per share of the stock. A $82.25, and closed at $81.875 per bought it at $59 and sold at its high, stock price of $80 would yield 1.5 share, six dollars higher than the you’d have made $37.87 a share, less percent from the dividend of $1.20. prior day’s close. 30 percent capital gains. Not bad.) The PE, or price-earnings ratio, says The next column provides an abbre- Excerpted from The Wall Street Journal, that the price per share ($80) is viated company name, followed by 09/09/98 about 31 times earnings per share. the ticker symbol of the stock. PE multiples vary over time and business cycles. CHA P TER 6 A STUDENT’S PERSPECTIVE

24 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1

Income Statement Statement of Retained Earnings (Profit and Loss Statement) The statement of retained earnings is used mostly The income statement records information about for analyzing the relationship between dividends and revenue, expenses, and profit for the firm—how much retained earnings. It shows how end-of-year retained money the firm made or lost in a given period. Although earnings are computed. To calculate, start with this is the basic statement used to determine whether a beginning-of-year retained earnings, add net income, THE INTERVIEW

company is profitable or not, bankers will take a careful and subtract dividends paid. CHA P TER 2 look at the numbers here to understand what they really A typical financial analysis relies on all four reports. PROCESS mean. To the extent that financial accounting standards Footnotes to the statements are found in the back of allow firm managers to record income statement items the annual report and must be used to understand how using one of several different alternatives, the quality of financial information should best be interpreted. earnings—also known as the bottom line—varies over time and across companies. Often a financial analyst Stock Analysis THE INTERVIEW will make adjustments to reflect the extent to which Stock analysis is an integral component of a research UNPLUGGED a particular financial accounting policy choice renders analyst’s responsibilities, and is relevant to the sales and CHA P TER 3 accounting income higher or lower than actual cash trading functions as well. Moreover, interviewers will income. For example, if a firm’s depreciable assets are often ask you to discuss a particular stock or stocks you vulnerable to technological obsolescence and the firm follow, and give a “buy” or “sell” recommendation. In uses a very long depreciation period, recorded expenses such cases, the interviewer is looking more to establish will underestimate depreciation costs. Reported income your enthusiasm for financial markets than to debate will therefore be overstated accordingly. the merits of a particular company or its stock price. PREP GUIDE INTERVIEW

A good answer to a question such as “Tell me about CHA P TER 4 Cash Flow Statement a stock that you follow” would be to give some brief The statement of cash flows is another essential part of background about the company and industry and any financial analysis. After all, even though a company why it interests you. You should then follow with a may be profitable, it needs cash to pay its bills and fund brief discussion of the current stock price, how it has its ongoing operations. Companies have to balance changed over time, what seems to be driving the price their outflows (paying bills, employees, and so on) with up or down, and the relevant industry information. their inflows (cash from sales of products, collections Among stock pickers, this type of analysis is known WORKBOOK INTERVIEW of amounts owed to the company, and investment). as fundamental analysis. (The other main type of CHA P TER 5 The cash flow report explains how cash was used and analysis is known as technical analysis, or “charting,” generated in each of three areas: operating, financing, and focuses on the historical pattern of prices and

and investing. Operating cash flows are those funds volume with the objective of discerning patterns in consumed and generated by the operation of the supply and demand over a specified period of time.) company’s core business. Financing cash flows describe When a pro does it, fundamental analysis begins events such as the payment of dividends, the issuance of with the underlying factors that drive a particular PERSPECTIVE stock or bonds, stock repurchases, and the repayment industry. It uses historical information, as well as pro A STUDENT’S CHA P TER 6 of debt. Investing cash flows detail how money was forma or forecasted information. Thus, fundamental spent or raised from selling or buying capital. analysis starts with a big-picture evaluation of the economy and proceeds to narrow its scope to a study of industry-level metastructure. A detailed analysis of

WETFEET INSIDER GUIDE 25 Beat the Street®: Investment Banking Interviews

each company operating within a particular industry statements after you’ve examined the fundamentals follows, culminating in the creation of a predictive of the industry. For example, if you were a research CHA P TER 1 A GLANCE AT valuation model. This company-level analysis entails analyst covering the pharmaceutical industry, you both an assessment of a firm’s financial profile as well as might identify overseas sales as a key industry driver. softer issues such as management competency, strategic In analyzing a particular pharmaceutical company’s vision, and brand equity. income statement, you’d know to account for the fact that exchange rate fluctuations will affect period-to- period earnings considerably. Comparing two Firms

CHA P TER 2 THE INTERVIEW PROCESS Calculating and benchmarking individual ratios is a necessary, but insufficient, part Investment of the study of a firm’s financial health. It is also necessary to decompose (or “double-click Banker lingo on”) the ratios, or employ several ratios to › Part of your research should involve learning to describe a firm’s financial well-being. Consider abbreviated financial information for two “talk the talk.” You’re not expected to have mastered firms, ABC and XYZ, both operating in the banker speak by the time you have your first inter- same industry. view, but you can separate yourself from a very large

CHA P TER 3 THE INTERVIEW UNPLUGGED pack if you become familiar with some job-related Firm ABC Firm XYZ terms. (Note: The source for some of these buzzwords Price Per Unit $10 $5 is Miriam Naficy’s The Fast Track, which is also full of Number of Units Sold 1,000,000 2,000,000 other useful tips.)

Sales Revenue $10,000,000 $10,000,000 Cost of Goods Sold $8,000,000 $6,000,000 Banker/I-banker Net Income $2,000,000 $4,000,000 As with most professions, investment banking has its Net Profit Margin 20% 40% own patois. While you will find sprinkled throughout CHA P TER 4 INTERVIEW PREP GUIDE At first blush, Firms ABC and XYZ seem to be this guide many of the buzzwords you should become equally successful, each generating $10 million comfortable with, one bit of lingo is worth highlighting in sales revenue. However, further inspecting the numbers reveals two significant facts. at the outset: Calling investment bankers “I-bankers” First, Firm XYZ sells twice as many units as is like calling San Francisco “San Fran” or “‘Frisco”— Firm ABC and at a lower price. Second, ABC’s only the out-of-towners do it, and the locals will expenses are 33 percent higher than XYZ’s, immediately know you’re not one of their own. Get pushing its net profit margin downward. To derive a robust predictive model that can be into the habit of using the term “banker.”

CHA P TER 5 INTERVIEW WORKBOOK used to value a firm and its stock, an analyst must understand the operating profiles of the various competitors within an industry. Beauty contest The series of presentations investment banks make Several comments are in order with respect to to clients to make themselves more appealing than fundamental analysis. First, it is meaningless to analyze competitors and therefore win the deal. Think of your a firm in isolation. Most bankers either analyze a firm efforts to land a position in investment banking as your over time or against an industry benchmark or both. own personal beauty contest. CHA P TER 6 A STUDENT’S PERSPECTIVE Moreover, you should only begin analyzing financial

26 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1

Bond Equity or stock A form of tradable debt evidenced by a promise to An ownership interest in a company, publicly or pay back money owed. The issuer of a bond promises privately held. to pay the bondholder a specific amount of interest (the coupon) on the original amount borrowed (the Fixed income principal) for a specified length of time. Also known as bonds. As the name indicates, the THE INTERVIEW

interest rate is fixed, with a certain period of maturity. CHA P TER 2 Cash flow PROCESS The amount of real dollars a company generates IPO from its operating, investing, and financing activities. Initial public offering: Selling shares of a privately In many industries, cash flow differs from reported held company to the public for the first time. income (profit) because of noncash accounting charges that must be included in reported income. Therefore, Junk bonds (high-yield debt) THE INTERVIEW cash flow is often a better measure of a firm’s health. Bonds backed by issuers with shaky financial prospects. UNPLUGGED Cash flow is often equated with EBITDA (“ee-bit- To compensate for the increased risk of default CHA P TER 3 dah”)—earnings before interest, taxes, depreciation, (including the possibility that the issuer will be unable and amortization. to make scheduled interest or principal repayments), the interest rate demanded on junk debt is relatively high. Copy, collate, spiral binding, double-sided… Enough said. LBO Leveraged buyout. Buying a company using PREP GUIDE

Comparables/Compsave INTERVIEW predominantly borrowed funds, often through a CHA P TER 4 Large spreadsheets comparing the financial stats combination of debt securities and bank loans. For of different deals, client competitors, or even the a number of reasons, including bad press in the investment banking capabilities of competing firms. late 1980s and subsequent changes in bank lending

As an analyst, you will spend a significant portion regulations, LBOs are now often referred to as HLTs of your waking hours updating these and ensuring (highly leveraged transactions). their accuracy (and dreaming about them in your sleeping hours); as an associate, you will oversee their Model WORKBOOK INTERVIEW preparation and double-check for accuracy. Comprehensive financial projections, created with CHA P TER 5 Lotus or Excel spreadsheets, that show the effect of a Corporate finance specific transaction. You will spend a great deal of your

The group within an investment bank that provides time building, updating, and explaining these. advice to corporations on a range of financial matters, including raising capital via debt or equity. Pitch books The documents investment banks use to try to win PERSPECTIVE Due diligence, or due dili (di´-lee) business with potential clients at beauty contests. The A STUDENT’S CHA P TER 6 Investment bankers’ evaluation of the financial and book highlights the bank’s performance, merits, and other conditions of a company before they help the the comps and models you slaved over. This is what company issue securities to the public. keeps you up all hours compiling, editing, copying, collating, and binding.

WETFEET INSIDER GUIDE 27 Beat the Street®: Investment Banking Interviews

Underwriting Investment banks’ purchase of a securities issue for CHA P TER 1 A GLANCE AT resale to investors.

Yield The annual return on an investment, expressed as a percentage of the original investment. CHA P TER 2 THE INTERVIEW PROCESS CHA P TER 3 THE INTERVIEW UNPLUGGED

CHA P TER 4 INTERVIEW PREP GUIDE

CHA P TER 5 INTERVIEW WORKBOOK

CHA P TER 6 A STUDENT’S PERSPECTIVE

28 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1 THE INTERVIEW CHA P TER 2 PROCESS THE INTERVIEW UNPLUGGED CHA P TER 3 PREP GUIDE INTERVIEW CHA P TER 4

WORKBOOK INTERVIEW CHA P TER 5

PERSPECTIVE A STUDENT’S CHA P TER 6

WETFEET INSIDER GUIDE 29

Interview Prep Guide

The Judge’s Scorecard...... 32 Acing the Interview...... 36 Round One: First Interview...... 38 The Airplane Test...... 41 Round Two and Beyond...... 42 Your Final Interview...... 44 A Few Words on the Stress Interview...... 47 Your Turn to Ask the Questions...... 48 Denouement...... 49 The Offer...... 51 4 Salary Negotiations...... 52 Beat the Street®: Investment Banking Interviews

The Judge’s Investment Banking Recruiters’ Top Ten Pet Peeves CHA P TER 1 A GLANCE AT Scorecard Rank Pet Peeve › In this section, we’ll tell you what the recruiters Being asked personal questions in CorpFin and Sales and Trading are seeking. There are 1 (especially regarding even the most a few constants. Candidates should have strong quan- obvious pregnancy). titative skills, because the work involves a large number Candidates who consult their resumes 2 during the interview. (Don’t you know of rapid calculations. A recruiter will want candidates your own background?) who seem particularly eager to start their investment Follow-up calls to confirm that the firm banking career with his or her particular firm—if you 3 received your resume. (Recruiters CHA P TER 2 THE INTERVIEW PROCESS have doubts, it will show in the interview. Recruiters sometimes get 8,000 resumes a season.)

seek people who work well with others, maintain poise 4 Overly fancy resumes. under pressure and aren’t ruffled by long hours. They also want candidates who seem mature and respon- “Creative” resumes (strange paper and 5 sible. (It’s easy to forget that investment bankers work fonts, attached to a fishing-reel hook). with enormous sums of other people’s money.) Finally, Questions that have already been 6 banks want candidates whose personality seems a good covered in the interview.

CHA P TER 3 THE INTERVIEW UNPLUGGED fit for their organizations—a person who is ideal for Goldman Sachs may not flourish at Merrill Lynch. 7 Canned answers. A Morgan Stanley employee may not do as well at JPMorgan Chase. In addition, different areas of an 8 Long-winded answers.

investment bank require different skills and personalities. We remind you to think deeply about which part 9 Arrogance. of investment banking is right for you. Undergrads who think they’ll be 10 running meetings and rubbing CHA P TER 4 INTERVIEW PREP GUIDE Corporate Finance elbows with the CEO. The top CorpFin candidate should possess strong quantitative and analytical skills (good with numbers, Special Information for Undergraduates able to draw conclusions from seemingly unrelated Recruiters say a top candidate for an analyst position in facts); an understanding of the industry (quick— corporate finance is an economics, finance, or business what was the biggest IPO last year?); an ability to major who has graduated from a top 40 school with a learn quickly and work efficiently (never need things minimum 3.5 GPA. The candidate has demonstrated

CHA P TER 5 INTERVIEW WORKBOOK explained twice, never miss deadlines); meticulous excellence through academic awards and the ability to attention to detail (it’s done right, done fast, and done juggle extracurricular leadership activities and team perfectly—the first time); and an ability to juggle sports. Fluency in a second language, especially Spanish, multiple complex assignments simultaneously (can Japanese, or Mandarin, is an added plus. manage three type A personalities who all expect their There are few candidates that fit this idealized projects completed yesterday). profile—so take heart! In fact, whether you realize it or not, you share many qualities of the top candidate, even if your experiences and talents aren’t as instantly CHA P TER 6 A STUDENT’S PERSPECTIVE marketable as those listed above. While you may not

32 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1 have an athletic bone in your body or an economics > TIP degree, you may be committed to a different activity. As one insider chillingly puts it, “Analysts are Highlight it! And a liberal arts major is no cause for not bankers, they are slaves to the bankers. gloom: Investment banks are filled with English, We want to see that they’ll do as they are told.” According to this same source, you history, and philosophy majors. won’t be making corporate presentations That said, if you didn’t major in economics or to senior management, but you will become THE INTERVIEW

business, you’ll need to show that you’re comfortable best friends with the copier and spend many CHA P TER 2 and skilled working with numbers and that you can a night sleeping on it. PROCESS learn how to analyze companies and industries. If you’re still in your junior year, it might be time to include the Special Information for MBAs odd accounting or economics class in your course load. While a large percentage of the full-time associate It’s also important to remember that getting hired as classes come from the summer associate pool, there is an undergraduate analyst is based more on intangibles still hope for those of you who elected for a different THE INTERVIEW than any other position in the bank. One firm actually first-year summer—provided, of course, you’ve done UNPLUGGED tried recently to find a correlation between its most time in banking or have relevant work experience in CHA P TER 3 successful hires and the schools they went to, their areas in which the firm specializes. The criteria for grades, their SAT scores, their rating on the big, super an associate include all the expectations investment interview day, and other quantifiable items. They found banks have for undergraduates and summer associates, none. Use this to your advantage. People who can plus a total grasp of the business and the job. While demonstrate an understanding and real enthusiasm your undergraduate studies, GPA, GMATs, and SATs for the job, attention to detail, a friendly disposition, matter, your work experience, the reputation of the PREP GUIDE INTERVIEW and a humble eagerness to follow directions may be business school you attended, and your potential to CHA P TER 4 way ahead of their peers with four years of accounting become a long-term asset to the firm are far more courses under their belts. important. Of course, raw brainpower is a must, since One more tip: Recruiters know that an they’re expecting that you can easily learn anything undergraduate’s experience is limited. So make your background left out. them see that you are, in the words of one insider, When asked what she looks for in an ideal associate “reachable, teachable, and updateable”—that is, full candidate, one recruiter says: “We don’t look for one of determination and easy to get along with. If you certain thing. We look for a good record of achievement WORKBOOK INTERVIEW can demonstrate that you can survive, thrive, and take in undergraduate grades, extracurriculars, and post- CHA P TER 5 orders in a type A environment, you won’t have to college work experience. We pay special attention if worry about gaps in your background. they were promoted early, worked in a Big [Four] firm,

Anyway, no one likes a 22-year-old know-it-all. ranked in the top tier of an analyst class, or served in One recruiter recalls an interview with a recent hire the armed forces. Undergraduate majors are not as who possessed the perfect combination of modesty important at this stage. Of course, my ideal candidate and understatement. “Everyone recommended this guy. would have a finance and accounting degree and have PERSPECTIVE While he attended a school where we don’t recruit, no worked as an analyst at another firm. I love that because A STUDENT’S CHA P TER 6 one seemed to care. This guy was just so nice and so into then we don’t have to train them.” She notes that as the job that everyone unanimously agreed he would sell a result, “It’s not surprising that 30 percent of the his soul to get his work done. His intelligence, ambition, investment banking class were former analysts.” and humility made him an ideal analyst.” Another recruiter says, “My ideal candidate would

WETFEET INSIDER GUIDE 33 Beat the Street®: Investment Banking Interviews

be at a top business school and would have been an personality is what really counts. If you come across analyst at Goldman or Morgan Stanley. He or she as a confident (but not cocky), thick-skinned, good- CHA P TER 1 A GLANCE AT would have language skills, which are now more natured person who learns quickly and can work on important than ever. They would also have done a team, you’re a strong candidate. Liberal arts majors something different for their MBA summer, which are rarely hired unless they have prior S&T intern brings something new to the table.” experience.

Sales and Trading Special Information for MBAs The hard and soft criteria used to assess people for sales Sales and trading candidates have to pass a different and trading jobs are different from those in corporate muster from whatever their pals are undergoing CHA P TER 2 THE INTERVIEW PROCESS finance. Sales and trading interviews are more heavily in CorpFin. Recruiters want to see that your past skewed toward assessing people skills, particularly experiences and unwavering passion for the markets those related to negotiation, relationship-building, and make you a logical choice for S&T. They also typically persuasion. If you’re not sure why, take a stroll around a require that second-year MBA candidates have previous trading floor when it’s busy. If you like the hubbub and experience on the Street. Asked to describe what think you’re tough enough to thrive there, send in your she looks for in an ideal candidate, a bulge-bracket job application. If not, it’s time to consider alternatives. recruiter says, “The person would have graduated

CHA P TER 3 THE INTERVIEW UNPLUGGED Remember you’ll be risking millions of dollars every from a top-tier undergraduate and graduate program, day and won’t have the luxury of slipping up much. having demonstrated excellence both academically Great results count most. A brand-name school and and in some activity that required them to be a team high GPA won’t rescue you from mistakes. player. Previous Wall Street experience of course is

Intelligence is measured by your understanding ideal; however, consulting experience is also great. of the markets and specific products, as well as your Quantitative skills are a must for anyone in any of the quantitative skills and ability to take orders faster than sales and trading positions.” the fastest online system. While investment bankers The S&T interviewing process has fewer instant CHA P TER 4 INTERVIEW PREP GUIDE frequently schmooze with clients, traders don’t have and obvious faux pas. Where you went to school is the time. From the get-go, you must rev yourself into generally much less important than a profound, if not overdrive and start talking, moving, listening, and intuitive, understanding of the business. The bottom networking faster than you ever thought imaginable. line is money. Indeed, if you’re asked, “Why do you The good news? Next year, you’ll be trading and selling want to be a trader?” and you answer, “I want to give with the pros—and mercilessly managing the new kids. it my all and make a ton of money,” chances are your interviewer would just shrug and move on to the

CHA P TER 5 INTERVIEW WORKBOOK Special Information for Undergraduates next question. (Over in investment-banking land, of Students with high GPAs who have majored in course, such a response would sabotage your chances.) economics or finance generally fill entry-level sales If you’re a potentially quick moneymaker and you and trading positions. Understanding economics is a seem tough enough to survive, then you’re in—at prerequisite to surviving the first three months. One least for a while, until you do something source reveals that she generally looks for resumes that unpardonably stupid or you just cost too much, show a willingness to take risks, sales experience, and and then you’re out. Cocky arrogance is not nontraditional choices. Since most college graduates appreciated. Insiders confess they hate when the new CHA P TER 6 A STUDENT’S PERSPECTIVE know very little about the markets at the outset, your MBAs start interviewing on the floor. One says with a

34 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1 sigh, “You can just tell that they think they are going success, but consistent diligence and competence to walk in and start trading. Little do they know that • Type A personality—you’re meticulous they’ll be responsible for getting coffee for someone • Good business sense—even without the experience, younger and less educated—and that generally doesn’t the instincts should be there fly too well.” Titles mean very little in S&T unless you • Good grades in B-school (Your undergraduate are really senior. Basically, you’re either a peon or a grades don’t matter too much unless you got Ds in THE INTERVIEW

moneymaker. finance or accounting. Otherwise, admission to a CHA P TER 2 top business school will have bleached the writing PROCESS INSIDEr SCOOP on the slate.) “Past successes mean very little to us…. You must be inwardly focused and driven, but if you can’t Special Information for Undergraduates thrive in an aggressive team atmosphere, you’re Few firms offer formal, pre-graduation summer analyst history. That’s why we hire so many athletes.” programs for undergraduates. Consequently, recruiters THE INTERVIEW are much less concerned about Wall Street–specific UNPLUGGED A final tip: When you interview on the floor, make experience in analyst candidates than in associate CHA P TER 3 sure you have a clear understanding of what you want hopefuls. At the same time, having a summer analyst to do there. If you want to work with derivatives, have a program under your belt enhances your marketability. reason and know the product. Don’t pretend you know One added note: Some firms have summer programs more than you do. Traders and salespeople revel in targeting minority students. They were designed to help foolish displays of ignorance. You haven’t experienced generate more minority job candidates in an industry humiliation, complete and utter ignominy, until a that has struggled to attract Latinos and blacks. PREP GUIDE INTERVIEW trader decides to dress you down in public for saying CHA P TER 4 something really dumb. Special Information for MBAs It used to be easy and acceptable for MBA students Summer Internships to explore one career option in the summer after

Banks require the same levels of commitment and their first year, then upon graduation, take a job in a enthusiasm from their summer hires as from their different field. But that doesn’t apply to investment full-time recruits. Even though recruiters say that they banking. Indeed, banks draw 80 to 90 percent of their don’t expect first-year MBAs to know everything, MBA associates from summer interns. They see internships WORKBOOK INTERVIEW interns say you should have some idea what you want as a way to judge if someone is a good fit. So be CHA P TER 5 to do. Says one MBA: “It’s a competitive pool out there, forewarned: If you want to try something different so you’d better be able to express why you’re interested and then move to Wall Street upon graduation, you

in, say, equity as opposed to fixed income, and why you may have trouble finding a job. But MBA recruiters are suited to the job.” don’t require previous Wall Street experience from Here’s what recruiters say they look for when first-years seeking summer associate positions. interviewing summer interns: PERSPECTIVE • Excellence in some field—be it athletics, the military, Research A STUDENT’S CHA P TER 6 short-story writing, professional music engagements Junior research positions filled typically by recent • Dedication—which can be translated into passion undergraduates involve a great deal of modeling. for proofreading pitch books These are not positions for liberal arts majors but • A good, steady track record—not just one brilliant rather for economics and business majors and others

WETFEET INSIDER GUIDE 35 Beat the Street®: Investment Banking Interviews

comfortable with quantitative analysis and and Picking Your Time possessing an interest in learning about companies Can you position yourself to stay in the recruiters’ CHA P TER 1 A GLANCE AT and industries. You’ll need excellent writing skills, minds on the basis of the time of day you meet with well-honed editing skills, and the ability to sell via them? Psychological studies have explored in some numbers the companies your firm is underwriting. depth when and how to catch your interviewer’s most positive biorhythms. Most of this research says that Most Common Interview Gaffes the recruiter typically forgets the first interview of the day and is exhausted by the time he is onto the

Heavy cologne last interview. Recruiters are also not at their best . immediately after lunch. That said, it’s best to focus on CHA P TER 2 THE INTERVIEW PROCESS your needs. Sign up for a time when you are typically Poor eye contact . most awake and coherent. Your own energy can often be the most important aspect of the meeting. Casual language (greeting an interviewer . with “Hey, what’s up?”)

. Sloppy appearance INSIDEr SCOOP “Remember, getting hired is tough. We are looking for ways to cut people. If it comes down to two CHA P TER 3 THE INTERVIEW UNPLUGGED . Cold or clammy hands people with the same credentials and personality, the one dressed like a banker will inevitably get Answering a different question the job.” . from the one you were asked

Nervous chatter—don’t be afraid of . a brief moment of silence What to Wear If you don’t have one already, go out and buy yourself True confessions (keep your political views an interview suit—one that fits properly and looks CHA P TER 4 INTERVIEW PREP GUIDE and private life private—and don’t ask your . interviewer about his or hers) sober but not funereal. Leave the suspenders at home. Don’t forget to shine your shoes. Women shouldn’t wear pantsuits but rather skirts or dresses. Hemlines should be no higher than the width of a dollar bill above your

Acing the knees. If it’s a straight, narrow skirt, extend this rule to Interview sitting down. Sound unbearably conservative? Get past › Now that you have a handle on the various it. Some recruiters actually revel in the idea that invest-

CHA P TER 5 INTERVIEW WORKBOOK departments in the bank and on what the recruiters ment banking is one of the last bastions of conformity. will be seeking, it’s time for a mad dash through the It’s all about fitting into a culture. As one interviewer interview process. If you’re serious about entering this puts it, “We don’t want anyone who’s too creative; we field, chances are that you’ll have a series of back-to- want everyone to dress the same to keep up our image. back interviews with many industry powerhouses. In It’s better to blend in than stand out.” He remembers this section, we’ll tell you how the process will unfold, with a shudder one candidate who pranced into his and provide recommendations on how to succeed at office unshaven: “My thought was that if he doesn’t have each stage of the interview process. We start with a few the time or the respect to shave, he’s not interested.” CHA P TER 6 A STUDENT’S PERSPECTIVE general tips. One more tip: Don’t try to impress people with big-

36 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1 label brands and suits and accessories that are too loud. wear, seek advice from a career counselor or coach, or visit Gray or blue will do. Leave the extravagant jewelry at the firm and see what people there are wearing. Also, you home. On the other hand, don’t be shy about wearing should carry a leather-bound notebook complete with your best watch. Well-made, expensive watches are a pen slot (and pen), a short writing sample, and of course quiet power symbol. If you’re in doubt about what to several extra copies of your resume. THE INTERVIEW

Body Language Dos and Don’ts CHA P TER 2 PROCESS

DON’t Stare your interviewer down. DO Greet with a smile and firm handshake. THE INTERVIEW DON’t Lean back in a chair or cross your legs. DO Sit down only after your interviewer does. UNPLUGGED CHA P TER 3

DON’t Fidget with pens or any other stray DO Sit up straight and look alert. accessories you might have in your possession.

DON’t Make dramatic hand gestures to reinforce DO Make steady eye contact with your interviewer, PREP GUIDE INTERVIEW CHA P TER 4 your point. especially when you’re listening.

DON’t Slouch. DO Lean forward when answering a difficult question (it signals that you’re interested and not intimidated). WORKBOOK INTERVIEW CHA P TER 5 DON’t Smile the whole time. It may be inter- DO Smile every so often. Not too much and never preted as nerousness or worse yet, emptiness. forced. One genuine smile is always worth waiting for.

DON’t Interrupt or look like you want to interrupt. DO Exude calm. Keep your voice low and hands in your lap. PERSPECTIVE A STUDENT’S CHA P TER 6

DON’t Take off your shoes, jacket, or any DO Wear clothes and shoes that fit you properly. other piece of clothing.

WETFEET INSIDER GUIDE 37 Beat the Street®: Investment Banking Interviews

Thank-You Notes Institutional Investor research ratings combined, these are Thank-you notes are a nice personal touch and may what matter to you, too. You can even point to several CHA P TER 1 A GLANCE AT help your cause. They show thoughtfulness, good seemingly irrelevant items on your resume which, with a manners, and attentiveness to small details. Keep the bit of earnest explanation, demonstrate your dedication notes short and ensure they don’t have any typos or to team and ethics. other mistakes. (Check out the WetFeet Insider Guide Killer Cover Letters and Resumes! for more information on crafting effective thank-you notes.) INSIDEr SCOOP “Once we assess that they have the raw brain power, we’re happy. We can easily train them.” CHA P TER 2 THE INTERVIEW PROCESS Round One: The interviewer will probably begin the First Interview conversation with some idle chitchat. Many recruiters › Welcome to the career center (which might admit that they hate to call these meetings interviews, end up being a hotel room). You have an appointment for the word connotes a canned question-and- for 10:30 a.m. and the 10 a.m. candidate is taking up answer exchange. They prefer to think of these as your precious time. No need to raise your anxiety level a conversation, so you should, too. Monosyllabic

CHA P TER 3 THE INTERVIEW UNPLUGGED any higher than it is already: Your time will come. The answers, however polite, will only sound curt and interviewer, who may be a human resources profes- stiff. At the same time, while you can chuckle at sional, a junior associate, or a mid-level banker, ushers your interviewer’s jokes, this is not an invitation to out your predecessor, shuts the door to make some assume a casual, unprofessional style. Instead, listen

quick notes, and then invites you in. carefully and take advantage of moments when you This is the bell for round one. Whether you find can interject (not interrupt) and conversationally sell yourself facing one or two interviewers, it’s time to yourself. be charming and intelligent. Questions are usually Investment banking recruiters tend to advocate CHA P TER 4 INTERVIEW PREP GUIDE straightforward, veering into the technical if you behavioral interviewing, the idea being that the best appear to know something about the job already. The predictor of your future actions is what you’ve done recruiter, who is often an alumnus, will try to get a in the past. If you’re an undergraduate, questions sense of your background, what you’re like as a person, will focus on your school (and why you chose it), the and how capable you are. courses you took (again, be prepared to explain why The interview is your chance to focus on your you took them and their link to investment banking), achievements rather than that low GMAT score or the extracurricular activities, summer employment, and

CHA P TER 5 INTERVIEW WORKBOOK second-semester C in accounting (although you may special accomplishments. Recruiters are looking for well be asked to explain these). It’s also your chance enthusiastic, academically capable students who know to tell them what they want to hear. Presumably you how to work hard and have demonstrated this with paid careful attention to what they said they care about a full-throttle schedule of activities. At the same most in an initial campus information session. We don’t time, you also have to convey to them that you know advise you to parrot their exact words, but a judiciously the difference between a managing director and paraphrased regurgitation will serve you well. If Bank X an analyst—though the more substantive questions asserted back in September that teamwork and doing pertaining to your role won’t emerge until later CHA P TER 6 A STUDENT’S PERSPECTIVE right by the customer matter more than net income and rounds.

38 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1

A Few Words on Humility draw. One recruiter always asks candidates to explain an An excess of modesty won’t get you the job—don’t be shy important choice they made and how it affected them. about touting your accomplishments on your resume or In her considerable experience, “A true sign of maturity in your interviews. For example, as an associate, you will is an ability to analyze yourself and the decisions you likely be responsible for managing a team of analysts as have made.” Previous work experience is important, and well as maintaining client relationships, so if you’ve had a job that required fairly rigorous time management THE INTERVIEW

any relevant managerial experience at all (babysitting tells your interviewers you have the stamina and ability CHA P TER 2 three kids for ten days while their parents were on to successfully juggle your responsibilities. Focus on the PROCESS vacation qualifies), don’t hold back. skills involved, not the prestige of the job—it’s not the job At the same time, if you have been taking credit for itself that matters, it’s what you learned from it. Short- everything you have ever lent a hand to, give it up now. order cooks, for example, know how to handle stress and Demonstrate that you are committed to that future and make a seemingly endless stream of either/or decisions. know when and how to metamorphose gracefully from Also, if you worked your way through college, be sure to THE INTERVIEW leader into team player. Regardless of how much time highlight it. UNPLUGGED you agonized over the sand castle after everyone else went In addition, talk about your experiences on a sports CHA P TER 3 swimming, you must be eager and willing to present the team or in a group to which you dedicated a great deal finished product as a group effort. Equally important, of time. The school newspaper, chorus, and debating restraining your humility does not mean denying your society are all just as valid team credits as a lacrosse fallibility. Indeed, addressing a mistake and discussing team, but you’re going to have to work a little harder what you learned and how you grew as a result of the to explain why. Merely listing your accomplishments experience demonstrates maturity and self-confidence— doesn’t work here. You have to use them to illustrate PREP GUIDE INTERVIEW two traits investment banks seek in new recruits. what a willing and capable person you are, your CHA P TER 4 countless interests, and your drive to succeed in Special Information anything to which you put your young mind. Provide for Undergraduates a few examples showing that you’re quantitatively

Package and present your responses as though you’re savvy (especially if you are a liberal arts major) as well interviewing for a job as the firm’s English butler. If as qualitatively aware (especially if you never wrote a you can convince your interviewers that all you want seriously analytical paper in your four years in college). in life is to work 80 hours a week, do what you are told And never forget that your body language in this WORKBOOK INTERVIEW and do it perfectly, be a part of their firm, and learn a round is speaking as loudly as your words. If you say CHA P TER 5 lot, then you’ll help your cause. Your job in this process you’re interested in the job and that you understand is easier than that of MBA hopefuls in that you really stressful time management better than most of your

only have to convince these folks that you are readily classmates, make sure your nonverbal cues support trainable and would be good to have around for the these statements. In other words: Maintain eye contact. next two to three years. They’re looking for a smart, Don’t fidget. Sit comfortably but straight. diligent worker, not the next CFO. PERSPECTIVE As an analyst hopeful, you’ll probably also be asked A STUDENT’S CHA P TER 6 how you arrived at the decision to pursue investment banking. Have a thoughtful response prepared and make sure your interviewer understands: It’s not just investment banking, it’s this particular firm that’s the compelling

WETFEET INSIDER GUIDE 39 Beat the Street®: Investment Banking Interviews

Recruiters’ FAQ banking. You’re allowed one anomaly—one dot that When we asked recruiters to list some other frequently doesn’t connect—but the rest should be excised. It’s CHA P TER 1 A GLANCE AT asked questions, the list looked something like this: even better if you can show that your focus extends • What makes a good salesperson? beyond investment banking to a particular industry or function—sales, M&A, or the oil and gas industry, for • What makes a good product? example. This is also the interview in which they’re likely to • Pitch me a stock. ask you to estimate the number of convenience stores in Manhattan or the number of golf balls that might • Ask me a good trading question. fit in the room. You don’t need to come up with the CHA P TER 2 THE INTERVIEW PROCESS correct number; rather, you have to display masterful • Why are you interested in sales and trading? deductive reasoning. As a formality, you’ll also probably be asked for your GPA, SAT, and GMAT scores. Rattle • Explain your role in the such-and-such job listed on them off—accurately. Remember, there’s a good chance your resume. that your record is in one of their folders and that they memorized it before you walked in the room. • Tell me about your biggest failure. [One recruiter

CHA P TER 3 THE INTERVIEW UNPLUGGED admits if a person can’t talk about failure, or if he or she puts too quick and rosy a spin on a very small INSIDEr SCOOP shortcoming, that’s a red flag. In this business, you “We aren’t here to trip you up. Do some research, be prepared to answer questions about the company, can’t let your ego get in the way and you have to be and you’ll be okay.”

able to admit when you’ve screwed up.]

• How would you feel about selling a stock that you One MBA recruiter on the CorpFin side says that, in were ethically opposed to or didn’t believe in? Okay, addition, “You need to be prepared to value a company CHA P TER 4 INTERVIEW PREP GUIDE now sell me that stock. in a practical way, not just from a textbook, like you learned in business school.” (See the earlier “Review” Special Information for MBAs section.) He says that, as with the brainteasers, “It’s MBAs can expect two questions to carry the more important to demonstrate knowledge of the conversational exchange: “Tell me about yourself” and process.” “Why are you interested in investment banking?” In The recruiter also encourages researching the firm this first round, recruiters are testing to see whether you at which you’d like to work—even on the day of

CHA P TER 5 INTERVIEW WORKBOOK have the smarts to do the job and whether investment the interview. Events can occur quickly. If the firm banking is really your long-term goal. You’re not being announces a major deal or merger on the morning hired to build models for two or three years: The stakes of your interview, you should know it. “One guy are higher here. Remember that your past experiences obviously looked up our company on the Internet don’t necessarily determine your future, but you should two months ago and didn’t follow up, so he had no at the very least be able to link the two. Think of it as a idea of an important recent development,” says one game of connect-the-dots. Look at your resume and try insider. This recruiter advises candidates to “know what to create a splendidly logical progression from schools differentiates each firm from the next.” CHA P TER 6 A STUDENT’S PERSPECTIVE to previous jobs to outside interests to investment Candidates for sales and trading will go through

40 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1 similar first-round interview questions. Once again, mathematician, a physicist, a pharmaceutical sales it’s all about “Why sales and trading?” and “Why representative, and an Olympic athlete. you?” Keep in mind what we’ve discussed before: It’s a bigger investment for traders to hire you because your costs come out of their pockets. Also, in training you, they’re grooming a future competitor. While investment The Airplane Test THE INTERVIEW

bankers are looking for diligent, likable underlings › Every firm has a different term for the “Could CHA P TER 2 who will follow directions and stay up all night, every I Get Along with This Person?” test. Some call it the PROCESS night, traders need thick-skinned fireballs who have the “plane” test. Interviewers ask themselves, “How would potential to bring in the money as soon as possible. A I feel sitting on an airplane or being delayed for hours high level of drive in these candidates is critical. in an airport with this person? Would it be okay? Better Within S&T, it is important to know what you want than okay? Or insufferable?” to do and why. Fixed income is very different from equity; Take, for example, Ralph. On paper Ralph is THE INTERVIEW ditto sales and trading. If you say you are well suited for a the perfect investment banking candidate: an Ivy UNPLUGGED variety of positions, first you’ll be laughed at, then you’ll Leaguer who worked as an analyst at another blue- CHA P TER 3 be dinged. One sales and trading recruiter we spoke to chip investment bank prior to his acceptance into a confides, “Today I interviewed an undergraduate whom top-tier MBA program. Ralph has been invited to I would classify as a disaster. I asked him, ‘Why do you interview with five of the bulge-bracket firms. His want to work on Wall Street?’ He said he was interested resume screams, “Pick me!” However, in interview after in fixed income. Well, I really don’t think this guy knew interview, Ralph doesn’t make the initial cut. Why? It’s what fixed income was. He started to say that every day not because he isn’t prepared; in fact, Ralph knows a lot PREP GUIDE INTERVIEW is exciting.” The recruiter pauses and laughs. “Little did about the business and has educated answers to every CHA P TER 4 he know that often there are days when you go up to question. However, he never took seriously the fact that the trading floor and the traders are asleep at their desks he has to pass the plane test. because things are so slow. I think he just read Liar’s Poker Perhaps he has offered a damp, limp handshake and and romanticized the whole thing.” failed to look the recruiter in the eyes upon entering the interview room. He sits before the recruiter has taken The Same, but Different her seat and slouches, refuses to make consistent eye MBA associates can come from surprisingly diverse contact, and yawns frequently. His suit is unpressed and WORKBOOK INTERVIEW professional and personal backgrounds. The one thing his shoes are scuffed. He is robotic about discussing his CHA P TER 5 they seem to share is an unyielding desire to work for resume. When the recruiter asks how business school a particular investment bank. That and a laundry list peers would describe him, he says “as a smart leader,”

of accomplishments, each of which required drive, without a trace of humility or any details to back up his intelligence, and a commitment to excellence. We comment. He doesn’t have questions about the bank asked recruiters to name some of the more unusual and leaves without an appropriately cordial parting or a backgrounds they have encountered. With the caveat thank you to the interviewer. PERSPECTIVE that investment banking associates “should always Some of these mistakes may seem obvious. But A STUDENT’S CHA P TER 6 have some previous experience in finance or a related otherwise good candidates make these and others industry,” their list included a pro baseball player, every year. They behave boorishly, look disheveled, and a ballerina, an armed services officer, a buyer for a appear unprepared. They mistakenly believe that the well-known fashion designer, a concert pianist, a PhD strength of their resumes will carry them through and

WETFEET INSIDER GUIDE 41 Beat the Street®: Investment Banking Interviews

haven’t taken the time to consider seriously how their If you are interviewing for a position in sales and trading, appearance and actions may weigh against them. you will most likely never receive a courtesy coaching CHA P TER 1 A GLANCE AT If you have doubts about how to act in an interview, call before your final interview. Traders don’t have time don’t hesitate to do some research on the topic, or even and, frankly, don’t really care if you’re shiny and polished. speak with a career coach or counselor. Good coaches and counselors can provide a ready list of dos and don’ts. PS: The Walls Have Ears One additional point: a number of investment The following true story illustrates a very simple rule banks conduct their first interviews by phone. Phone we can’t emphasize enough: Do not talk about your interviews require every bit as much preparation as interview with other candidates, especially in the a face-to-face meeting. Have your list of questions bathroom or the elevator. One morning an investment CHA P TER 2 THE INTERVIEW PROCESS easily accessible. You’ll want to be sure you’re in a banking recruiter, clad in casual Friday attire, was quiet room—no traffic noise or dogs barking in the taking the elevator up to her office for her first background. If possible, avoid phones with call-waiting. interview of the day. John and Mike, two prospective MBA candidates, were also in the elevator. Mike asked John with which part of the bank he was interviewing. Round Two Looking around the elevator and seeing only a few other people, none of whom looked like bankers, John

CHA P TER 3 THE INTERVIEW UNPLUGGED and Beyond replied, “Investment banking, but I’m actually not › Unlike Reject Ralph, you’ve made it. You did interested in this firm. I’m just doing it for practice.” everything right (or at least nothing egregiously wrong). Ten minutes later, the poor man turned out to be the Now you’re ready for Round Two. Most banks invite recruiter’s first appointment of the day. She greeted him

recruits to their New York headquarters for a grueling politely and told him there would be no interview. routine of socializing and back-to-back interviews. The questions in this round will be more focused. You’ll have The Evening Before to know more detail about the firm and your chosen line You stayed up all last night finishing your term paper CHA P TER 4 INTERVIEW PREP GUIDE of work, and repeat some of the information related to or wrapping up a case study, skipped lunch, and rushed your background. to the airport to make your flight to New York, only If you’re called back for a second round of interviews, to arrive in the Big Apple with one hour to spare. consider calling your first-round interviewer for Anxiously you check into your midtown hotel and suggestions on how you might improve your performance. scamper off to a firm’s two-hour cocktail party. Dinner Keep your questions short and to the point. Some with fellow alumni follows this event. Remember candidates have been surprised by calls from the first- that these people will be your strongest supporters

CHA P TER 5 INTERVIEW WORKBOOK round interviewer, congratulating them on reaching if you impress them, because at most banks there is the next round and offering unsolicited advice. In one a lively internal competition among the folks from such case, the interviewer told the candidate that while different schools. Also remember that whenever there he had great potential, he was too aggressive during the are representatives of the bank present, you need to first round. Another student, considered very qualified think and act like you’re selling yourself. but unpolished, received coaching on body language and Follow a few simple guidelines to ensure you’re in appearance. But no matter what happens with your first prime condition the moment you set foot in the lobby interviewer, do not grill the person who calls to set up of your prospective employer. First, before you leave CHA P TER 6 A STUDENT’S PERSPECTIVE your second interview on your strengths and weaknesses. the hotel, eat and drink something substantial enough

42 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1 to keep your blood sugar at an appropriate level. When to the senior people in the department you most want to blood sugar sinks, you lose energy. That will show in work in, you also need to interact with your competition your interactions. When you enter the room, you have for the job, plus the present analysts and associates. between one and two hours to meet, greet, and impress Recruiters pay a lot of attention to group dynamics. You people. Drink moderately. Don’t forget that social events want them to see that you play well with others. are an important part of the hiring process, or that In conversations, play things conservatively. No one THE INTERVIEW

tomorrow morning you have a full day of interviews. likes a flirt or a suck-up. If you’re gregarious by nature, CHA P TER 2 Recruiters say that behavior at the cocktail parties you might want to listen and observe others more than PROCESS and dinners is often their only way to assess how a usual. It is much more important to attend politely to future employee would act with a client. And while it’s what others are saying than to dominate and dazzle the important to use this opportunity to introduce yourself room with your wit and wisdom. After all, few clients

Social Gatherings...From Cocktails to Lunch THE INTERVIEW UNPLUGGED CHA P TER 3

DON’t Order messy, hard to eat food. DO Eat a nourishing snack before cocktail hour.

DON’t Be a wallflower. DO Seek out and introduce yourself to important players. PREP GUIDE INTERVIEW CHA P TER 4

DON’t Eat too quickly or display bad table man- DO Take small bites and use the cocktail napkins ners. provided.

DON’t Tell dirty jokes. DO Err on the side of being excessively polite. WORKBOOK INTERVIEW CHA P TER 5

DON’t Be informal. DO Respect the competition. With any luck they will soon be your colleagues.

DON’t Let anyone see you writing their names DO Pay close attention to the name tags. down in a notebook. (But by all means do it later.) Remember as many names as you can. PERSPECTIVE A STUDENT’S CHA P TER 6

DON’t Drink too much. DO Be yourself.

WETFEET INSIDER GUIDE 43 Beat the Street®: Investment Banking Interviews

would abide by a banker who refused to allow them to Consult the short list of points that you’d like to cover. get a word in edgewise. If you had a nice chat with Mary Merger and Andy CHA P TER 1 A GLANCE AT Good table manners will reflect favorably on your Acquisition at dinner, no harm in mentioning this when candidacy, too. Remember to put your napkin in your you go in to talk with their M&A bosses. Think about lap, take small bites, chew with your mouth closed, the topics they brought up and seemed interested in. and wait for others to be served before digging in. Think about how they presented themselves and the Include people on your right and left in conversation. firm. You were given a wealth of corporate and cultural Refrain from heavy discussions about politics and other information last night—use it. Interviews will last potentially sensitive subjects. Remember to say “thank anywhere from 30 minutes to one hour. If it makes you you” to waiters and others that serve you. tired just thinking about it, wait until you have talked CHA P TER 2 THE INTERVIEW PROCESS Following your meal, at some point, jot down the about yourself for five hours straight. This experience has name of every person you can remember meeting been known to exhaust some of the biggest egos out there. and something about who they are and what part of the bank they work in. Your cheat sheet can be of Pre-Game Warm-ups immeasurable help. Before you go to bed, lay out your It is time to distinguish yourself from your peers. While wardrobe for the next day’s activity. Set your alarm round one was primarily about your ability to do the clock, then (just to be on the safe side) schedule a job, round two is more about assessing whether you

CHA P TER 3 THE INTERVIEW UNPLUGGED wake-up call for shortly after the alarm sounds. mesh with this firm. Why would you be better at a particular desk than others competing for the same slot? More important, do they like you? You need to be Your Final more polished and focused than the other candidates,

and have a clearer understanding of the business and Interview the job. You also need to convey why you want to work › Good morning. You’re up in time and ready for only this firm. for action. You survived the previous night’s social test We are all reassured by others who seem like us. We CHA P TER 4 INTERVIEW PREP GUIDE and now it’s time to come face-to-face with about six are even more reassured if this person with whom we recruiters and bankers. Now is the time to take a few deep feel so comfortable validates our choice of employment. breaths and take care of any small, last-minute chores. So be a chameleon. Take cues from your interviewer. And make sure the subtext reads: If you like working Breakfast here, I would obviously love working here. That said, Before you meet with interviewers, you will probably you shouldn’t change who you are. You’ll come off as gather for breakfast with your fellow candidates and stiff and forced.

CHA P TER 5 INTERVIEW WORKBOOK members of the firm in either a conference room or the Every corporate body has its own way of doing corporate dining room. Remember: As soon as you enter business. One firm may like people who take initiative the breakfast room, your interview has begun. Recruiters and are creative. Another may primarily assess your long- say that they observe how candidates interact with their term potential as a banker: Are you a team player and a peers. Most say they are impressed with students who leader all wrapped into one? Can you feel the moment take initiative to greet the competition with a handshake when you must push others aside and grab the reins? Yet and an introduction. You’ll receive an interview schedule, another may want you to simply conform and follow which will list the senior-level bankers you’ll be talking to directions. Do your research and know the preferences CHA P TER 6 A STUDENT’S PERSPECTIVE and the groups in which they work. of the firm you’re interviewing for. One former analyst

44 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1 recalls receiving an offer from one bank but not from a before business school and what you want to do both competitor. She admitted that this was understandable, this summer and after graduation. Prepare as if recruiters since her personality was better suited to that firm. expect you to know. Choose an area and stick to it. If you are interviewing with sales and trading, do not Welcome to the Show mention that you are also considering corporate finance. Questions won’t vary much from those you were asked Be specific about what you want to do in that area. S&T THE INTERVIEW

in the first round; there will just be more of them. Now, recruiters won’t look favorably at candidates who can’t be CHA P TER 2 more than ever, you need to make everything in your intelligent about equity versus fixed income or explain PROCESS background relate to investment banking—and to your why they favor one over the other. interviewer and his firm. If you’re interviewing for a Each banker with whom you meet will have his or summer associate position, it’s particularly important her own interviewing style. “Some of the guys wanted to to make a logical connection between what you did push me to my limit and make me uncomfortable, while THE INTERVIEW UNPLUGGED Interview Prep Exercise CHA P TER 3 Study your resume. What have you done or studied that coincides with what recruiters are seeking? Find examples in which you demonstrated leadership, dedication, success under pressure, an ability to juggle priorities, quantitative analytical ability, and teamwork. You also need to emphasize whatever the firm was plugging hardest at the first campus information session. PREP GUIDE INTERVIEW CHA P TER 4

WORKBOOK INTERVIEW CHA P TER 5

PERSPECTIVE A STUDENT’S CHA P TER 6

WETFEET INSIDER GUIDE 45 Beat the Street®: Investment Banking Interviews

Interview Prep Exercise

In one minute, maybe two, try to logically link the experiences on your resume to one another and then to CHA P TER 1 A GLANCE AT your future in investment banking. Rather than list the skills, demonstrate them through examples. Why would you be a successful analyst/associate/trader/salesperson? How do you exemplify how this firm already sees itself? (In other words, if the firm touts itself as global, how can you appear to be international?) CHA P TER 2 THE INTERVIEW PROCESS CHA P TER 3 THE INTERVIEW UNPLUGGED

Ask yourself who you’re trying to convince with this pitch. (If it is you, better reevaluate your career choice.) Knowing your audience is key. Pitch your candidacy to the person who’s in charge. CHA P TER 4 INTERVIEW PREP GUIDE

CHA P TER 5 INTERVIEW WORKBOOK

CHA P TER 6 A STUDENT’S PERSPECTIVE

46 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1 others just wanted to get to know me,” said one hire. the bankers play good cop/bad cop. In one such interview, Consider yourself lucky if half the people you a candidate became so infuriated by the bad cop’s harsh meet want to engage you in a let’s-get-acquainted interrogation and obvious scorn that she threw caution chat and limit their questions to why you want to be to the wind and shot some of that hostility right back at an investment banker and how your background is him. Convinced she’d nixed any chance of ever getting a well-suited for a job in the industry. But be prepared job on Wall Street, she arrived home to a phone call from THE INTERVIEW

to prove your quantitative intelligence and survival none other than Mr. Bad Cop, inviting her back for a CHA P TER 2 instincts. A warning about answering numerical, logic- second round of interviews the following morning. He PROCESS based questions: It’s best to admit that you do not know made a point of congratulating her on her assertiveness an answer, and feel stupid for a split second, than to and her ability to handle pressure. pretend and get caught. If an interviewer senses that you’re pretending to understand something, he or she will likely push you until you break. An insider INSIDEr SCOOP THE INTERVIEW who has had countless investment-banking interviews “In my interview, the guy focused on the fact that UNPLUGGED

I had played in a band in college. Of course I had CHA P TER 3 says, “When you don’t know, say you don’t know. Just listed that I played bass guitar, but he wanted to remember you never want to say it twice.” see if I had more talents. He then proceeded to Let the interviewer control what’s going on here. conference in four other guys and then made me You need to appear competent, but not in charge. sing a few lines of a song. I’m tone deaf, but I did it. Granted, I was extremely embarrassed, but for some reason they thought it was funny and seemed pleased. How’s that for induced stress?”

A Few Words PREP GUIDE INTERVIEW CHA P TER 4 on the Stress For their part, our banking sources insist that they do not conduct stress interviews. But most recent Interview interviewees would disagree. One recruiter offers a

› “Stress interviews” are an offbeat way to see rationalization for this interpretive divergence: “Just how candidates react to unusual circumstances under remember: it’s all perception,” says one banker. pressure. Our advice: Expect the unexpected. While no one can prepare for every wild pitch, make In one type of stress interview, a recruiter might sure you know what’s expected of you in general terms. WORKBOOK INTERVIEW introduce himself, start reading a newspaper and ignore There will always be the random banker who just wants CHA P TER 5 a job candidate for minutes. The baffled candidate might to make you uncomfortable. Sometimes you can best sit silently, fearful that she would upset the interviewer, or these types, but more often, you can’t. Just take a few deep

grow angry and lose her temper. Under- or overreacting breaths and roll with the punches. More often than not, could sabotage a candidacy. Banks want neither a all that’s being tested in a stress interview is your ability wallflower lacking the confidence to speak up for himself to keep your wits about you. For your edification and nor someone who’s rude and overaggressive. After a amusement, here are some of our favorite war stories: PERSPECTIVE brief interval, a calm, collected job seeker might politely • A former analyst recalls an interview in which a A STUDENT’S CHA P TER 6 suggest another time for the interview. The subtext of woman, not much older than she, looked at her this action is clear: “If you don’t have time for me now, I without so much as a smile and said, “Okay, tell would be happy to speak with you on another occasion.” me a joke. Entertain me for five minutes and then Another stress tactic: a two-on-one session in which we’ll see if I want to stay and learn more about you.”

WETFEET INSIDER GUIDE 47 Beat the Street®: Investment Banking Interviews

(Note: Under no circumstances is this an invitation Recruiters say that candidates can lose points by ask- to serve up an off-color joke.) ing a meaningless question—one whose purpose isn’t CHA P TER 1 A GLANCE AT to elucidate an answer, but to demonstrate their clever- • Another candidate cites a banker who wouldn’t shut ness or their familiarity with The Wall Street Journal. up for the majority of the interview; out of polite- But if you have a good question, ask away, and include ness, our source thought it best not to interject. At qualifiers that show how thoroughly you’ve researched the end of the session, the banker criticized him for the firm. For example: “I know you’ve moved a lot of his lack of assertiveness. people around in the past year, both here and in your West Coast branches, and there also appear to have been Regardless of the questions asked and the tactics some fairly significant management changes at the senior CHA P TER 2 THE INTERVIEW PROCESS employed by an interviewer, keep in mind you are being executive levels. But I’m still curious as to why your rat- assessed on how you handle a situation. Stay cool and ing dropped 24 points in Fortune‘s ‘100 Best Companies be prepared for anything. One undergraduate candidate to Work For.’ These factors explain some, but perhaps arose on interview morning feeling queasy. In an effort not all, of what happened. Would you mind talking to calm his insides, he ate a small breakfast. The doors about this a bit more?” opened and before our candidate could greet his peers and recruiters, most of whom were standing less than

CHA P TER 3 THE INTERVIEW UNPLUGGED ten feet away, he threw up. Instant gong, right? Actually, INSIDEr SCOOP “My last interviewer stood up and thanked me for he handled the situation so well that, after returning for coming. I followed suit and was relieved that it was another interview, he received and accepted an offer— over. I was confident that I was well on my way to and the affectionate office nickname “Chuck.” an offer when all of a sudden, two other bankers

charged into the room. ‘Have a seat,’ one of them ordered. ‘This interview is far from over.’ For the next 45 minutes, these two guys grilled me like Your Turn to Ask there was no tomorrow. After I received an offer, I learned that as a candidate gets closer to the brass CHA P TER 4 INTERVIEW PREP GUIDE the Questions ring, the firm will sometimes lay it on thick just › The interview is drawing to a close. You’re to see how he or she reacts to the unexpected pressure.” almost there. The recruiter or banker has asked if you have any questions or feel there is something of importance that you haven’t addressed. This is not a Even if they hate answering this question, your cue to sit back and relax. Insiders say that this is the interviewers will give you top marks for having done point where many strong candidates talk their way your homework—and also for giving them some

CHA P TER 5 INTERVIEW WORKBOOK into a rejection letter. First, don’t feel obligated to ask ways out they might not have considered. How a question. If it comes out sounding canned, you’ll attentively you listen to their response also makes a be dinged even as you speak. One MBA student who difference. Even if they parrot back the easy out you received several offers explained that he used the ques- just gave them, save your skepticism for the moment tion time to close the interview and sum up his can- you have an offer in hand. Nod your head, lean didacy. He suggests: “Thanks. I think you’ve probably forward slightly and look interested. And don’t be answered all my important questions, but I would like afraid to let them off the hook if they start to squirm. to leave you with three things to consider about my Interviewers don’t like answering tough questions any CHA P TER 6 A STUDENT’S PERSPECTIVE candidacy….” more than you do.

48 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1 Last-Minute Comebacks —and Surprises INSIDEr SCOOP “One guy was so lackluster in the first two minutes, What happens if you get off to a bad start or are having I thought, ‘Oh, yuck.’ But then he got it going, an off day? and by the end I really thought he’d be a great It’s hard to recover from an awkward start. An interview candidate. But this is pretty rare.” is so short, and the interviewers are so seasoned, that they THE INTERVIEW

usually form an impression of a candidate within the first CHA P TER 2 few minutes. “The best candidates tend to be consistent Denouement PROCESS from the minute they step in my office to the minute they › The interviews might be over, but you may leave,” says one recruiter. A comeback is possible, but it is still have an obligation. Some firms will arrange for a likely to occur early on rather than three-quarters of the way meal with present analysts and associates. These may through the interview. be informal gatherings where you can ask questions of Of course, a good beginning isn’t enough: You people in the jobs you covet and interact with poten- THE INTERVIEW can sabotage it with a poor middle and end. Some tial colleagues. But you’re still being evaluated. Behave UNPLUGGED candidates get overconfident, too comfortable and say professionally. CHA P TER 3 the wrong thing. Never assume that at any point in the On one occasion, a prospective candidate who had interview you’re home free. all but clinched an offer managed to offend nearly every

Interview Prep Exercise

Some candidates fail to show respect to receptionists and other administrative staff. Or they’ve said things PREP GUIDE INTERVIEW

in their presence that reflected poor judgement. These are serious mistakes. Treat these people with the CHA P TER 4 same professional courtesy that you do the most senior bankers. Remember many of them have been with the firm for years. They have their supervisors’ ears and can sink your candidacy with a few well-placed words. One banker spoke of a top candidate who spoke rudely to a receptionist and was promptly rejected.

In Summation If you had to leave your interviewer with three thoughts about you, what would they be? Fill in answers to the following questions to help you refine your pitch. What distinguishes you from your peers? WORKBOOK INTERVIEW CHA P TER 5

PERSPECTIVE A STUDENT’S CHA P TER 6

WETFEET INSIDER GUIDE 49 Beat the Street®: Investment Banking Interviews

Interview Prep Exercise

CHA P TER 1 A GLANCE AT Why would you be a particularly good candidate for this job? CHA P TER 2 THE INTERVIEW PROCESS

How could you add value to your team? CHA P TER 3 THE INTERVIEW UNPLUGGED

How do your past accomplishments show that you can do the job? CHA P TER 4 INTERVIEW PREP GUIDE

CHA P TER 5 INTERVIEW WORKBOOK

Your responses to these questions provide an interviewer with four reasons the bank should hire you. Choose the three strongest. Try not to forget them next time.

CHA P TER 6 A STUDENT’S PERSPECTIVE

50 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1 other candidate and current employee at a table. He Acceptance Process apparently not only ate like a horse, but also attacked You may return to headquarters for wining and the small number of women and minorities in the dining. A current analyst or associate will serve as your program, and then proceeded to act condescendingly guide and buddy. He or she will become a new friend toward the other candidates. Not surprisingly, he got and source of information. Don’t let the attention the gong. inflate your ego. And remember: The judging is not THE INTERVIEW

One banker tells of a candidate who was a shoo-in over. How you handle the offer will be remembered. CHA P TER 2 for an offer—until everybody went out for dinner: “We A former analyst recalls a candidate who’d received PROCESS were at the Penn Club after a long day of interviews, and an offer turning people against him by telling an anti- this guy proceeded to get really drunk on grasshopper gay joke. The offer wasn’t rescinded, but when it came shots and 19 other ridiculous drinks. My first thought time for group selection a few months labor, people was, Not only is he an idiot, but how could we trust remembered his gaffe. him with clients? Could you imagine what his expense Don’t lie about offers from other firms. This will come THE INTERVIEW report would look like? It was inevitable that he’d take back to haunt you. Especially in the case of summer UNPLUGGED advantage of the system if he already had the gall to do it associates, recruiters often call around to other firms to CHA P TER 3 before he even landed the job.” see who else has offers out to a particular student. If you accept an investment banking offer on the spot, it may work to your benefit. For example, if you know at the The Offer outset you want to work for a particular industry or › You got the call. They want you. other group, or in the case of S&T hires, you hope It doesn’t mean you have to accept instantaneously. But to land at a particular desk, the decision-makers will PREP GUIDE INTERVIEW it also doesn’t mean you should string along your suitors. usually remember. In some interviews, it may even be CHA P TER 4 Address your needs carefully. Taking a job is a big decision. advantageous to state that if given an offer, you would Evaluate your experiences. Which organization treated you accept on the spot. Needless to say, if the bank comes best? Which working environment and management style through, you would not look good backing out. Our is likely to motivate you? Let the bank woo you. advice: Think seriously before giving up your ability If you need a few extra days for legitimate reasons, to decide where you want to work. don’t be afraid to ask for them, or to speak with someone Weigh an offer with equal parts of the left and right at the organizations. Some of the people from whom you sides of the brain. In other words, ignore earnings for a WORKBOOK INTERVIEW seek advice may have been in your position just a few moment and focus on vibes. One MBA student admits CHA P TER 5 years before. HR staff and bankers can be flexible. It’s in that he didn’t accept a prestigious offer because the their interest to ensure that their hires are happy. recruiting process with its stress interviews had left a bad

But be considerate. Banks have deadlines to fill their taste. analyst, associate, and other classes. You’d be wrong to take If you think you can play one firm against the other, extra time in the hope of dramatizing your desirability tread carefully. “They think they can screw us,” says or of squeezing a few more dollars from an organization. one recruiter, “but they don’t realize that we can screw PERSPECTIVE Let’s keep things in perspective: The firm may need you, them, too. Wall Street is not that big.” A STUDENT’S CHA P TER 6 but it can find other skilled candidates in a hurry. One insider remembers a senior managing director And if you change your mind, do so as early as extending an offer to a student for a trader position possible. A last-minute change of heart could prevent a and reiterating that he was only going to offer once. No runner-up from taking the position you rejected. ritual mating dance, just yes or no. The student gave out

WETFEET INSIDER GUIDE 51 Beat the Street®: Investment Banking Interviews

yes signals, then accepted a position with another firm. here. Every few years, one of the bulge brackets ups Unfortunately, the director had lots of pals at the rival the starting salaries by $5K to $10K and all the other CHA P TER 1 A GLANCE AT firm and he placed a quick phone call. You know the investment banks scramble to bring their own offers end of this story: The candidate ended up without a job. into line. But unless you’re coming in at a more senior level or with considerably more experience than most of your peers, the numbers are pretty much fixed. You Salary can’t change them. An insider says that the going rate now at large firms for college grads is about $65,000 Negotiations in base salary with a $12,000 sign-on bonus. After › Fact: Most of us hate haggling about money. six months, an incoming analyst will likely receive a CHA P TER 2 THE INTERVIEW PROCESS Very few people are good at it. If you’d like some guide- bonus of between $10,000 and $30,000. That may lines about how to do it better, we suggest reading the double or triple after two or three years. An associate’s WetFeet Insider Guide Negotiating Your Salary & Perks. base is about $25,000 to $30,000 higher. Also worthwhile is the well-known negotiation guide That said, you can occasionally negotiate Getting to Yes: Negotiating Agreement Without Giving In, reimbursement of relocation costs and assistance for by Roger Fisher and William Ury. your spouse or significant other. But part of the rationale Regardless of your negotiating prowess, analysts behind the signing bonus is to cover these and other

CHA P TER 3 THE INTERVIEW UNPLUGGED and associates don’t have much room to maneuver expenses.

Dealing with the Offer

DON’t Tell a recruiter you have another offer when DO Be fair. If you accept and then pull out at the last you don’t. They’ll check. And then you’ll be sorry. minute, you’re taking a spot away from someone who probably really wants to be there. CHA P TER 4 INTERVIEW PREP GUIDE

DON’t Request an extension because you’ll be on DO Accept on the spot if you know this firm is vacation until after the acceptance deadline date really where you want to work.

or for any other trivial personal reason. This does not win you points. CHA P TER 5 INTERVIEW WORKBOOK DON’t Accept a job at a firm because of its brand DO Do your homework and think hard about name. Pay attention to the culture. You’re going where you’d be most happy to be spending a lot of time in that building. Make sure you like just about everything there is

to like about it. CHA P TER 6 A STUDENT’S PERSPECTIVE

52 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1 THE INTERVIEW CHA P TER 2 PROCESS THE INTERVIEW UNPLUGGED CHA P TER 3 PREP GUIDE INTERVIEW CHA P TER 4

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WETFEET INSIDER GUIDE 53

Interview Workbook

Sample Q&A...... 56 I-Banking vs Management Consulting...... 71

Never Let Down Your Guard...... 72 5 Q&A Thought Balloons...... 73 Beat the Street®: Investment Banking Interviews

Sample Q&A › You know the areas of the investment bank. You understand the philosophy of the interviewers and you’re CHA P TER 1 A GLANCE AT confident that you have what it takes to excel. But to help you navigate the interviews, we’ve put together a short list of leading questions and WetFeet commentary in italics on how to approach them. Space for your own responses follows.

Corporate Finance: Analysts and associates Questions for undergrads will be focused on ethics, business savvy, and general self awareness. But some recruiters will throw these analyst-hopefuls a random bond-math question. MBA associates should anticipate questions similar to those for undergrads but expect ose bond-math questions. Since most banking is done in groups, CHA P TER 2 THE INTERVIEW PROCESS MBAs should also answer questions with both a team player and leader mentality in mind.

What is the role of an investment bank?

>> Many undergraduates interviewing for analyst positions don’t have a clue what investment banks do. Understanding the difference between some of the basic financial products and the ability to confidently explain what an investment bank does will make you stand out. (For a good summary of the investment banking

CHA P TER 3 THE INTERVIEW UNPLUGGED industry, read WetFeet’s Insider Guide to Careers in Investment Banking.) If you can then differentiate the bank that you most want to work for from its chief competitors, you’ll be a star.

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56 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1

Are you prepared to work 80 hours per week, and how have you ever exhibited such dedication in the past?

>> Have at least one, preferably several, examples of projects that you have cheerfully devoted at least this much time to before. Banks are seeking drive and commitment. Show them you have both in abundance. Dedication is seen as easily transferable. THE INTERVIEW CHA P TER 2 PROCESS THE INTERVIEW UNPLUGGED CHA P TER 3 PREP GUIDE INTERVIEW CHA P TER 4

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WETFEET INSIDER GUIDE 57 Beat the Street®: Investment Banking Interviews

Why would you be a good analyst?

CHA P TER 1 A GLANCE AT >> If you make it clear to the interviewer that you understand an analyst’s responsibilities, you’ll have a much easier time convincing him or her that you can employ your seemingly unrelated skills for building and analyzing models, researching competitors, checking pitch books and other responsibilities. As in any industry, if you can talk the talk, your credibility skyrockets. CHA P TER 2 THE INTERVIEW PROCESS CHA P TER 3 THE INTERVIEW UNPLUGGED

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58 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1

What is your greatest weakness?

>> If you can examine yourself and show how you’ve learned from your mistakes, you will have answered correctly. But choose your weakness carefully. You don’t have to admit that you’re not good with numbers; that would be self-defeating. Recruiters are by no means expecting you to come clean. In fact, this question is posed more to discern whether you have prepared and can maturely assess yourself. If asked to list your strengths, pick ones THE INTERVIEW

that the firm wants their analysts to possess. CHA P TER 2 PROCESS THE INTERVIEW UNPLUGGED CHA P TER 3 PREP GUIDE INTERVIEW CHA P TER 4

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WETFEET INSIDER GUIDE 59 Beat the Street®: Investment Banking Interviews

Where else are you interviewing?

CHA P TER 1 A GLANCE AT >> We don’t recommend lying—a real no-no in any interview—but we don’t encourage full disclosure. If you are interviewing with consulting firms, consumer product companies, and sports marketing firms, don’t admit it: It will make you seem unfocused and tactless. Your interviewers expect you to say you only want to be a banker and therefore you are solely concentrating your job hunt in the industry. Do not volunteer, “Well, of course, an M&A job with your firm is my first choice, but I’m also talking to UBS about a trading job and to Credit Suisse about a research position.” Remember, a focused message is important. CHA P TER 2 THE INTERVIEW PROCESS CHA P TER 3 THE INTERVIEW UNPLUGGED

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60 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1

What course did you most enjoy in college?

>> Enthusiastic as you may have been about the theater workshop you took last year, this would be a bad answer. Instead, think about what this investment bank does best and find a relevant course. You don’t have to say Accounting 101; if your bank is going after emerging markets, the semester you spent studying Asian governments is a fine choice. But whatever you choose, make sure you got a reasonably good grade and that THE INTERVIEW

you remember enough about the course to discuss it intelligently. CHA P TER 2 PROCESS THE INTERVIEW UNPLUGGED CHA P TER 3 PREP GUIDE INTERVIEW CHA P TER 4

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WETFEET INSIDER GUIDE 61 Beat the Street®: Investment Banking Interviews

Why our firm? Compare us to Goldman or Merrill.

CHA P TER 1 A GLANCE AT >> This is a thinly disguised “Have you done your research?” question. It’s also a test to see if you can be honest without seeming overly critical. Why do you like the firm? What impressed you about the people and recruiting process? Don’t concoct anything, but don’t refrain from putting a favorable spin on events. For example, if interviewers called with lots of helpful coaching, give them credit for such attentiveness. It is also critical that you differentiate the firm’s culture without disparaging its competitors. An overly negative tone suggests that you’re a complainer, or at the least lack tact. CHA P TER 2 THE INTERVIEW PROCESS CHA P TER 3 THE INTERVIEW UNPLUGGED

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62 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1

What might a study-group peer say your strengths and weaknesses are?

>> This question is designed to gauge your self-awareness. It also tests how well you work in teams. If you understand the role you typically play in group situations and have a reasonably accurate grasp of how others see you, this bodes well for you. One recruiter says she wants to hear that candidates are flexible: While at times they might coordinate activities, at others they should show that they’re comfortable taking instruction from those who are THE INTERVIEW

more knowledgeable. If you can recognize the appropriate time to step up to the plate and swing, banks will love CHA P TER 2 you. But don’t put too much stress on leadership: In a recruiter’s eyes, candidates who claim to be leaders all the PROCESS time are unlikely to take direction well and might turn out to be poor team players. THE INTERVIEW UNPLUGGED CHA P TER 3 PREP GUIDE INTERVIEW CHA P TER 4

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WETFEET INSIDER GUIDE 63 Beat the Street®: Investment Banking Interviews

If our firm didn’t exist, which firm would be at the top of your list and why?

CHA P TER 1 A GLANCE AT >> One insider claims that this question, more often than not, reveals a candidate’s true colors. (The follow-up question, of course, is “But since we do exist, why did you choose us?”) Our source says, “If they cannot intelligently answer why they chose our firm over their second choice then I question their interest level, not to mention whether they have really researched the firm.” CHA P TER 2 THE INTERVIEW PROCESS CHA P TER 3 THE INTERVIEW UNPLUGGED

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64 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1

Why do you want to be an investment banker?

>> Insiders agree the worst response to this question is, “Because I want to do deals and make money.” What does that say about you? Nothing. In truth, there is no perfect right answer, but sincerity is important here. THE INTERVIEW CHA P TER 2 PROCESS THE INTERVIEW UNPLUGGED CHA P TER 3 PREP GUIDE INTERVIEW CHA P TER 4

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WETFEET INSIDER GUIDE 65 Beat the Street®: Investment Banking Interviews

Please value XYZ Company.

CHA P TER 1 A GLANCE AT >> This is one of the most important questions for which you can prepare. When an interviewer asks you to value a company, be ready to walk him through your answer efficiently but also with flair. Stay away from textbook answers, for they often sound canned and will make the interviewer question your grasp of the concept. And though textbooks are a fine basis for your prep work, they generally can’t give you enough material to deflect the curveballs many interviewers like to lob at you mid-valuation. Like with brainteasers and case questions, these folks need to know that you understand the process; the quantitative data of the valuation matter less. See “Valuing a Company” (page 20) for more detailed information about how to handle these questions. CHA P TER 2 THE INTERVIEW PROCESS CHA P TER 3 THE INTERVIEW UNPLUGGED

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66 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1

Please discuss a deal you have worked on in the past and your role in the transaction.

>> A word to you resume-padders out there: If you cite a deal on your resume, make sure you know the details. Interviewers invariably ask candidates to explain key drivers behind the deal, the structure, the fees, and the rationale behind the choice of financing. Beware of EBITDA multiples. Recruiters know they trip people up, and they’re merciless. THE INTERVIEW CHA P TER 2 PROCESS THE INTERVIEW UNPLUGGED CHA P TER 3 PREP GUIDE INTERVIEW CHA P TER 4

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WETFEET INSIDER GUIDE 67 Beat the Street®: Investment Banking Interviews

Sales & Trading: Analysts and Associates These recruiters do not expect undergrads to know much, so questions will focus more on your quantitative CHA P TER 1 A GLANCE AT abilities, personality, and intangibles that make great salespeople and traders. If you’re an MBA or prospective summer intern, the stakes are higher. Ask intelligent questions, show that you know the markets and this bank’s products, keep your sentences short and don’t be shy about using your hands and facial expressions more than you would in investment banking interviews. They’re looking for quick-thinking, confident, thick-skinned risk- takers.

Demonstrate your sales skills: Sell me this desk. CHA P TER 2 THE INTERVIEW PROCESS >> This is not a cue to detail your previous sales experiences, nor to extol impressive financial sales techniques you’ve read about. Rather, it’s an invitation to roll up your neatly pressed shirt sleeves and give them the quick 30-second hard sell. For those of you who don’t have experience in sales, we suggest you structure your pitch something like this: • What kind of desk do you use now? •What do you like about it? What would you change? • If you had an ideal desk what features would it have?

CHA P TER 3 THE INTERVIEW UNPLUGGED • May I suggest then that you check out this desk?

Do all this with as deft a combination of serious purposefulness and good humor as you can muster. The clear message to your interviewer has to be: I know this is a goof, but don’t worry, I also know what you’re looking for

and I can deliver. CHA P TER 4 INTERVIEW PREP GUIDE

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68 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1

Which are you interested in, equity or fixed income, and why?

>> The two are different, and if you’re still not sure why or which you prefer, do some reading and talk to people who understand both. Once you’ve formulated an opinion, be sure to convey it convincingly. Also be sure to link any related previous job experience to your choice. If you know something about commercial credit because you once worked in a bank, use it in your pitch for an equity job. Or go for the historical rationale. Discuss why THE INTERVIEW

bonds have historically been a more interesting area. Interviewers like it a lot when you can demonstrate some CHA P TER 2 understanding of the past. PROCESS THE INTERVIEW UNPLUGGED CHA P TER 3 PREP GUIDE INTERVIEW CHA P TER 4

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WETFEET INSIDER GUIDE 69 Beat the Street®: Investment Banking Interviews

Which do you want to work in, sales or trading? Why?

CHA P TER 1 A GLANCE AT >> These two are different, and if you don’t know how or why, you need to. A good answer for why you want to work in trading might be: “I’m pretty good at reading subtexts—through people’s body language, voice intonation, what they don’t say when they’re talking about money. I learned a lot of this at my job at [fill in the blank], but I also just seem to have a knack for it. I can almost always tell when someone is bluffing.” Or if you want to work in sales: “I like people and they seem to like me. They seem to trust me, even though I’m often younger than they are. When I had [job X], I learned to use this in ways that helped me a lot in selling. I’m also probably not enough of a gambler to be a good trader. Doing the best job for a customer matters a lot more to me.” Traders are a lot closer to real money and risks than sales. If this excites you, say so. If it makes you even a little nervous, be aware CHA P TER 2 THE INTERVIEW PROCESS that this is a reality you need to address. CHA P TER 3 THE INTERVIEW UNPLUGGED

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70 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1 Other Favorite Questions I-Banking vs Here are some other interview favorites that might arise during your conversations with investment banking Management recruiters. Play to your audience. • How well do you handle surprises? Give me an example. Consulting • How do you feel about wealth? › Thinking about consulting and invest- THE INTERVIEW

• Teach me something unrelated to banking. ment banking? Although both bankers and consultants CHA P TER 2 • Name three adjectives your roommate, family, best know that many top students are interviewing with PROCESS friend, colleague, or employer would use to describe both industries, it’s probably best to avoid pointing out you. that you’re talking to the other—you’ll look unfocused. • Tell me your biggest accomplishment. (Hint: Tie it in The hiring processes for both are competitive and to the strengths they seem to look for at this firm.) intense, but based on our conversations with recruiters • Tell me about a difficult project you handled. from both sides, here are some of the differences. THE INTERVIEW • Career changers: Tell me how your previous job UNPLUGGED experience led you to this company. Consulting Firms CHA P TER 3 • Give examples of projects you have done in which • Are apt to interview candidates in the office they’re you used the same skills as you will use in this job. applying to, as opposed to in corporate headquar- • Where do you see yourself in five years? ters. • Do you prefer working on a team or alone? • Like “Do you fit our culture?” questions. This area • If you could do anything, what would you do? (The accounts for about 50 percent of the ultimate decision. answer: “This job.” Try to make it sound sincere. If • Love case questions focused on business operations PREP GUIDE INTERVIEW

you can’t, be honest but think of lots of ways it links (for example, “Why are the profits for company X CHA P TER 4 to the job.) going down, when revenues are rising?”). • Tell me about the most interesting job you have had. • Look for a candidate’s ability to analyze a problem • Give me an example of your leadership ability. and deduce an answer.

(What kind of manager are you?) • Typically push a candidate to the conclusion of the • Please describe more thoroughly X experience listed case question and often ask for implications and on your resume. recommendations. • What do you think your favorite part of the job will be? • Tend to be fairly friendly (although the case WORKBOOK INTERVIEW questions can be nerve-racking). CHA P TER 5 • Love quantitative skills, but also seek people who have strong presentation and people skills.

• Look for a strong interest in business. • Look for stamina.

Investment Banking Firms PERSPECTIVE • Hire through the corporate headquarters, where the A STUDENT’S CHA P TER 6 majority of employees work (generally in Manhattan). • Love “Do you fit our culture?” questions. Your showing here will account for perhaps 75 percent of the decision.

WETFEET INSIDER GUIDE 71 Beat the Street®: Investment Banking Interviews

• Tend to focus on hypothetical questions involving Question 1 valuation, financing strategy, and markets. If you were stranded on a desert island for one CHA P TER 1 A GLANCE AT • Pay more attention to a candidate’s process in deriv- year, which three people would you want with ing the answer (for example, building the model) you? than to the actual quantitative solution. • Often cut candidates off mid-sentence once it’s appar- Good answers: ent they know a practical way to solve a problem. • The former company director, who now investigates • Hold interviews that can be more confrontational, misdeeds for the SEC or designed to create pressure on the candidate. • Paul Bunyan (or some other hearty, outdoorsy, • Look for strong sales skills, particularly in sales and can-do type) CHA P TER 2 THE INTERVIEW PROCESS trading. • Alice of Alice’s Restaurant • Look for a strong interest in finance. • Look for exceptional stamina and drive. Bad answers: • The former partner at an archrival who now runs the Fed • Gilligan (or Tina Louise) Never Let Down • Lindsay Lohan

CHA P TER 3 THE INTERVIEW UNPLUGGED Your Guard › Questions that on first impression seem Question 2 irrelevant rarely are. There is almost no such thing as If you could have any job besides banking, an unimportant or meaningless question in an invest- what would it be?

ment banking interview. If you are presented with any such queries (a few of which we set forth below), use Good answer: Concert pianist the opportunity to reveal your personality and your outside interests. Remember not to come across as too Bad answer: Accountant CHA P TER 4 INTERVIEW PREP GUIDE self-absorbed. For example, if a particular question affords you an opportunity to introduce your passion Question 3 for marathoning, it’s appropriate to let your interviewer What was the last book you read know that you train, say, 50 miles a week. But don’t (or What is your favorite book?) disclose (even if it’s true) that you have to run by yourself because you can’t possibly run with other people. Good answers: And stay away from controversial areas like politics and • Jane Eyre

CHA P TER 5 INTERVIEW WORKBOOK religion. You are not talking to your shrink, and soul- • The Way Things Work searching truth has a low priority here. Below are sev- • Eliot Janeway’s The Economics of Imperialism eral more examples of oft-asked disarming queries and suggested good and bad responses. Bad answers: • Stephen King’s The Stand • The Joy of Cooking • Michael Lewis’s Liar’s Poker CHA P TER 6 A STUDENT’S PERSPECTIVE

72 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1 Question 4 Q&A Thought What did you do last weekend? Balloons Good answers: › Below are some examples of real questions • Went skiing with friends job candidates have asked—and what recruiters think • Read two books of them. THE INTERVIEW

• Took a weekend vacation to Hawaii CHA P TER 2 Candidate: I know your department is rated among the PROCESS Bad answers: top three by I.I. (Institutional Investor) and is growing • Sat at home and watched TV quickly in countries Y and Z in Asia. But both Y’s and • Went shopping Z’s currencies have recently been devalued, Z’s obviously • Knitted mittens more than Y’s. How is this affecting your business here and overseas, and also your plans for the future in Y and Z? THE INTERVIEW Question 5 UNPLUGGED How do you spend your free time? Recruiter: Better-than-average question. She CHA P TER 3 understands one of our firm’s core competencies and Good answers: the most obvious way we differentiate ourselves from • Coaching Little League Baseball competitors. She’s also a strong candidate to get sent to • Poking around old record shops in search of rare jazz Asia in a few years given her claimed proficiency in albums Mandarin. Wonder if she’s aware of the more serious • Traveling to out-of-the-way places and then writing cultural and political problems there…Wonder how PREP GUIDE INTERVIEW

about them for The New York Times I can probe and find out how deeply she understands CHA P TER 4 • Playing the stock market this.

Bad answers: Candidate: How long have you been at firm X and

• Watching TV why? What do you like about the culture? • Hanging out with my friends in bars and getting wasted Recruiter: Puff question. It is always easy to talk • Picking up girls (or guys) about myself. Should I mention how isolated I feel WORKBOOK INTERVIEW at times? Probably not. Need to reveal something, CHA P TER 5 though, to make all the rest sound true.

Candidate: Your firm labels itself as “innovative.” Could you give me examples of its innovations?

Recruiter: Too general. A better question might ask PERSPECTIVE about innovations that are helping the bank develop A STUDENT’S CHA P TER 6 better employees or improvements in technology.

WETFEET INSIDER GUIDE 73 Beat the Street®: Investment Banking Interviews

Candidate: One of the other bulge-bracket firms says your merger with X has diluted your strength in both Y CHA P TER 1 A GLANCE AT and Z departments. Do you think that’s true?

Recruiter: A bit presumptuous, and I don’t like her tattletale opener, but it’s a valid question. One I’d want to know, too, before accepting an offer.

Candidate: How long, realistically, might it be before I actually begin trading/selling/meeting with clients? CHA P TER 2 THE INTERVIEW PROCESS

Recruiter: Legitimate question. He asked politely, and this is his job we’re talking about. Problem is, of course, I have no idea….

Examples of Good Questions to Ask Your Interviewer

CHA P TER 3 THE INTERVIEW UNPLUGGED • What sort of person seems to flourish at your firm long-term? • If the firm is committed to becoming a more global player, what impact does that have on regional

offices outside New York? • After the training program is over, what is the process of assigning analysts and associates to industry groups? CHA P TER 4 INTERVIEW PREP GUIDE • If you’ve worked on a project recently, could you describe what you liked best about it and what was most difficult? • How are deals staffed? • What do you think is the biggest challenge facing the firm in the next five years? CHA P TER 5 INTERVIEW WORKBOOK

CHA P TER 6 A STUDENT’S PERSPECTIVE

74 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1 THE INTERVIEW CHA P TER 2 PROCESS THE INTERVIEW UNPLUGGED CHA P TER 3 PREP GUIDE INTERVIEW CHA P TER 4

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WETFEET INSIDER GUIDE 75

A Student’s Perpective

Note to the Reader...... 78 First and Foremost: Things You Should Know...... 78

Getting the Interview...... 79

Before the Interview...... 81

At the Interview...... 82

After the Interview...... 84

Concluding Remarks...... 84 6 Beat the Street®: Investment Banking Interviews

Note to and Houston offices. On the day of the interviews, candidates were asked about their geographical CHA P TER 1 A GLANCE AT the Reader preferences. A no-brainer, right? The answer’s gotta › Up to this point, you’ve gotten a lot of advice be Houston or Dallas. However, it’s not that simple. from career experts. Now here’s insight from someone In Dallas, Goldman has two key divisions: wealth who has been the exact position you’re in now. Meet management and real estate. In Houston, however, Vivek Shah, a Houston native and graduate of the Goldman has its investment banking division. I heard McCombs School of Business (the University of Texas several candidates confidently say that they wanted to at Austin) where he majored in business honors and get into investment banking in Dallas. Clearly, they finance. Before attending McCombs, Vivek worked at hadn’t done their due diligence on the company. An CHA P TER 2 THE INTERVIEW PROCESS Merrill Lynch in the private client services division. He immediate ding. later attended the London School of Economics and As you start interviewing, you’ll notice differences Political Science, where he took advanced courses on in interviewing styles. The interview can be a pleasant valuation and entrepreneurship. From this point on, experience when you meet with bankers who are the advice you’ll find will be from Vivek’s point of view. outgoing and enthusiastic. But then there are those interviewers who make their lives more interesting by making ours more stressful. You will no doubt face the CHA P TER 3 THE INTERVIEW UNPLUGGED full spectrum—be prepared for them all. First and Regardless of whom you meet, don’t forget that the Foremost: Things interviewer is not necessarily representative of the firm’s culture. I’ve seen many students go sour on a firm

You Should Know because they disliked the interviewer. Don’t jump to MISTAKES HAPPEN conclusions—or close out your options—too quickly. I’ve interviewed countless times and have plenty of As for the interviews themselves, the types and lengths stories about mistakes I made during some of those are manifold. You might have the standard 30-minute CHA P TER 4 INTERVIEW PREP GUIDE interviews. The good news about mistakes is that you question-and-answer interview. Or you might have an learn more from them than from your successes. And interview that focuses on your behavior or personality, what’s even better is learning from someone else’s or an interview that targets technical knowledge and mistakes and successes—that is, mine—and figuring skills. About 80 percent of my interviews were a out what works without having to run your own standard mix of behavioral and technical questions. The experiments. Here are some of my personal experiences remaining ones, however, were unique. and strategies. For example: At one bulge-bracket firm, the

CHA P TER 5 INTERVIEW WORKBOOK second-round interviewer focused solely on my life. KNOW YOURSELF More specifically, he asked questions about what I do Be sure to understand the differences between the firms, for entertainment, my best spring break, and what including their history, culture, and business. You know I hate about investment banking. At another firm, this already, right? Well, be aware that it’s easy to fall I met with two stone-faced individuals—it was like into traps without even knowing it—especially if you speaking to a wall! At yet another, the interviewers haven’t done your homework. introduced themselves and then asked me if I had any For example: Goldman Sachs came to the questions for the remaining 25 minutes. What it all CHA P TER 6 A STUDENT’S PERSPECTIVE University of Texas at Austin to recruit for its Dallas boils down to is this: You don’t know whom you’re

78 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1 going to meet and what to expect, so be prepared to The point of these stories: You will do well in change gears at a moment’s notice. some interviews and still not get selected. Don’t get And finally, the content of your interview will also discouraged; just be aware that the interview process depend on your background. If you’ve interned or can be and often is subjective. worked as an investment banker, you’re more likely to get lobbed some technical questions. On the other Stress Levels Are High THE INTERVIEW

hand, if you’ve never worked in banking before, be Imagine a world in which you interviewed with your CHA P TER 2 prepared to prove that investment banking is what top firms, received several offers, and ultimately worked PROCESS you’re passionate about. at the firm of your choice. Okay, fantasy aside, it’s time to come back to reality. In the current economy, Interviewing Is Often Subjective getting into an investment bank is a serious challenge. At some point, you will walk out of an interview feeling If you want to break into the industry, get ready for confident because you feel that you’ve nailed it—that skyrocketing stress levels, more interviews than you THE INTERVIEW phone call to invite you to the second round feels like think you can handle, and a struggle to keep the words UNPLUGGED a sure thing. But then, no phone call: You didn’t make “I quit” from entering your daily vocabulary. CHA P TER 3 the cut. What happened? Interviews are subjective, My first internship—unpaid—was in Merrill and you can never really know what an interviewer is Lynch’s private client group. I landed my second thinking. Of course, there are certain situations whose internship with an energy company; none of the banks outcome may seem unfair to you. Life isn’t always fair. that I had targeted hired me. The following year, I Don’t let rejection stop you. interviewed with more than 20 firms for another For example: When I was interviewing for financial internship. Initially, I didn’t get a single offer. PREP GUIDE INTERVIEW internships, I met with an interviewer from San Was I frustrated? Absolutely. Giving up was definitely CHA P TER 4 Antonio, Texas. The interview candidate right before a recurring thought, but I refused to give in to it. If me was also from San Antonio. After the interviews, banking is your life goal, know that you will travel I spoke to the San Antonio candidate and asked him a rough road while you’re getting started. But many about his interview. All they talked about was San rewards lie ahead. Antonio, the high schools they attended, and so on. Nothing about the qualifications required for the job. Despite the fact that I’d felt good about my interview WORKBOOK Getting the INTERVIEW and was confident about getting a call back, it was the CHA P TER 5 San Antonio candidate who was invited to the second Interview round. An undeniable connection had been made, and The Recruiting Shuffle

I—the Houston native—was left out. Now that you know what to expect, how do you In another set of interviews with a bulge-bracket go about getting an interview? The best way is to firm, I interviewed on campus and had friends who submit your resume through your university. Many were also part of the interview round. Though many banks recruit on campus and have resume submission PERSPECTIVE of us felt we had done well, none of us qualified for the through various schools. You can also call firms directly A STUDENT’S CHA P TER 6 second round. So who did? The interviewer selected and submit applications via the company’s website. someone directly from his fraternity, a candidate who Whatever you do, follow instructions. hadn’t even been originally scheduled to interview. I Firms often recruit at universities that are located was furious. near the firm’s operations. Most banks that recruit

WETFEET INSIDER GUIDE 79 Beat the Street®: Investment Banking Interviews

at the University of Texas at Austin, for example, are many of the bulge-bracket firms and some small from the Houston area. The assumption is that because boutique banks. But interview followed interview and CHA P TER 1 A GLANCE AT you’re attending school in Texas, you want to stay in nothing came through. Even after several second-round Texas; hence, firms recruit for positions within the state. interviews I didn’t get a single offer. However, occasionally firms recruit for other offices as Suddenly, one phone call changed everything. A guy well. That said, if you have a strong desire to work in I’d met through basketball games and dorm meetings New York, let a company know about your preference. when I was a resident assistant was now at Deutsche Bank in its technology group. He got in touch with Networking—What Is It, Why Do me and a few others when he learned that Deutsche’s It, and How Do You Do It? San Francisco office was looking for a summer intern. CHA P TER 2 THE INTERVIEW PROCESS Intense networking is another effective method for After two phone interviews, the firm flew me to San landing an interview. This means making connections Francisco. After six interviews, I received an internship through a number of routes, both formal and informal. offer. This experience convinced me of the impact of— It involves interacting with people so that you can learn in this case, informal—networking. about them, their lines of work, their firms, and areas of So how do you network? Start with people you growth in the industry. With effective networking, you already know. Make a list of anyone in the industry create ready sources of information and job openings. you can talk to. Whatever you do, keep in mind that

CHA P TER 3 THE INTERVIEW UNPLUGGED Consider this scenario: You’re a VP of company XYZ, you should never ask for an interview or a job. Your aim and you are responsible for making hiring decisions. should be information gathering. Recently, you learned that the firm wants to hire Let’s assume, for example, that the mother of a another associate. You receive a stack of 100-plus friend works in banking. Call her and express your

resumes and have to select a handful. As you look over interest in gaining insight into the industry. Find out each resume for maybe 15 seconds, an old friend from exactly what she does. Ask questions about what she high school gives you a call. She’s looking for a job in loves and hates about the job. Find out everything banking and has kept in close contact with you for the possible about her firm. Learn as much as you can. CHA P TER 4 INTERVIEW PREP GUIDE past year. You know what she wants to do, and that Gradually expand your network. Look through she’s capable, and that she has a great personality. So an alumni database at your university. Call friends who do you hire? you know who are working in the industry. Contact The qualified friend, of course. After all, why waste classmates and anyone else who can help you gather your firm’s time and money in phone screening and information. flying out candidates for interviews when you can When I interviewed with a representative at Goldman bring in your friend, who you already know will hit it Sachs for the sales and trading division, I wasn’t invited

CHA P TER 5 INTERVIEW WORKBOOK off with your coworkers, and make the hiring process to second rounds. But I held onto my interviewer’s busi- quick, simple, and cost-effective. Put simply, most ness card, keeping in mind that she worked in the San hiring managers give preference to friends or previous Francisco office. The following year, when I worked at contacts. This is why you need to network. Deutsche Bank in San Francisco, I sent her an email to let Let me explain further. My third internship hunt her know that I was in the area and was still interested in was a frustrating experience. I thought I was well learning more about Goldman Sachs. She was shocked; prepared for the recruiting process because I had she didn’t expect someone who’d interviewed with her a completed my energy-company internship the previous year ago to contact her. We spoke over the phone, and CHA P TER 6 A STUDENT’S PERSPECTIVE summer. I landed more than 20 interviews with she invited me for lunch and later gave me a tour of the

80 WETFEET INSIDER GUIDE AT A GLANCE chaPter 1 trading desk. My interaction with her helped me more • Can you tell me about yourself? than I could have imagined. As she continued to guide • Why do you want to work in banking? and advise me on my career decisions, she became my • What does an investment banker do? mentor. She also helped me get an interview with the • What do you enjoy outside of school? investment banking division, and although it did not lead • Tell me something about yourself that is not on your to an off er, I learned a great deal more about the industry. resume. THE INTERVIEW

• Why did you choose to attend this school? chaPter 2 • Why do you want to work at our fi rm? PROCESS • What are your strengths and weaknesses? befOre the • Whom else are you interviewing with? IntervIew • What would your friends say about you? SoakIng It all uP

Before you get to the interview, recall the three Rs of THE INTERVIEW interview preparation: research, rehearse, and review. UNPLUGGED You never know just what you’ll be asked—every chaPter 3 interview is diff erent. I rarely used all of the data that I’d prepared for my interviews. Finance issues, banking, and past work experiences didn’t always come up. But you have to be prepared for any potential angle an interviewer may present to you. Don’t stop at researching the fi rms that are PREP GUIDE INTERVIEW interviewing you or the industry in general. Get chaPter 4 to know their competitors’ fi rms, too. Be prepared to explain why you prefer investment baking to consulting, for example. Research markets, equities, current industry events, and more. Th en be sure to rehearse and review the information avoIdIng SIlly mIStakeS you’ve gathered. Develop a point of view from all People often make mistakes without realizing they’ve this data. Make sure you understand it fully. Have done so. Th ere are several pitfalls to avoid. First, know the WORKBOOK INTERVIEW your friends help you with mock interviews. Start position and location you are applying for. For example, chaPter 5 formulating responses to potential questions and most banks are strategically located: Technology groups practice delivering them smoothly and confi dently. are usually in the San Francisco area, energy groups are in Houston, generalists are in New York, and so on. So if SamPle IntervIeW QueStIonS you are passionate about technology banking, it doesn’t Th roughout my interview rounds, I answered many of make sense to tell your interviewer you want to work in the same questions. However, I’ve also had my share of technology but live in Houston. PERSPECTIVE less-than-traditional questions—ranging from the very It bears repeating: Know the bank you’re interviewing A STUDENT’S chaPter 6 technical to the very bizarre. Look over the list below to with. In one interview, I was discussing trends in get a feel for the most common types of questions you investment banking. At that time, many commercial can expect. Make sure you have a solid and thorough and investment banks were merging. During one answer for each. interview, I began talking about the strategy behind

WETFEET INSIDER GUIDE 81 Beat the Street®: Investment Banking Interviews

such mergers. Th e interviewer asked if I thought the Dos and Don’ts” to review how to make a great fi rst merging of commercial and investment banks was the impression. chaPter 1 A GLANCE AT best strategy. Knowing that this company’s strategy My suggestion is to walk in, shake hands, smile, and was to remain as an investment bank, I was instantly ask the interviewer how he or she is doing. I frequently on alert. I knew I had to tread carefully. Expounding started with a greeting such as, “It must be nice to get on the virtues of merging without this understanding a break from the offi ce for a day.” Th is opener almost would have demonstrated my lack of knowledge of always enabled me and the interviewer to relax. Your the company. icebreaker is critical; it sets the tone for the rest of the interview—and a conversational interview is your goal. chaPter 2 THE INTERVIEW PROCESS at the IntervIew the JudgeS’ Scorecard Part II What qualities do interviewers look for? Some are universal: enthusiasm and a willingness to work hard. It’s up to you to show them how excited you are about the fi rm and how well you fi t with the culture. Th ink chaPter 3 THE INTERVIEW UNPLUGGED about what you would look for if you were hiring someone, or better yet, the kind of person you would want to work with. Th at would probably be someone who has focus, takes initiative, works well with teams, and has an agreeable personality. Don’t forget that while the fi rm is interviewing you, you are also interviewing the fi rm. Your goal needs to be to learn as much as possible about where you’ll be chaPter 4 INTERVIEW PREP GUIDE working, who your colleagues will be, and what you’ll be doing. Remember, you are about to make a decision Initially, most interviewers will introduce that could aff ect the course of your life. You want to themselves and then ask you to tell them about enjoy your experience as much as possible and ensure yourself. Th is is an opportunity for you to go over that it’s a good fi t for your future goals. your life in 60 seconds. Th roughout the interview process, your aim is to make the stranger on the other the IntroductIon side of the table like you. We could get into the whole

chaPter 5 INTERVIEW WORKBOOK When you walk into the interview room, you’ll probably psychology of interviewing, but let’s keep it simple: have millions of thoughts racing through your head. If you are trying to make a friend who can push you Let them go. Even after I’d become an old hand at to the next round, you need to fi nd something you interviews, I still found myself getting tense. I dreaded have in common with that person. Your mission is to shaking hands since my palms would always get form a bond so that he or she remembers you. When sweaty. Eventually, I started keeping a napkin in interviewers asked me about myself, I would walk my pocket; I would stick my hand in there and wipe them through my educational and work experiences. it before extending it in a handshake. Look back at I always mentioned the time I studied abroad in chaPter 6 A STUDENT’S PERSPECTIVE “Most Common Interview Gaff es” and “Body Language London, saying something like: “I went and took a

82 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1 course in valuation and entrepreneurship. I also went an understanding of what a particular firm is all about to Wimbledon and met Angelina Jolie at a movie can only increase your chances of making it to the next premiere.” round. For example: Let’s say you are at an information With that, I was hoping to somehow connect with session for XYZ Bank. You’ve been to a lot of these my interviewer on one or more fronts. In fact, this bit before, and it’s hard to overcome the boredom, but it’s of information often led to discussions about sports, definitely in your best interest to pay attention. Jim, THE INTERVIEW

movies, or London. In two of my interviews, all we an associate with the bank, emphasizes how his firm CHA P TER 2 discussed was my time abroad. Not only had I managed gives its new hires substantial responsibility. The next PROCESS to connect successfully so that the interviewer would day, when you interview with him, you ask: “Can you remember me, but I think I’d conveyed that I had the describe a recent transaction that you worked on and kind of personality that would complement the firm the responsibility you gave to the analyst?” and its working environment. In this scenario, you’ve managed to score several key points. First of all, you’ve shown that you cared enough THE INTERVIEW Getting to Know Your to attend the information session. Second, you’ve proved UNPLUGGED Interviewer—and Using that you listen carefully. Finally, you’ve demonstrated CHA P TER 3 That to Your Advantage a genuine interest in the position by asking for a You need to quickly size up your interviewer’s style specific example. Add all of this to the fact that you and personality and adjust your style accordingly. For will gain valuable insight into whether you’ll be example, if you’re meeting with someone who is relaxed building financial models or making copies—a key bit and easygoing, it might be okay to discuss some of of data in deciding whether the job is the right one for your activities that are not directly related to banking. you later on, when you’re considering the offer. PREP GUIDE INTERVIEW

You might want to use light humor if the opportunity Here’s another example: Let’s say you are CHA P TER 4 arises. On the other hand, if you’re meeting with a interviewing with Bob from ABC bank, and in his more serious person, then it’s best to stay concise and introduction he tells you he worked at XYZ bank and straightforward, discussing only experiences that are LMN bank before ending up at ABC. At the end of the relevant to banking. interview, Bob asks if you have any questions. You say: I have found that many of my best interviews were “Bob, you mentioned that you moved from XYZ bank the ones that turned into dialogues. One effective way to LMN bank before you arrived at ABC. I’m curious to foster this is to follow one of your answers with an why you chose ABC bank and what is it specifically WORKBOOK INTERVIEW appropriate question. For example: In an interview about the firm that keeps you there?” CHA P TER 5 with Wachovia Securities, the interviewer described an In this scenario, you’ve shown that you were paying ethical dilemma he had recently encountered. He then close attention to Bob when he introduced himself.

asked what I would do in such a situation. I first asked You have also demonstrated to Bob that you really do a couple of questions to make sure I understood the care about the firm you will go to work for. In addition, situation correctly and then responded. Following my Bob gets to talk about his path in banking as well as answer, I asked him how he’d handled the situation. the merits of his firm—two topics most bankers love to PERSPECTIVE He responded, and from there we began talking about discuss. A STUDENT’S CHA P TER 6 ethical dilemmas in the workplace and established a To recap: You have 30 minutes to make a friend, rapport. convince your interviewer that you are passionate about You also need to show the interviewer that you’re a being an investment banker, and get yourself invited to good listener. Demonstrating attention to detail and the next round. Since those 30 minutes could determine

WETFEET INSIDER GUIDE 83 Beat the Street®: Investment Banking Interviews

the next few years of your life, you should be using every “We want to extend you an offer,” and then paused. It interview strategy at your disposal. was as if he expected me to accept right away. CHA P TER 1 A GLANCE AT Some firms gave me as little as one week to make Concluding Your Interview my decision, while others offered as much as two When you come to the end of your interview, ask months’ time to think things over. Ideally, we want several questions to gather more information. Keep in all of our offers on the table at once so that we can mind the time. If it’s a 30-minute interview and there’s pick the best of the bunch. Unfortunately, the timing one minute remaining, ask one quick question. If rarely works out so neatly. On the flip side, consider you’ve got 15 minutes left, you probably have time for the recruiter’s perspective. A firm may need to hire one more involved questions. Review the “Sample Q&A” candidate immediately from five finalists. The firm can’t CHA P TER 2 THE INTERVIEW PROCESS covered previously. necessarily afford to give that person months to make a Be sure to say thank you, smile, and ask for a business decision, because the other candidates are also waiting card. Even if you don’t make the second round this time, to hear back. you’d be wise to hold onto your interviewer’s card for Then there are the rejections—by mail or by phone. your files. They hurt equally. But be cordial and professional. And keep in mind that a rejection isn’t necessarily absolute: An interviewer may remember your grace under difficult CHA P TER 3 THE INTERVIEW UNPLUGGED After the circumstances and think of you for an opening down the road. If you’re rejected, hold onto your interviewer’s Interview business card and make contact occasionally. Remember Thank-You Emails Can’t Hurt that every interview is an opportunity to add to your

Thank-you emails definitely can’t hurt, unless they network, even if you don’t get an offer. include a grammar or spelling mistake. Of course, I’ve known people who’ve received job offers without having sent a thank-you email; in fact, it’s likely CHA P TER 4 INTERVIEW PREP GUIDE Concluding that the email will be deleted. But it’s a good way of demonstrating your courtesy, professionalism, and Remarks interest in the position. › I hope you are feeling more confident and better prepared for the interviews ahead. Just remember that Receiving Offers and many things don’t go according to plan. Anticipate weathering rejections making mistakes: The key is to learn from them. As Now that the interviews are over, you’re desperately you journey through the interview process, hone your

CHA P TER 5 INTERVIEW WORKBOOK waiting for an answer, one way or the other. I know approach so that you land the investment banking job how it feels to be in this post-interview limbo. I also of your dreams. know—all too well—how it feels when you don’t receive an offer. Let’s assume that you do receive an offer. Under no circumstances should you accept on the spot unless you are 100 percent sure it’s what you want. Of course, some will expect you to accept immediately. For example, I CHA P TER 6 A STUDENT’S PERSPECTIVE once received a call from a managing director who said,

84 WETFEET INSIDER GUIDE AT A GLANCE CHA P TER 1 THE INTERVIEW CHA P TER 2 PROCESS THE INTERVIEW UNPLUGGED CHA P TER 3 PREP GUIDE INTERVIEW CHA P TER 4

WORKBOOK INTERVIEW CHA P TER 5

PERSPECTIVE A STUDENT’S CHA P TER 6

WETFEET INSIDER GUIDE 85

>> The WetFeet Story WetFeet was founded in 1994 by Stanford MBAs Gary Alpert and Steve Pollock. While exploring their next career moves, they needed products like the WetFeet Insider Guides to guide them through their research and interviews. But these resources didn’t exist yet—so they started writing! Since then, millions of job seekers have used the WetFeet Insider Guides and WetFeet.com to research their next career move.

In 2007 WetFeet became part of Universum Communications, the global leader in employer branding. Thanks to the integration of WetFeet into the Universum group, WetFeet products are now used by job seekers all over the world. In addition to our Insider Guides and WetFeet.com, we produce WetFeet magazine, which features career advice tailored to undergraduate students.

>> The WetFeet Name The inspiration for our name comes from a popular business school case study about L.L. Bean, the successful mail-order company. Leon Leonwood Bean got his start because he literally got his feet wet: Every time he went hunting in the Maine woods, his shoes leaked. One day he set out to make a better hunting shoe, doing such a good job that his friends lined up to buy pairs of the boots. And so L.L. Bean was born.

The lesson we took from the Bean case? Well, it shows that getting your feet wet is the first step toward achieving success. And that’s what WetFeet is here for: To help you get your feet wet and take the right steps toward ever-greater career goals, whatever they may be. >>Do you have what it takes to become an investment banker? If so, you’ve got to be prepared to compete with the best of them. In order to land a spot in any part of the industry—corporate finance, research, sales, trading, and more—you have to shine in your interviews, and show your potential employers that you’ve got the right stuff. We’ve talked to recruiters and senior bankers at the leading firms to find out what separates the winners from the also-rans.

TURN TO THIS WETFEET INSIDER GUIDE TO EXPLORE

★ HOW TO TARGET YOUR IDEAL EMPLOYER ★ INTERVIEWERS’ POWER PLAYS—AND HOW TO COME OUT AHEAD ★ DIFFERENT AREAS OF THE INDUSTRY AND WHICH ONE IS RIGHT FOR YOU ★ THE BEST WAYS TO MAKE A GREAT IMPRESSION

★ THE VIEW FROM THE OTHER SIDE OF ★ A FIRST-PERSON ACCOUNT OF THE TABLE—WHAT RECRUITERS WANT THE INTERVIEW PROCESS

★ TIPS FOR ACING YOUR INTERVIEWS

WetFeet has earned a strong reputation among college graduates and career professionals for its series of highly credible, no-holds-barred Insider Guides. WetFeet’s investi- ISBN 978-1-58207-949-3 gative writers get behind the annual reports and corporate PR to tell the real story of what it’s like to work at specific $ 14.95 U.S. companies and in different industries. www.WetFeet.com