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How to Prepare for Investment Banking Interviews: Guide and Study Plan

To prepare for investment banking interviews, learn how the three financial statements link, then master valuation (comparables, precedents, DCF), enterprise value math, and the basics of M&A and LBO analysis, and practice answering technical questions out loud. Most candidates need about 8 weeks at 8 to 10 hours per week, with networking and behavioral preparation running alongside the technical work.

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What is Investment Banking?

Investment banking interviews test whether you can do the day-to-day analytical work of an analyst or associate: reading financial statements, valuing a company, and explaining how a merger, acquisition, or financing affects a business. Interviews usually combine behavioral questions (why banking, why this firm, walk me through your resume) with technical questions on accounting, enterprise value, valuation methods, DCF mechanics, accretion and dilution, and leveraged buyouts. Later rounds at some firms add a modeling test or case study.

Who it is for

This guide is for undergraduates recruiting for summer analyst roles, MBA students recruiting for summer associate roles, and career changers moving into investment banking from accounting, consulting, corporate finance, or other areas of finance. It also suits analysts preparing for lateral moves between groups or firms who want a structured refresh of technical fundamentals.

What is tested

  • Valuation & Core Concepts: Comparable companies, precedent transactions, and DCF analysis, including when each method is appropriate and why results differ. The key skill is explaining the logic behind a valuation, not just the formula.
  • Valuation & Implied Share Price: Bridging from enterprise value to equity value and an implied price per share, including net debt, minority interest, preferred stock, and diluted shares under the treasury stock method. Interviewers look for precise handling of each bridge item.
  • M&A & LBO Modeling: Accretion and dilution analysis, purchase price allocation, goodwill, and the mechanics of a simple leveraged buyout. You should be able to reason through whether a deal is accretive and what drives returns in an LBO.
  • Accounting & 3-Statement Linking: How a change such as a depreciation increase or a new debt issuance flows through the income statement, balance sheet, and cash flow statement. This is one of the most frequently asked technical topics and the foundation for valuation and deal analysis.
  • Restructuring, DCM & ECM: The basics of debt and equity financing, capital structure, credit metrics, and distressed situations. Candidates for product groups such as leveraged finance or restructuring should expect deeper questions here.

Investment Banking study plan: 8 weeks, 8 to 10 hours a week

1. Accounting foundation (weeks 1 to 2)

  • Learn the structure of the income statement, balance sheet, and cash flow statement and how net income and cash connect them.
  • Practice walking through how depreciation, inventory, debt, and stock-based compensation changes flow through all three statements.
  • Review working capital, deferred taxes, and goodwill at an interview level.
  • Draft your answers to walk me through your resume and why investment banking.

2. Valuation and enterprise value (weeks 3 to 4)

  • Master the bridge between enterprise value and equity value and the treasury stock method.
  • Learn how to choose comparable companies and precedent transactions and which multiples apply to which industries.
  • Build a simple DCF from free cash flow to terminal value and discounting, and learn how to estimate WACC.
  • Practice explaining why a DCF might produce a higher or lower value than trading comparables.

3. M&A and LBO (weeks 5 to 6)

  • Work through accretion and dilution examples using cash, debt, and stock as purchase consideration.
  • Learn the steps of a basic LBO: sources and uses, debt schedule, exit, and returns.
  • Solve paper LBO style problems by hand to build fluency with returns math.
  • Read about recent deals in the sector you are targeting so you can discuss one in detail.

4. Mock interviews and polish (weeks 7 to 8)

  • Run timed mixed sets of technical questions and answer each one out loud.
  • Do mock interviews with peers or mentors and ask for feedback on structure and clarity.
  • Review every question you missed and rewrite your answer in two to three sentences.
  • Prepare questions for interviewers and a short view on current market conditions.

How to practice

  • Answer every technical question out loud, because interviews reward a clear, structured verbal explanation more than a memorized definition.
  • Use short daily sets of mixed questions so that accounting, valuation, and deal topics stay fresh at the same time.
  • Keep an error log of missed questions and revisit them until you can explain the correct answer without notes.
  • Use flashcards for definitions and formulas, such as the enterprise value bridge and WACC, so they become automatic.
  • Build at least one simple three-statement model and one DCF yourself to understand the mechanics behind the questions.
  • Practice mental math with percentages and multiples, since many interview questions expect quick estimates without a calculator.

Common mistakes

  • Memorizing answers without understanding them, which falls apart when an interviewer changes one assumption.
  • Forgetting the tax effect when walking a change through the three statements.
  • Mixing enterprise value and equity value metrics, such as pairing enterprise value with net income.
  • Spending all preparation time on technicals and neglecting the resume walkthrough and fit questions.
  • Giving long, unstructured answers instead of stating the conclusion first and then the reasoning.
  • Being unable to discuss a single recent deal or market development in depth.

Free Investment Banking practice by topic

How long does it take to prepare for investment banking interviews?

Most candidates need about 6 to 10 weeks of focused technical preparation at 8 to 10 hours per week. Candidates with a strong accounting or finance background can move faster, while career changers often need longer. Networking and behavioral preparation usually run in parallel over a longer period.

What technical questions are asked in investment banking interviews?

The most common technical questions cover how the three financial statements link, enterprise value versus equity value, the main valuation methods, how a DCF works, and accretion and dilution in M&A. Many interviews also include basic LBO questions. Interviewers care about your reasoning as much as the final answer.

Do I need to know how to build a financial model for an analyst interview?

For most first-round analyst interviews you need to understand modeling concepts rather than build a full model live. Some firms add a modeling test or case study in later rounds, especially for lateral or associate hires. Building a simple three-statement model and DCF yourself is the best preparation for both.

How do I answer walk me through a DCF?

State that a DCF values a company based on the present value of its future cash flows. Then explain projecting unlevered free cash flow for several years, calculating a terminal value with a perpetuity growth or exit multiple method, and discounting both at the weighted average cost of capital. Finish by bridging from enterprise value to equity value and an implied share price.

What is the difference between enterprise value and equity value?

Equity value is the value of the company that belongs to shareholders, such as market capitalization for a public company. Enterprise value is the value of the core operating business to all capital providers, calculated as equity value plus debt, preferred stock, and minority interest, minus cash. Multiples must pair each value with a matching metric, such as enterprise value with EBITDA.

Is accounting knowledge important for investment banking interviews?

Yes. Accounting is the foundation of valuation and deal analysis, and the three-statement walkthrough is one of the most frequently asked technical questions. You need interview-level fluency with how transactions affect each statement, not the depth of a professional accountant.

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