Hard technical questions
I’m interviewing at an EB and I’m looking for the best place for tougher technical questions (not the 400). Preferably questions that require calculations.
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DEPENDS:
IF Diversity, THEN "What is an investment bank?"
IF Non-Diversity, THEN "you have 2 companies. Company A ($50M) and Company B ($50M). Company A and B merge and are valued at $150M. How could this be possible?" Note: you cannot use "synergies" - both revenue and cost.
I'm like 99.999999% sure you fucked up the non-diversity question and meant to ask about revenue instead of valuation. If synergies don’t count, this is an accounting question.
A and B both owned 50% of another business “C” that also has 50 of sales. A and B merge and together own >50% of C, so all three consolidate their financials. Hence 150 pf sales
- diversity hire
Diversity candidate who's a VP showing off his understanding of simple accounting a non-diversity intern. Checks out.
Del
I interpreted it as an impossible-to-answer question and that’s the point.
Nice job though correcting relatively easy questions as a VP. Clearly someone is still insecure about having the easiest path to wealth ever.
Trying to be funny and you ended up looking like an idiot. The non-diversity question doesn't make sense. It should be about revenue of pf company
As someone who was diversity in literally got asked the second question and it wasn’t even the hardest question I was asked in that interview.
almost everyone got this one wrong:
How does a $10 decrease in depreciation expense flow through the 3 statements
You gotta be real stupid to mess that one up considering that is the first question in every single guide
every single guide asks for a $10 increase, this asks for a $10 decrease, since candidates memorize the answers to the guide they ignore the decrease part and get the whole thing wrong
He said decrease, not increase. The latter is super common, the former doesn’t get asked much and can throw people off who memorize too much.
How many water molecules can you fit in your college dorm?
EBs don't ask hard technicals. Almost any interview won't be hard. Just understand what corporate finance is and the coverage you are going for. The questions can be made up on the spot so practicing in a guide won't get you far.
Bunch of downvoters from prospects who think a basic paper LBO is hard. I went through interviews at almost every EB years ago.
EBITDA 50 EV/EBITDA 12x leverage 8x. If you were the debt investor, how many warrants would you need to demand for a moic of 1.5x
100% warrant coverage?
Ev: 600
Debt: 400; 100% would need to be converted to equity for 1.5x MoM assuming existing equity holders are completely wiped
Might be overcomplicating but won’t dilution limit their stake to 2/3 (400) of EV without the business growing
Sorry its been a while but why wouldn't it be 50%. Wouldn't it be the 400mm in debt plus the 200mm in warrants (50% of principal)? I'm likely missing something
Do we have any additional info? Is there interest on the debt? Are the warrants exercised in exchange for cash? Do we assume that debt is paid down each year using EBITDA over say a 5 year period? Did they give you the share count? Otherwise I agree, we need $200 of value from the warrants or 100% of the equity
why 400 from the warrants? You want 1.5x and you're lending at 8x the 50 EBITDA so lending 400. If you want 1.5x you want your 400 back plus 200 which is 50% what the current equity is.
Look at IBvine from U Michigan. It was great help for me when I was studying technicals. Good variety of harder questions not limited to those in the guides.
I found Overlevered's questions helpful for challenging questions
liquidityshark has a questions bank online that i used. they have some tough merger math questions and other tricky questions asked at EBs in past cycles
used a question bank called mаrgin of alpha, was pretty useful
Is Margin of Alpha worth it?
yes and don't look back lol, my og banking club got a subscription
Is your stated EV correct here? 90+90-50=130. Is it 130 or was the cash amount supposed to be 60?
saw that too, im assuming there was some restricted cash or min cash covenant they just didn't put on there that im guessing you have to make an assumption about since its an evercore question lol
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