When you think about trying to explain something to someone, you normally try to breakdown the topic into very basic, simple, and part by part explanations. But in ibd interviews, the expected answers all seem to be very broad.
For example: "How would you value a company?"
Answer: "You would use the three valuation methods.. (list the three methods)"
That is not in anyway a good explanation. Intuitively, you should be giving a more thorough answer and be able to explain these topics to someone not in the industry, I would think. It seems like it would also express your strength in understanding the material. Why are interviews so unintuitive and simple?
Usually after I get that question, interviewers will press more in-depth until they're satisfied with the answer or until you stumble.
Example of a "flow" question: - How do you value a company? - Can you describe an LBO? - What makes a good LBO candidate? - What are the major drivers of an LBO? - Let's do a paper LBO...
etc.
But otherwise, they may not be expecting much finance knowledge, and just want to see that you know the very basics.
True. Maybe lateraling/associate will require more intuitive explanations that go beyond easy to read answers
Not sure you know what intuitive means.
I mean that I would think that I'm should be explaining things very simply (my intuition), instead for interviews I have to be extremely high-level.
Ok, fair enough, you mean the answers expected are typically not intuitive. But that's just that, you don't have to give standard answers just because such exist to frequently asked questions. On the other hand, I don't think your answer should necessarily be intuitive in the way someone not in the industry would understand it. After all, this is a job interview, not a visit with relatives.
The standard answers to ib interview questions typically aren't intuitive, that's why candidates who can provide intuitive answers to technical questions easily stand out.
For example, for the question you mentioned, the standard answer would just be "you use the three valuation methods..." You can make this much more intuitive by explaining it at a high level. For instance, "value is typically estimated based on either how investors have historically valued similar companies (trading & transaction comps) or the present value of cash flows that the company is projected to generate in the future (dcf)"
Just because the 400 question guide tells you that you're supposed to answer a question a certain way does not mean that that is how you have to answer it. As an interviewer, it's refreshing to not hear the same cookie cutter answer every time.
Makes sense. It's as if the intuitive question should be: "why do you use the three valuation methods?"
trader_timmy pretty much nailed it
Yep, completely agree. The answers in interview guides are very "check the box" and won't make you stand out in a good or bad way. The candidates that really impress me are the ones that demonstrate they actually understand the concepts instead of just regurgitating what they've heard.
last time I gave an intuitive, maybe even elegant, explanation of the WACC, the guy went like : huh and can u gimme formula plox ?
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