Interview prep for Senior Investment Banking Analyst - DCM & Leveraged Finance. Rate my prep plan?
I don't work in investment banking right now but I'm going into my second interview for a Senior IB Analyst position at a large bank. In my first interview with the HR lady who started her career in this role said that she thought all of my skills were transferable and wants to give me a chance, my largest weakness would just be that this is a senior position and that the expectations would be very high from the beginning so not much training time but training would be provided.
Where I'm coming from (5 years of experience):
I recently resigned from my career to pursue something I was passionate/enthusiastic about because of a massive gain trading options in 2018. In college (non-target) I triple majored in Managerial Finance, Banking & Finance, and Economics. I graduated with the most majors in my class and on an academic scholarship I earned in my sophomore year.
I was a financial risk analyst (underwriter) for an insurance product that would mainly cover litigation and react when a company:
-went into bankruptcy (lawsuits include "you are no longer able to satisfy our contract and I can't get these terms any where else" or "management ran the company into bankruptcy so they could push me out")
-experienced a change of control in ownership or board management (lawsuits include "this was an unfavorable price to sell stock at" or "I didn't agree to allowing this person to run the company"
-disputes (mainly relating to representations) arising from mergers, acquisitions and divestitures (lawsuits include "you failed to perform your due diligence on said acquisition and now it's reducing the value of my equity" or "your due diligence was inadequate as we should have looked into their representations with more scrutiny")
-Derivative security lawsuits from shareholders against management (lawsuits include "all of the above" and "your management of this company has decreased the value of my equity" or "managements failure to control risks has created a decrease to my equity")
The product would provide defense cost coverage, pay damages, and other reasonable costs & expenses relating to the lawsuit. I would do a very deep financial analysis (particularly diving deep into their liquidity profile), capital structure analysis, ownership analysis, board analysis, minimal financial modeling would include valuing the risk for how much insurance limit I was providing / the review of models provided to me from PE / VC firms for their ventures / and consolidating financial statements for unconsolidated companies. I'm addressing my weakness in financial modeling by getting a certification in Financial Modeling and Valuation (FMVA).
The recruiter said I should make sure I know the following for when I have a meeting with 2 Managing Directors next Wednesday.
-Financial statement analysis / How the 3 financial statements are connected - should be easy since I've been analyzing them for the past 5 years
-How different types of debt effect the capital structure of companies - I'll need to freshen up on this
-Previous transactions I've been involved in: the most recent one was where a PE backed energy company was consolidating 2 entities and created a new entity to put them into one entity and issued some Caa rated debt to payoff the debt under those 2 entities in turn consolidating the debt under the new entity. I'm going to think of 2 other debt funded acquisitions as well.
-Understand the deal flow - how does the deal flow usually go for DCM and Leveraged Finance?
-Keep working on financial modelling - is there anything specific to this field I should look at? I hear this IB type isn't so modelling heavy (thankfully for me) since this isn't a strong strength but I'm working on it.
-Some FX hedging strategies. Which one is most commonly used? I'm going to figure it out but I bet knowing what is most commonly used in the business & why would be helpful
Thanks so much everyone. I'm really passionate about this. This is the second investment banking role I've interviewed for and I need to convince them to take a chance on me for a senior level position which is a stretch I know but for some reason they are giving me a chance. If you want to see my resume let me know and I'll post it!
I'd be interested to know what the deal flow actually looks like. Check their past transactions and definitely ask. It can be pretty variable. Some have syndicated, acquisition, ABL, etc. under the LevFin umbrella. This can change the modeling a bit. I think what's important there is to just have a strong foundation and think logically about how different levels of the cap stack flow. Have a sense of the different possibilities: Term A vs. B vs. C vs. different bonds, structural subordination, common covenant types, etc.
Definitely be able to speak in depth on any previous transactions where you participated or at least witnessed a lot of the process.
I can't speak too much to FX hedging, but I know there are some decent articles out there. I would think understand the basic mechanics of cross-currency swaps and various futures contracts. Know the difference between strip hedging and stack-and-roll. Again, I don't really know what to expect for this situation exactly, but I can't see them dinging you if you demonstrate that you know what I just mentioned and can give some thoughts on the matter. A lot of leveraged transactions aren't domestic, so I understand the importance (our group has a fair amount in LATAM).
If I missed something or you have a follow up, let me know. I guess lastly for modeling: I would know statement projections and DCF mechanics cold and be able to at least speak really well regarding LBO mechanics. It wouldn't hurt to review some Dupont Analysis and EBITDA multiples.
First of all, thank you so much for your reply.
When I said deal flow, what I meant was a step by step guide I guess for when a deal hits my desk to it's completion. I really need to know this since I'm interviewing for a Senior Analyst position. I looked at 2 of their analyst on the team and saw that they have a few months of experience each (total in the job market but from good business schools), so my 5 years of experience in a related field should make sense for a senior position.
What do you think I should be able to express to convince them that I am capable for a Senior Analyst position?
And to revise my post I would back track a bit away from LevFin, I think this is more a Corporate Banking & DCM role. I am really nervous about my modeling skills. Do you think I could do a crash course to freshen up over the next few days? Also, is a modeling test likely for a position like this even though I wasn't told to be prepared for one and modeling isn't heavily used in this type of IB?
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