Difference Between IBD and Capital Markets Interviews

the magnum's picture
Rank: Baboon | 157

I understand that at many firms, ECM/DCM/LevFin activities fall under the investment banking division.

However, I'll be interviewing for a generalist capital markets program at a bank that separates it from ibd.

How are interviews different between specific capital markets divisions and investment banking divisions?

Comments (10)

Oct 4, 2011

Coverage Groups - Maintain relationships / Pitch
Product Groups - Work with coverage groups IF a deal is proceeding to structure the deal and offer strategic alternatives.

Capital Markets - Have an understanding of what is taking place in the markets. Debt Capital Markets will be employed if the deal team wants some sort of debt in the deal.

Equity Capital Markets likewise is employed if there is some sort of public offering / follow on offering and comes up with more realistic viewpoint of what these might garner in the market.

A lot of overlap within coverage and ECM/DCM

Oct 4, 2011

No, I understand what the capital markets groups do.

I am wondering about interviews. Do they focus a lot on things like bond pricing/macroeconomic trends rather than DCF calculations?

Oct 4, 2011

I'd maybe study recent deals more and have my own macroeconomic view (in detail), but I doubt the interviews vary much between IBD and Capital Markets.

I've also found that candidates focus way too much on technicals and not enough on just being in interesting person with a convincing story.

Oct 5, 2011

Probably won't differ that much, but I'd have a good answer for why capital markets over traditional IBD coverage

Oct 5, 2011

I think the biggest thing to take away is how each operates. In the most basic sense (pretty much just building on what ChicagoIBD said):

Coverage groups pitch, maintain relationships, and typically see the deal process all the way through in a given industry or sector.

Product groups are going to essentially be adding value along the way to each potential "deal" by assisting in various parts of the deal (i.e. LevFin structuring leveraged deals, Syndications determine the hold amount in the deal/bringing in other banks when leading the deal, and Loan S&T to eventually price the deal on the market).

To the OP, I realize you understand how the groups breakout, but I figured I'd give some perspective because there is a ton of misconception in general about how capital markets work. At a recent career fair we hired at, it was mind-boggling how mis-informed a significant portion of the student body was about investment banking in general. While the contributors/users on this site are definitely in the know, a lot of people unfortunately aren't so instead of talking resumes and seeing what candidates are really about we end up spending 80% of the time telling people how it all breaks out.

I think you should focus on a number of different things:

1) As I mentioned briefly above, understand the deal process and what happens during a deal. A good example would be that Term Loan A's typically get priced in for Investment Grade companies, while you will see TL B's for leveraged deals based on the length of the loan. For someone who has work experience in the industry, this should be pretty easy, but do your DD if that is not the case.
2) You definitely want to do some digging and see how banks break out their IBD in general, because you will see different layouts at a number of different banks (especially with DCM).
3) Be aware of what's going on in the market and know how deals are pricing. Its a little bit trickier when you don't have a lot of the news/database software that most bankers have on hand, but if you can put in your two cents about how the Go Daddy deal just priced (random example, but they just priced recently and are still current/should be comparable to some deals coming out of the pipeline relatively soon), you will definitely help yourself out.

Other than that, be passionate about it. If its purely for a CM generalist position, talk about how you want to gain expertise and knowledge on parts of the deal process and use that to build a foundation around whatever you end up doing going forward (you can bullshit from here but its a good starting point).

    • 1
Oct 5, 2011

At a guess - less emphasis on modeling questions, more on markets (know recent trends and why they matter), macroeconomic trends,

Oct 5, 2011

ST depends on whether you get a trader, salesperson or quant as your interviewer (focus on market view, fit/personality and basic option knowledge respectively). Banking interviews were more consistent - good balance of fit/why banking and high level accounting/modeling technicals. Capital markets are a combo of both.

Oct 5, 2011

At most banks you won't interview with capital markets directly - you'll interview for IBD and later get placed in ECM/DCM. MS is an exception I know of.

Oct 5, 2011
Comment