Hey guys, my situation has changed slightly and it might be necessary to brush up on technicals for ib interviews.
Can anyone help me strengthen this list so I can get studying?
Thanks!
Quick Guide: Investment Banking Technicals
The following is a quick review of some of the key technical concepts. It is not exhaustive. For more in depth study check out the DCF
From the Himanshu Singh A DCF is carried out by estimating the total value of all future cash flows (both inflowing and outflowing), and then discounting them (usually using Weighted Average Cost of Capital - WACC) to find a present value of that cash. The aim of a discounted cash flow is to estimate the total amount of cash you will receive from an investment, and if this value is higher than the cost of the investment, it is usually worth doing. The process behind creating a DCF model is as follows: From the Patrick Curtis LBO stands for Leveraged Buyout and refers to the purchase of a company while using mainly debt to finance the transaction. Leveraged Buyouts are usually done by private equity firms and rose to prominence in the 1980s. The company performing the LBO or takeover only has to provide a portion of the financing yet is able to make a large purchase through the use of debt, hence the name 'Leveraged'. During the 1980s - 1990s when LBOs were hot, debt could make up as much as 90% of the purchase of a business. However, now investors and private equity firms are a bit more risk adverse and therefore may use closer to 50% debt and 50% equity to purchase a business. The expectation with leveraged buyouts is that the return generated on the acquisition will more than outweigh the interest paid on the debt, hence making it a very good way to experience high returns whilst only risking a small amount of capital.
From the Patrick Curtis WACC, or Weighted Average Cost of Capital, is a financial metric used to measure the cost of capital to a firm. It is most usually used to provide a discount rate for a financed project, because the cost of financing the capital is a fairly logical price tag to put on the investment. WACC is used to determine the discount rate used in a DCF valuation model. From the Patrick Curtis Enterprise Value (also known as EV) is a metric that attempts to reflect the market value of a firm. It can be used as an alternative to market capitalization. Essentially, Enterprise Value attempts to provide a more accurate valuation aimed at a buyer. Whilst a firm's market capitalization will indicate share price x share quantity, the firm may have a lot of debt which the acquirer would need to pay off (thereby adding the price of the transaction). The calculation for Enterprise Value is: Enterprise Value is a far better metric when considering mergers and acquisitions as it provides a 'truer' valuation on a company by considering more factors than market capitalization, the main one being debt
The WSO investment banking interview course is designed by countless professionals with real world experience, tailored to people aspiring to break into the industry. This guide will help you learn how to answer these questions and many, many more. Investment Banking Interview Prep Recommended ReadingModels: LBO
Calculations: WACC
The two main sources a company has to raise money are equity and debt. WACC is the average of the costs of these two sources of finance, and gives each one the appropriate weighting.Calculations: Enterprise Value
Looking to break in?
get the wso technical interview guide
Yeah know the technical guides inside out and you should be fine in almost all cases.
Yes, generally speaking, the topics you listed above are all fair game (sometimes with brainteasers thrown in for fun)...
i don't like promoting our products for fear of sounding like a used car salesman, but in this case, it really makse sense: //www.wallstreetoasis.com/guide/wso-technical-interview-guide
Less expensive than competition and actually has real interview questions from recent interviews with investment banks...no other guides can say that.
I may be biased, but our technical interview guide is the best out there (we have made huge strides in the last 2 years).
If you cram, you can get through the fundamentals in 1-2 nights (especially since you have an accounting background)...and the WSO guide is structured with "easy", intermediate and difficult questions in each section so you can see where you are in your prep quickly.
Either way, best of luck!
Patrick
BIWS or WSO Technical guide will more than prepare you for the technicals. When you make it far enough, it is more about making a connection. Good Luck!!!
Excuse my ignorance- what does BIWS stand for?
Bankers In Wharton School
hahaha
A benefit of the WSO guide is you can buy it, whereas you need to apply-and compete- for access to the BIWS guide. If you don't/can't go to Wharton, it's the next best thing.
You guys are great. Thanks!
I'll PM Andy about the WSO guides as well.
definitely get the wso technical interview prep guide. try to do few mock interviews with a friend. i am sure if you prepare well, you should be able to knock it out of the park. Goodluck!
@usgoi has a great idea- I never did any mock interviews, but was fortunate enough to land offers anyway. While they obviously aren't a prerequisite to getting the offer, mock interviews help spot your weaknesses and you can work to fix them- a big part about who bankers hire (once the interviewer has checked the box on the technical questions- as I'm sure you know from reading the site, answering some right probably won't get you the job but answering some wrong might make you lose it) comes down to which interviewees they like best and who has the most presence in the interview. Be aware of how you walk, carry yourself, stand/sit, shake hands, make or don't mak eye contact etc etc etc.
Rosenbaum and Pearl!
It's really not that long, especially if you only focus on comps, precedent transactions, and dcf. I did it just now and I personally felt it paid off.
I can definitely see where you're coming from though, and for rhen it might not be necessary.
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