Getting into Investment Banking: A Comprehensive Guide

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Introduction

Breaking into investment banking (IB) is no small feat, whether you're pre-MBA or post-MBA, from a target or non-target school. While high GPAs and test scores are standard, they are often not enough to stand out. Here’s a strategic approach to help you embark on a successful investment banking career.



1. Network Extensively

When your application lands at an investment bank, it’s usually reviewed by a small team of bankers responsible for recruiting from specific schools. Given the competitive nature of this field, networking is crucial.

Why Networking Matters:

  • Decision-making bankers are more likely to advocate for you if they know you.
  • Especially vital for non-target school students.
  • Engage with alumni and other connections at your target firms.
How to Network:

  • Start reaching out to analysts and associates a few months before core recruiting starts.
  • Look for non-target alumni if you're from a non-target school; they often help each other out.
  • Demonstrate Interest in Finance
Your resume should reflect a strong, consistent interest in finance. Here’s how to build that profile:

2. Join Finance-Related Activities:


  • Participate in finance clubs at your school.
  • Invest in stocks using platforms like StockTrak.
  • Read extensively about finance and investing.

3. Gain Relevant Experience:

  • Secure school-year and summer internships at small investment banks, private equity funds, or hedge funds.
  • Prepare for Behavioral Questions
  • Behavioral questions are a significant part of IB interviews. Being prepared can set you apart from other candidates.

4. Common Behavioral Questions:

  • Tell me about yourself.
  • Why do you want to work in investment banking?
  • What are your greatest strengths and weaknesses?
  • Tell me about a time you failed.

5. Preparation Tips:

  • Develop 4-6 personal stories that can be adapted to answer these questions.
  • Practice articulating your responses clearly and confidently.
  • Master Technical Prep Early
  • Technical questions are often challenging, and preparing for them early is crucial.

6. Common Technical Questions:


Walk me through a DCF.
Walk me through an LBO.
How does $10 of depreciation flow through the three financial statements?
Does an all-stock transaction result in accretion or dilution?

You can go through these for the above : 

IB Interview Questions: M&A : Level 2 M&A Questions

IB Interview Questions: M&A : Level 3 M&A Questions

IB Interview Questions: LBO : Level 1 LBO Questions

IB Interview Questions: LBO : Level 2 LBO Questions



Preparation Strategy:

  • Understand the answers deeply enough to explain the underlying concepts.
  • Progress to tackling more complex questions like the Paper LBO.
  • Investment Banking Roles and Salary Progression
  • Understanding the investment banking career hierarchy and the associated compensation levels can also be motivating. Keep in mind that the figures quoted are for top-tier banks; compensation is typically lower at smaller or regional banks.

Disclaimer: This guide provides a comprehensive overview of entering investment banking. While following these steps can significantly enhance your chances, the competitive nature of the industry means that success is not guaranteed.


By diligently networking, demonstrating a sustained interest in finance, preparing thoroughly for interviews, and understanding the career landscape, you can position yourself effectively for a career in investment banking. Good luck!






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