Paul Pignataro - The Technical Interview Guide to Investment Banking, + Website

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Copyright 2017 by Paul Pignataro. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data is available:

ISBN 978-1-119-16139-4 (Hardcover)

ISBN 978-1-119-16141-7 (ePDF)

ISBN 978-1-119-16140-0 (ePub)

Cover Design: Wiley

Cover Image: Mikhail Zahranichny/Shutterstock

This book is dedicated to every investor in the pursuit of enhancing wealththose who have gained, and those who have lostthis continuous struggle has confounded the minds of many. This book should be one small tool to help further this endeavor; and if successful, the seed planted will contribute to a future of more informed investors and smarter markets.

Investment banks perform two major functions. First, they act as intermediaries between investors, or suppliers of capital, and entities that request capital such as corporations. Second, investment banks advise corporations on mergers, acquisitions, restructurings, and other major corporate actions.

Jobs within the investment banking industry vary widely; some roles can be very lucrative and as a result be highly sought after and competitive.

This book seeks to give any student or professional interested in the investment banking industry the technical tools to ace an investment banking interview. Having worked in the investment banking industry, I will give my personal perspective on what the investment banking interview process is like. I will provide advice and strategy on how to best navigate such an interview process. The book will contain a series of standard investment banking and interview preparation questions that increase in difficulty. We will also go through a series of case studies important for later-stage investment banking and private equity interviews. This book is the ideal go-to guide for anyone who is looking to break into the industry.

This book is divided into five parts:

1. Introduction to Investment Banking
2. Core Financial Statements
3. Valuation
4. Mergers and Acquisitions
5. Leveraged Buyouts

Each part will aim to give a brief overview of the core concepts: enough to better your knowledge for investment banking interviews or just a refresher. After each overview, chapters will contain interview questions and answers in increasing difficulty. These questions and answers do not capture every single possible topic, but will cover the most common. The most important thing to remember is you will never know exactly what will be asked in an interview, or how a particular question or scenario will be posed; but if you have the proper conceptual understanding of the core topics, you will be able to handle a multitude of questions asked on each topic.

If you need a stronger technical understanding or an actual modeling overview of each topic, I would recommend reading my other books, which dive deeper into each topic and provide steps for building a model from scratch:

1. Financial ModelingFinancial Modeling and Valuation: A Practical Guide to Investment Banking and Private Equity
2. ValuationFinancial Modeling and Valuation: A Practical Guide to Investment Banking and Private Equity
3. Mergers and AcquisitionsMergers, Acquisitions, Divestitures, and Restructurings: A Practical Guide to Investment Banking and Private Equity
4. Leveraged BuyoutsLeveraged Buyouts: A Practical Guide to Investment Banking and Private Equity

An investment bank is large, complex, and has many facets. In order to best understand the investment banking interview process, it is important to first give an overview of the major investment banking departments operating within an investment bank and the major roles within each department. This will help a job seeker identify and better understand the roles sought after in an investment bank and the most popular areas of interest for job applicants. Note this is just a high-level overview; you will always find more departments as you dig deeper, and each bank may slightly vary.

It is first important to highlight the difference between an investment bank and a commercial bank. An investment bank underwrites securities and performs advisory services while a commercial bank accepts and manages deposits for businesses and individuals.

In 1933 the United States issued the Glass-Steagall Act that prohibited banks from performing both investment banking and commercial banking. This act was set up in response to the Stock Market Crash of 1929 in order to prevent banks from betting on the market at the expense of depositors. This act was repealed, however, in 1999.