How to Dominate Your Industry-Specific Interviews: Real Estate, Energy, FIG, and More

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Investment Banking Industry Specific InterviewsYou’ve applied to over 100 banks, networked with 230 bankers, and have been pounding the pavement since August.

And now you’ve lined up 10 first round interviews, most of which are for the M&A and generalist pools.

But then you notice that you’re also set to interview with a mysterious FIG (Financial Institutions Group) banker, followed by 2 oil & gas bankers from the Houston office.

And who knows, maybe you’ll land a real estate, mining, airlines, or healthcare interview to make things more fun as well.

So how will it be different? And how can you get up to speed on all the accounting and valuation differences, recent deals, and everything else if you only have a few days – or a few hours – to prepare?

Definitions

Everyone lumps investment bankers together, but that’s not really how banks operate.

Banks have product groups that focus on specific deal types – M&A, Leveraged Finance, Equity Capital Markets, and so on – and then industry groups that do all sorts of deals – but all within a specific industry, such as technology, industrials, healthcare, financial institutions, energy, real estate, and so on.

At a bank, you might interview specifically for one of the product groups, or you might interview for one of the industry groups – or you might just interview for a “generalist” position, be placed in the generalist pool, and then select your group later on.

Most investment banking interview guides focus on standard questions that you might get in any group.

But there are important differences when you interview with specific industry groups – so let’s get started with the festivities.

Most of the Time…

Interviews are not dramatically different – if you’re interviewing with a FIG banker, he’s not going to say, “Since this is FIG I want you to build a detailed model and valuation for Citi right now – you have 30 minutes.”

You still need to know the standard “fit” and technical questions, and you will still get questions on those.

You still need a great story, you still need to know why you want to do investment banking, and you still need to know what it’s like being an investment banker.

Industry-specific interviews require you to shift your answers rather than come up with completely new ones.

How to Shift Your Answers

Focus on these 4 questions (or categories of questions, as in the last case):

  • Why This Group?
  • Tell Me About the Industry
  • Tell Me About a Recent Deal in This Industry
  • Industry-Specific Technical Questions

The first 3 are not terribly difficult as long as you’re prepared – the technical questions can be more problematic, but there are ways to get up to speed quickly.

Why This Group?

Answer this one by linking it to something in your background: a school project, an internship, someone you met while networking, family, friends, and so on.

Let’s say that all your experience has been as an engineer in the technology industry and there’s no obvious reason why you’d want to work in an oil & gas group.

But maybe you have a distant relative who is in the business, or maybe one of your friends started working at a big energy company recently – you can take something small like that, spin it, and turn it into a “I had always been interested in tech, and still am, but recently I started talking to [Person Name], who made me really interested in energy…” story.

If you don’t have something specific in your background, you could always talk about industry news or recent deal activity making you more interested.

Once you’ve established this spark, give 1-2 solid reasons why you want to work in the group after someone or something made you interested.

Going back to the energy example, you could talk about how it affects not only everyone and every economy in the world, but also geopolitics. You could also talk about being interested in promising but controversial technologies like hydraulic fracturing and how quickly the industry is changing due to rising energy demand in emerging markets.

They don’t expect you to be the next T. Boone Pickens – they just want to hear something intelligent from you.

Do not attempt to BS something on the spot here – and don’t say something silly like, “I’m interested… because… it’s so interesting!” (yes, I’ve heard that one before)

Tell Me About the Industry

It’s easy to go “off the rails” and ramble with this type of question.

Use the following structure to describe an industry:

1. Give an estimate of the total market size if you can get it, and say whether it’s growing, mature, or declining. Also mention a dominant recent trend.

Example for FIG: “Financial services are the biggest industry on the S&P 500, so it’s a huge market in the US – it is relatively mature, though there are pockets of growth in some areas such as risk management. The major issue in the industry, especially post-financial crisis, is regulation and how capital requirements for banks will change in the future.”

2. Next, sum up the major players and the sub-industries in 1-2 sentences. Most industries have a few global, diversified companies that do everything and then have smaller companies that focus on more specific segments.

Example for FIG: “It’s split into segments such as commercial banking, insurance, investment banks, wealth management, and investment firms. A couple huge banks, such as BNP Paribas, RBS, Barclays, Deutsche Bank, and JP Morgan, operate in all these segments, while there are also more specialized firms like Goldman Sachs that may focus on just one or only a few of these segments.”

3. Close with a recent trend or recent news in the industry. This shows that you’ve been keeping up with deal activity and reading the WSJ, DealBook, and other news sources.

Example for FIG: “Recently as banks have been recovering from the financial crisis, everyone is thinking about new regulation and the adoption of Basel III – that will have a big impact on banks’ capital structures, how they do business, and how they issue dividends.”

Bankers don’t expect you to know everything, but they do expect you to have done some research – otherwise you won’t seem interested and they’ll give the offer to someone else.

Where Do You Find This Information?

Now I’m going to save you 10 hours of time spent frantically searching online by sharing these resources:

Yes, you read that correctly: Big 4 firms like PwC and Deloitte regularly publish industry and M&A research for free.

Some of the reports on those sites are too specific to be helpful – the “Outlook” or “Overview” ones for entire industries are the best.

But that’s the best way to get this information quickly assuming that you don’t have access to Capital IQ, Factset, or other tools that bankers have.

If you can’t find what you’re looking for there, Google searches for [Industry Name] + M&A or + “Market Size” also work, but take longer.

You can also look in industry-specific publications like the Oil & Gas Journal – but they’re more useful for researching deals rather than industry trends.

Tell Me About a Recent Deal

M&A deals are the best ones to discuss and the easiest to find information on, so here’s the structure you should use:

  1. Name the buyer, seller, purchase price, and multiples.
  2. Give background information – what does the buyer do? What does the seller do? How much revenue and EBITDA do they have (or other metric if those are not relevant, e.g. total assets for a bank)?
  3. Explain how the deal came together if it’s public knowledge, and why both parties were motivated to get it done.
  4. Conclude by summarizing what Wall Street thinks about the deal, and how the industry will be affected in the future.

You can find all this information on the WSJ Deal Blog – they do all the work for you with their “Deal Profile” reports that give the relevant financial stats and multiples.

Let’s say you’re looking for information on the Intel – McAfee deal for a technology group interview. Do a Google search for “wsj intel mcafee deal profile” and you get the deal profile page as the first result.

Most of the information is right there: Intel, the huge semiconductor company, was the buyer, McAfee, a security software company, was the seller. It was an all-cash deal worth $7.68 billion, with an EBITDA multiple of 17x and revenue multiple of 3x (rounding multiples is less controversial than rounding your GPA).

This one’s not a great example because the profile doesn’t list anything besides the numbers – but if you do a few searches you can find other articles on how most investors were scratching their heads at the deal – there were no obvious synergies and it came as a surprise to everyone.

The official rationale was so that Intel could target more of the mobile chip market and get into network security, but few others thought it made sense.

Going forward, more companies might start to focus on security for mobile devices and solutions that protect everything from desktops to laptops and mobile devices to web-based applications.

But What About…

If you’re having trouble finding recent deals, look in the M&A reports from Big 4 firms I linked to above; simple Google searches for “[Industry Name] biggest M&A deals” can also give you names at the very least.

If the WSJ and searching online don’t give you good results, you could take another approach and find equity research instead.

Yes, you can find this research without working at a bank: just sign up for a TD Ameritrade account and you can get free Credit Suisse reports on most large companies.

Other brokerage accounts can work as well – Scottrade, for example, also offers free research.

So if you can’t find analysis of a deal in the WSJ, find equity research on the buyer or seller just after the deal was announced and look up the multiples, numbers, and rationale there.

If you can’t find relevant metrics, just get the purchase price for the deal and get the financial metrics yourself by looking at the acquired company’s annual report on their investor relations site.

Technical Questions

You’ll find conflicting reports on technical questions for specific industry groups: some interviewees claim that they’re uncommon, while others (especially in Canadian mining groups) claim that interviews can be extremely technical.

So there is no universal rule – the only generalizations that apply are:

  1. It’s good to be familiar with the basics and the high-level view of how companies in the industry are different.
  2. Some industries are more different than others. Financial institutions (banks and insurance firms) are by far the most different compared to normal companies; oil, gas, and mining are also different but less so than financial institutions, and REITs are also different but less so than banks.

Technology, consumer, and retail are the most “normal” industries because they have straightforward business models; others like healthcare, industrials, and utilities are not quite “standard” but are also far less different than the 3 groups above.

Here’s a quick run-down of what you should know for the “most different” industries:

  • Banks / FIG: Understand how they’re different (balance sheet-centric, loan portfolio drives everything, traditional metrics like EBITDA are meaningless because Interest is Revenue for a bank); also know how valuation differs (P / E and P / BV multiples and the Dividend Discount Model) and why regulation and regulatory capital are important.
  • Oil & Gas / Mining: Understand how they’re different (balance sheet-centric, energy/mineral production drives everything, can’t control prices or revenue); also know how valuation differs (Production and Reserves multiples and the NAV model).
  • Real Estate / REITs: Understand how modeling individual properties is different from REITs; know the key metrics and multiples like FFO and AFFO and key lingo such as NOI and cap rates and how the business model works.

I can’t list every single industry here because I just don’t know enough personally – but most other industries have much smaller differences, such as slightly different metrics and multiples and revenue or expense projections.

For example, an Internet company might project revenue based on unique visitors and conversion rates rather than # of products sold to customers; a key metric might be EV / Unique Visitors, especially if it’s unprofitable.

Resources for Technical Question Prep

Everything useful I’ve found is listed below:

And then there are good old books, but you probably don’t have time for that if it’s 3 AM right now and your interview is at 9 tomorrow.

Models & Models (and Interview Guides)

If you want to learn these concepts in more depth, you can also check out the Breaking Into Wall Street Bank & Financial Institution Modeling course (based on JP Morgan), the Oil & Gas Modeling course (based on the $41B Exxon Mobil – XTO deal), and the Real Estate & REIT Modeling course (based on AvalonBay, a multi-family REIT).

These are not introductory-level courses. If you cannot build a 3-statement LBO model easily, stay away because these are both more complex than even the Advanced Modeling course.

And before you ask, if you’re in Canada or Australia, mining is 95% the same as oil & gas and lessons specifically on mining will be added in the future.

More?

That’s how industry-specific interviews are different, the key questions and concepts to focus on, and how to do the research necessary to answer the new questions you might get.

If you have any other good resources for these groups and these types of interviews, post a comment below and I’ll add it.

And if you actually made it to the end of this one, congrats – hopefully you don’t have too many questions, but ask away if you do.

About the Author

is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys learning obscure Excel functions, editing resumes, obsessing over TV shows, and traveling so much that he's forced to add additional pages to his passport on a regular basis.

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72 Comments to “How to Dominate Your Industry-Specific Interviews: Real Estate, Energy, FIG, and More”

Comments

  1. fs2117 says

    Excellent post.

    Profiles of deals you’ve worked on (the info that typically goes on the Exec. Summary slide of a deck) is VITAL for PE interviews… only thing I’d add (if/when you interview for PE shops) is knowing and understanding the financing/cap structure, if applicable.

  2. Max says

    Fantastic post.

    I used Deal Profile a lot in the past but the deals are mainly US ones. Thompson Reuters’ quarterly M&A league table has a section on the 10 largest deals of each region (US, EMEA, APAC…). Granted, it’s not as detailed as Deal Journal.

    • says

      That’s a good point, though the Deal Profile does sometimes have larger international deals. Thanks for the tips on Thomson Reuters, I will make a note of that.

  3. Gekko says

    Hi Brian,

    Long time reader of this great website! Just had a few questions.

    1) For breaking into PE, why do you suggest doing it after 2 years FT as a BA ? My reasoning(perhaps flawed) is this – as a BA and then as an Associate, you would do heaps of deals (hopefully) at a BB Investment Bank and would really learn modelling, client relationship building (more so as an Associate *although this is more at the Exec Director level*) and learning how to do deals…by joining a PE firm after 2 years as a BA, you don’t have that much deal experience…PE firms don’t do near as much deals as IB’s advise on so your knowledge and the expertise you could offer the PE firm is limited…hence your development is limited…what about joining after 5-10 years experience ?

    2) When would you suggest doing an MBA – right out of undergrad or after 1,2,3 years FT experience ?

    3) How different is the level of finance you learn in the finance subjects in an MBA course as opposed to a Masters in Finance course ?

    Apologies for the long post. Thanks very much in advance!

    Regards,
    Gekko

    • says

      1. It’s not me, that’s just how the game works. Associates are supposed to be lifelong bankers or at least be in it for the long-term, whereas analysts are expected to move on. And that is why recruiters and PE firms recruit from analysts 99% of the time.

      2. 3-5 years

      3. Probably not that much different, the main advantage of an MBA is the networking and (supposedly) life-changing experiences.

      • Gekko says

        Thanks Brian,

        So would doing a Masters in Finance (right out of undergrad) and doing an MBA 3-5 years after that make sense to you – for networking (this is considering I can get into Ivy / INSEAD out of Australia) ?

        I understand what you’re saying but was just questioning the logic of the industry – would make more sense for an experienced banker to join KKR and actually be valuable.

        Thanks again,
        Gekko

          • Gekko says

            I wouldn’t think traders go into PE. Do Investment Bankers go into Hedge Funds (and what are their roles and opportunities) ?

          • says

            Yes they do… usually more in long-term investing / M&A-related roles or markets-related if coming from ECM/DCM. Few go to pure short-term trading roles.

  4. Dave says

    Fantastic Post!
    I thought I was fairly well aware of what was out there on the net for free but this is great!!

    Much appreciated as always.

  5. James says

    Great article. Just wanted to point out that a lot of people make generalizations about FIG but really, they’re thinking about just the banks sub-sector of a given Financial Institutions group. As you mentioned, depository modeling is based on the balance sheet etc, but if one gets to work in the Specialty Finance sector of FIG, it’s possible to be working on EBITDA based companies. Just wanted to illustrate this point for potential readers but everything else was spot on. Thanks for all the great work.

    • says

      That is a good point, commercial banks and insurance are the 2 most different ones and others may actually use EBITDA and so on. I think in interviews you’re more likely to get asked about the more different industries but that’s good to keep in mind.

  6. Eric says

    First, I would like to say that it was a very well detailed and well written article. If this kind of technical knowledge isn’t interesting now, I guess investment banking be for me and I won’t have to tell a story that isn’t very genuine about how I’m interested in finance. Moving ahead, I guess I’ll see how interested I am in the years to come, as passion also comes the more and more you get into the field sometimes. Great article again, thank you.

    • says

      Yes, honestly if you are not that interested in this kind of material then finance may not be the best fit. Important to note because lots of people assume that other positions are dramatically different but you’re still doing a lot of the same work in banking/PE etc.

  7. A says

    This was so informative and helpful, thanks!

    If my school has OCR, and most of the banks come on campus to hold interviews, is it safe to assume that all my interviews will be generalist? Or does it depend on my interviewer and what group he/she is in?

    Also — would you happen to know if the firms provide you with the names of your interviewers before the interview? And are they generally analysts (who are recent alum) or people higher up?

    • says

      Depends on the school and the bank I think… if you don’t know the group beforehand then they will probably be generalist. Usually they only give you the interviewer names right before the interview, but that varies by bank. Usually recent alum.

  8. chloe says

    this is an awesome post Brian! I really appreciate it and please post more articles like this. It saves so much time knowing all these free resources. Is it possible to also post something like interview tricks and psychology?

    • says

      There is actually very little on interview psychology out there and I feel general interviews are already well-covered by the articles on this site and the interview guide. But, I’ll see if any other topics lend themselves to this.

  9. A says

    Very useful site, it helped me much in life!

    Let me ask one “career path type” question: suppose that I apply to a full-time MBA program 2-3 years after I am promoted to an IBD associate from an analyst. Will it give me a wider set of opportunities after I graduate (compared to being an associate without an MBA degree)? Do any people do this in the US?

    Thanks a lot.

  10. effie says

    Dear Brian,
    I`m a long time reader of your website, thanks for the great posts!!
    I wanna ask for some advice from you:

    So I`m in Hong Kong and just got out of school this year. I have a offer from a chinese state-owned bank(one of the big4s in china) in the corporate banking division (for china mainland businese and chinese listed companies in HK)
    and another one is 1-yr internship of marketing assistant at a french asset management firm.
    So both positions are entry level. do you have an insight for me? How do you think the commercial banking background helps me to apply for top MBA ?

    Thanks a lot :)

    • says

      Not that I know of, but healthcare is 95% identical to standard companies. Still use EBITDA multiples, DCF, standard valuation, and so on. Revenue/expenses are different but they’re different for all companies.

  11. Adam says

    Brian,

    In addition to the free industry reports from the Big 4, McKinsey, BCG et al have a lot of free industry “outlook” type research available for download too. Found them very helpful for quick intros into the industry and more importantly what transitions the industry is going through and what challenges.

      • Adam says

        Yes they’re free (at least some are). Helpful for M&A? Everyone will have his/her opinion on this but I think knowing overall industry trends is helpful, especially as M&A activity is something that comes up frequently in the reports.

      • Dre60 says

        Do equity research people use information and data collected from Big 4/Mngmt Consulting reports in their own reports?
        Like the industry and M&A research reports above?
        Do they reference Big 4/Mngmt Consulting firms in their reports?

  12. AE says

    I am looking at your completed XTO excel model and found you did not use historical expense/mcfe to project production expense in 2010. It is on your “XTO_Prod” J107-J112.

    Could you tell me how you came up with these numbers? Thanks.

    • says

      If you’ve signed up for the course, please ask your questions within the BIWS site.

      The sample models are really just intended to be previews of the courses. Support and instructions are not included, and I’ve since removed all the models from the site to avoid any confusion there.

  13. Bemi says

    Hi Brian,
    Quick question pls?
    What’s the best way to structure or go about answering a why Real Estate IBD related question especially with RE IBD activities not being very buyant?
    I have a junior analyst interview coming up but don’t have direct RE IBD experience.
    Would really appreciate the advice

  14. SL says

    Hi,

    I am currently applying for Oil & Gas IB analyst positions (off-cycle), and I completed the Oil & Gas course for ExxonMobil XTO to be ready for the technical questions. Do you think I should mention in my resume that I completed an Oil & Gas valuation course? Would that be helpful?

  15. Dre60 says

    Is Market Cap identical to Market share?

    I.e. I take the market cap of a firm divided by the total industry market cap to get the Market share percent of that firm?

    Market Cap of firm i/Total Industry Market Cap=Market share of firm i ?

    • says

      No. Market share refers to revenue or sales relative to the total market. For example, one company earns $100 million in sales and the total market size is $1 billion so it has 10% market share.

      Market cap of firm / total industry market cap is not a commonly used ratio and doesn’t necessarily correspond to market share… it just means how much that one firm is valued at relative to the industry valuation as a whole.

  16. TechNoob says

    Hi, I have an interview coming up for a bank that focuses on tech deals. I’ve always struggled with this question why tech? I don’t follow tech specifically. Any help would be appreciated as to how to focus my research.

    • M&I - Nicole says

      Are you truly passionate about the sector? You might want to demonstrate your passion in tech in your interviews.

      • TechNoob says

        Well I applied to a company and this is the group that decided I have an interview. I’m passionate about tech gadgets like smart phones and computers, but I don’t know much about the industry itself. Could I talk about how I think that it’s one of the hotter sectors and spin something off that instead?

        • M&I - Nicole says

          I don’t know how convincing that would be but if you are confidant that you could spin it go ahead

  17. TechNoob says

    Any advice to someone who has no specific industry knowledge in tech? I’m trying to break into IB it just happens to be that they cover tech specifically. What’s the best way to show my enthusiasm for the industry with limited knowledge?

    • M&I - Nicole says

      I believe I’ve answered your question in another post already? Someone else might be able to give you a better answer here.

    • says

      Look up specific companies on sites like TechCrunch and find a few that you’re really interested in, and then discuss those along with broader industry trends. You really need to show that you’ve done some research or they’ll wonder why you are interested in joining a tech group.

  18. Moises Guerrero says

    Great post! Very helpful. Per your knowledge and/or experience what are the best valuation multiples for these industries?

    -Internet
    -Retail
    -Beverage (Alcoholic)
    -Education
    -Cable TV

    Is there any website that have further information about this topic. I’m working on an investigation (MBA) I appreciate your help!

  19. Alexander says

    First of all thank you for your very informativ articles. I have an MBA from Switzerland (3.1 GPA) and no work experience at all. I am moving to NYC next month and I got an interview for an internship at a small wealth management firm (www.adamswm.com). Is this even worth considering in my case if I plan to get into IB one day? I can’t seem to find any info on this firm, have you ever heard of it and how do you recommend I prepare for the interview?

    • M&I - Nicole says

      No I have not heard of it. Readers may have better insights. Re moving to IB, I’d suggest you to attend industry events, organizations & network lots w bankers.

  20. Chris says

    Hi Brian/Nicole,

    Thanks for your useful article!! This is the best article that I ever seen.

    However, none of us here asking about construction industry. Do you have any source/link regarding to this industry? Would like to do some research regarding construction IB.

    Thanks in advance!!!

  21. Heisenberg says

    If you’re interviewing with a industry-specific bank or group and they ask for a stock pitch, should it be within that industry or does it not matter?

    • says

      It’s better to be from within that industry, but if you don’t know much about it and do know about other companies, pick the one you’re most comfortable with.

  22. Chris says

    How would you modify the response for “tell me about a recent deal” for a real estate interview, given that RE uses different metrics (FFO, AFFO, caprate) and that a lot of the relevant information seems to be less publicly available than for big M&A deals?

    Would you talk about an acquisition of a REIT instead of just an acquisition of a single property?

  23. Aniket says

    Excellent post. By far the best and almost identical to what I wanted to know before my interview. Cheers.

  24. Mimi says

    Hi Brian,

    What if I can’t find any general opinion of the street about a deal? For instance I am looking at this health care deal Actavis and Forest.

  25. says

    Hi Brian,

    I had a first round interview about a week and half ago and I was lucky enough to interview with the MD himself. I was invited back for a superday interview two weeks from today. It will have been about a month by the time I interview again. What would be something I could send in an email just to kind of stay relevant in his mind before the next round comes up? Should I send anything at all since I’ve already been invited back? Would it be wrong to ask if there is anything in particular he wants me to study up on. It’s a little bit of a niche group. Also, I felt like the first round went very well, he invited me back for the next round before we were even done with the first interview.

    Thank you in advance for any advice.

    • M&I - Nicole says

      Since you’ve been invited back, I’d send him a thank you note and reiterate your interest in the firm. I’d then give him a call after a few days to see if he has any tips for you. Since the first round went very well, I think it’s fine to email and call him once.

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