by Brian DeChesare Comments (30)

How Finance Interviews Have Changed in the Past 5 Years (2009 – 2014) – and How to Prepare

Finance Interviews - Changes from 2009 to 2014“Change.”

Saying it over and over again might just get you elected President…

…and it might also sink your chances in finance interviews if you’re not properly prepared.

People like to claim that “interviews don’t change over time,” and that’s partially true.

But the recruiting process itself, interviewers’ expectations for you, and the way they evaluate you definitely change over time.

Of course, it’s not just the interviewer and the questions he/she asks that determine your fate – it’s also determined by the quality of other interviewees (your competition).

So to answer this question of how interviews have changed in the past 5 years, you need to look at how the recruiting process itself has changed, and how people themselves are changing and preparing differently.

What Is This Based On? How Do You Know This?

“But wait,” you say, “you’re not even working in the finance industry anymore, how could you possibly know how interviews have changed?”

The answer is that I get exposed to all things interview-related, 365 days per year, via:

  1. Our resume/CV editing and coaching services.
  2. The questions and answers on BIWS.
  3. Comments and emails submitted here.

We get a TON of questions about interviews, case studies, and the recruiting process through those.

I have a better sense for what’s required in interviews now than when I was still in the finance industry – and I have far more data to back up my observations:

  • 16,104+ comments on BIWS and 40,182+ comments on M&I
  • 31,290+ emails received since 2007 (~12 per day on average)
  • 19,317+ customer emails on BIWS since 2009 (10-11 per day on average)

Your Competition: How Other Interviewees Have Changed

So let’s start with how other candidates have changed in the past 5 years. I would summarize this by stating:

“It’s easier at the top, but tougher in the middle.”

If you go back to 2005, investment banking and related exit opportunities were the “it” jobs.

That was less true in 2009 following the financial crisis, but there still weren’t many other attractive non-finance options.

Today, that’s no longer true which is why banks have been scrambling to improve pay and working conditions for junior bankers.

But higher pay and reduced hours can only do so much: many students are simply less interested and are leaning more toward tech these days.

There’s still a lot of interest in finance – but many interviewees no longer have the best grades or the most impressive work experience of everyone in their class.

Got Prep?

Another difference is that interview guides, modeling courses, and other forms of training are far more widespread today than they were in 2009.

And I’m partially responsible: I will plead guilty to increasing the average difficulty level of questions in interviews.

I’ve heard many, many stories over the years of “everyone in the interview room using your guide(s)” and “everyone using your templates for case studies.”

To be fair, though, plenty of other books, websites, and YouTube videos have been published over time, and plenty of candidates use those resources as well. So even without this site, the level of technical rigor would have increased.

Whenever there’s a process with specific questions and well-defined answers, inevitably it will be “gamed” (see: the SAT, GMAT, and GRE prep markets).

Got Critical Thinking?

Ironically, though, all those prep materials have not necessarily made candidates better at answering questions or presenting case studies.

The problem is that many people go into it with a “quick fix” mentality:

“Today’s Wednesday, and I’m getting a case study presentation on Tuesday next week… OK, I’ll sign up for this course, get some templates, work on my case study, and submit it without actually understanding what I’m doing.”

I’ve seen this firsthand because we’ve been getting an increasing number of questions that indicate a lack of conceptual understanding.

Here are a few examples from recent comments and emails:

  • “Why do companies list D&A on their Cash Flow Statements, but not their Income Statements? It doesn’t make sense!” (It does if you actually understand the financial statements)
  • “Wait, for a forward EV / EBITDA multiple, shouldn’t you project Enterprise Value? How do you project it?” (You don’t, because time travel does not exist)
  • “I don’t understand why you multiply the previous year’s figure by (1 + Growth_Rate) to get the next year’s figure. Why do you need the ‘1 +’ there?” (I hope I don’t need to explain this one…)

These questions indicate that you might understand, on the surface level, how to model or value companies, but that you would be lost if you had to do it yourself without a template.

My theory: “Back in the day,” it took a lot more time and effort to prepare for interviews because you had to learn models and the technical side yourself, with almost no resources or tutorials.

Today, the perception is that it’s “easier” because there are more resources available.

That may be true, but it still takes time to learn the fundamentals.

Got Communication Skills?

I’ve also noticed a substantial decline in many candidates’ communication skills.

Part of it is because of the point above: a lot of template re-purposing, but less conceptual understanding.

But part of it is also because fewer people take the time to practice effective writing / speaking.

And I hate to sound “racist,” but part of it is also because more and more candidates are non-native English speakers.

If English (or whatever language is used in the country where you’re applying) is not your first language, it takes far more effort to prepare for “fit” questions, your personal pitch, and so on (I found this out the hard way a long time ago).

You can absolutely compete with native speakers and win job offers, but you need to devote just as much time and energy to communication practice as you do to the technical side.

You might be tempted to “memorize” your story if you’re in this position, but that is a huge mistake.

Take that time and use it to practice telling your story naturally, based on a rough outline, rather than a word-for-word speech.

The Interviews Themselves

When we looked at this question at the end of 2009, there were a few big changes:

Some of those are still true: technical questions seem to get more difficult each year, to the point where I wouldn’t be surprised if interviewers start asking you to prove the Gordon Growth formula.

Others are less true: distressed M&A and restructuring were appealing in 2009, but somewhat less so in 2014.

But the increasing prevalence of case studies is, by far, the biggest change I’ve noticed across all seniority levels, all regions, and all types of finance roles.

The Rise of the Case Study

A long time ago, case studies were rare in entry-level investment banking interviews.

You might get them in regions such as EMEA that use assessment centers, but otherwise they were more common in private equity and hedge fund interviews.

That began to change in the past few years, and case studies are now increasingly common, even for 2nd year students completing unpaid internships at boutique banks.

To illustrate, here’s a case study that a BIWS client (a 2nd year student going for boutique bank internships) received earlier this year (I’ve changed the deal to protect privacy, but the questions are the same):

  • Please consider the recently announced $7.7 billion deal between Tyson Foods and Hillshire Brands.
  • Write a 1-page summary of your thoughts on the deal, the motivation for the buyer and seller, and the price per share.
  • Does that price value the seller appropriately?
  • What form of consideration should the buyer use to acquire the seller? How accretive or dilutive would the deal be with this consideration?

To answer these questions, he had to build a simple merger model, screen for public comps and run the numbers, and read through press releases on the deal.

So the questions don’t involve hyper-advanced modeling, but you do need to understand the fundamentals to perform well.

From a bank’s perspective, case studies are the perfect way to respond to changes in candidates themselves:

  • Just memorizing interview questions? Easy, give them a case study on a recent deal that requires critical thinking.
  • Using templates from modeling courses without understanding the models? Easy, just ask for an analysis of companies with strange financial statements that don’t line up with standard templates.
  • Poor communication skills? Easy, ask for a 1-page written document to test their writing ability.

On the buy-side, case studies have been widespread for at least 10-15+ years, so there’s nothing new there.

What is new is that even very young candidates are now getting case studies, even when applying to informal/unpaid positions.

So, How Do You Set Yourself Apart?

You shouldn’t overestimate the competition, but you do need to be aware of what’s going on… so here are my top 3 tips:

Tip #1: Start Learning Accounting/Finance EARLY

In previous articles, we mentioned that you can do a reasonable job preparing for recruiting on a 6-month timeline.

But I’m starting to doubt that advice.

As I’ve been creating the new Financial Modeling Fundamentals course (just posted a new valuation/DCF case study!), for example, I’ve realized that it is very, very difficult to explain certain concepts precisely… and that proper explanations require significantly more time than you might expect.

So if you currently have no background in accounting/finance, I recommend starting your studies at least 1 year in advance.

And don’t just stick to university or business school classes.

You want exposure to case studies and practice exercises given by finance firms – otherwise, you may not develop the critical thinking that’s required in interviews these days.

Tip #2: Start Writing, Communicating, and Building Your Social Skills EARLY

If there’s one easy way you can beat the “Ivy League” crowd (maybe I should write a separate article on that topic), this is it.

Universities offer classes on these topics, but you might be better off with something taught by specialists (e.g., professional writers or public speakers).

You can improve your social skills by attending networking events, even when you’re not feeling sociable, but you also need to get feedback on your performance and your overall presentation.

In addition to this feedback, you also need to go outside your comfort zone to improve – so try going to a completely random event once in a while, or try writing about something you have no interest in and making it interesting.

Tip #3: Start Writing About Deals and/or Making Investment Recommendations On Your Own

This combines tips #1 and #2 above, so I’m listing it last.

If you do not enjoy analyzing deals or investing in stocks or other assets, you are unlikely to succeed in the finance industry in the long-term.

If you read about people who have won case competitions and then gone onto success in the industry, you’ll see one common theme: they all started early.

Here’s a quote from an interview with Ryan Fusaro, winner of the stock pitch competition at the Value Investing Congress a few years ago:

“I really enjoy it.  On weekends I’ll spend my entire weekend for a month putting together a PowerPoint when the idea strikes. That’s always been my passion.”

Doing this not only gives you practice, but also helps you figure out if you actually want to be in the industry to begin with – and makes you look like more of a line and less of a dot.

Whither Interviews?

Finance interviews haven’t necessarily gotten “harder” or “easier” in the past 5 years, but they have changed.

If you are in the middle-of-the-pack in terms of grades, activities, work experience, and technical knowledge, it’s definitely more of a challenge to break in.

But if you’re one of the top candidates, it’s actually easier today than it was in 2009-2010.

And that’s a change you should welcome – if you put in the work to get there.

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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Read below or Add a comment

  1. Hi Brian,

    I am a sophomore student studying at a target Ivy school. To date, I’ve had three internships at a F500 firm (corporate strategy), and two internships at small firms (private equity and special situations equity research). I am currently in search for a boutique banking gig for the summer. However, I am a poli sci major. How will that place me in the competition?

    1. About the same as most others? Your internship experience is good, and assuming you have a good GPA, you should have the same chances as other qualified candidates from top schools. Your major doesn’t matter that much.

  2. With regards to forward multiples, say EV/EBITDA, my thoughts are as follows (do correct me if I’m wrong): forward EV/EBITDA is actually derived from EV as at valuation date, and a NTM EBITDA from the valuation date. The reason why this is acceptable (unlike the apples to apples analogy always used for numerators and denominators for L/UL DCFs or multiples components) is because EV is actually a snapshot while EBITDA covers a time range.

    An even better way to understand this is to look at how the multiples are used in comparable valuation, which at it’s simplest is to multiply your target’s NTM earnings with the median forward multiple of your comp-spread (all values are calendarized and adjusted accordingly). Doing so will result in an EV as at valuation date, which is exactly what you want to do.

    If one insists on using “foward EV” to NTM EBITDA to keep the components “equal”, then the question is; what is forward EV? As at which date? Since EV is a snapshot at an exact point of time (often defined as the valuation date), the use of variables that sum into the EV (equity, debt, pension, associates, preferred, minority, etcetc.) are as at that date.

    Thus, understanding this makes the idea of a “forward” or “backward” EV moot. EV is simply EV. The question would be not whether it’s “historical/LTM or forward/NTM”, but “EV as at which date”?

    1. Yes, you are basically correct. It’s because Enterprise Value already reflects all future expectations, so if you were to “project” it, you would have to look into the “future future” period, which is impossible. Please see:

  3. Are you guys updating the FIG and advanced BIWS courses in December? Or is it only the fundamentals one?

    1. The major addition is the new Fundamentals course, but the industry-specific courses were all updated earlier this year with transcripts + certification quizzes for everything, and a new case study in the O&G one. There will be a new Advanced course next year and updates to the industry-specific ones (followed by eventually completely re-doing those as well).

  4. How could international students improve communication skills? Any advice?

    1. Take a public speaking class, or join a public speaking group like Toastmasters and practice making speeches.

      Also, try writing short descriptions or essays, and then cut 50%+ of your words but maintain the same message.

      The hardest part of effective communication is making your message more concise. Practice that, and you’ll be ahead of everyone else.

  5. Dear Brian,

    Can you post some sample videos/PDFs to see how the New Fundamentals is different from the old version?

      1. Wow!
        Looks really really good! I’ll give it a try!

  6. I’m really glad that interviews are becoming more focused on skill and subject knowledge rather than abstract questions about airplanes and golf balls. Sure, I can understand the rationale behind the abstract questions seeking to assess how someone’s mind works, but isn’t it much better to see how someone’s mind works by asking relevant questions about skills and subject matter? It’s about time, I say.

    I agree with the language ability. Accent is sort of not that important as long as the grammar and mechanics of the language are there. That’s why in the US it’s not legal to discriminate against national origin or accent, but it is entirely legal to discriminate against English ability. Unfortunately there is a lack of focus on communication from speakers of all languages. I fail to understand how people can be honors students but their emails and verbal communication are so lacking. I don’t see it as a race or nationality issue, but an issue involving actually trying to perfect the language you’re trying to speak. Like anything else it takes practice. As a competent (non native) speaker of a few languages, I see no excuse for failing to devote some time to get spelling and grammar mechanics down pat. Sure, I’ve got an accent in foreign language, but my spelling and mechanics are almost completely correct and I’m not that bright. But I try hard, and people with much more brain power than me can certainly nail it if they just try.

    Thanks for the constant developments and free additions to BIWS. This stuff is gold. Nobody works harder and is as dedicated as you, so hats off. Working at a firm and following instructions has its merits, but creating value is a whole other level. I love the polish of the updated courses. Thanks!

    1. Thanks for your comments!

      Yes, it is pretty amazing how few people ever try to improve their communication skills. Even native speakers sometimes mistakenly assume that just because they are native speakers, they can communicate effectively… not true at all.

      Glad to hear you find the new course useful!

  7. The most important point is starting with the study of finance and accounting early , WHICH IS SPOT ON.I have been studying accounting since i was 17-18.I know many people who went to top MBA programmes in my country and found accouting very hard and are still clueless as to what a journal entry is , mind you these people have now secured jobs in PWM,Marketing etc and still the problem persists.Now imagine an IVY league kid who has worked in strategy(or any other non banking/finance field) for 3 years and does an MBA , he would naturally struggle to learn accounting in 1-2 years and probably would be flummoxed by questions relating to IFRS/IAS treatment of research cost or writing off of intangibles.

    Now itd be although more important for people targetting IB.Simply knowing D&A comes onto the P&L debit side is not enough , one needs to know the Why it comes on the p&L debit side.I have purchased the BIWS package and there isnt that much detailed accounting explanation as i thought , its understandable because the video length would increase double fold if that were to happen and you would end up charging alot more and make it a frustrating and boring experience altogether.

    Regarding the accent , yes accent reduction would help , I am from India and i spoke in the clearest way possible to a Canadian lady and she didnt know what i was saying half the time.She was 70 plus though so maybe shes hard from hearing

    1. Yup, exactly. You really can’t “learn” accounting in a short period of time, at least if you want to really understand it.

      There is actually a lot more detail on the accounting and other explanations in the new Fundamentals course… as in, it will be about 4x the length of the current course when it’s completely finished. There’s an entire module now just devoted to explaining accounting fundamentals.

      And yes, sometimes no matter how much you try some people will have a hard time understanding you.

      1. While i’ve no intention getting into an argument with what the reader above said or thinks, it continues to amaze me (and that is why i m forced to write here), how people think that debit/credit would help them in IB/ER etc…having now worked in banking and coming from No accounting background,i can tell ya every M&A (which is considered the most technical group) Associates/Analyst have to “unlearn” & “relearn” the tools of the trade..
        I myself had to train a couple of CA/CPAs how to analyse, build Financial statements, its kinda like saying that every top F1 driver needs to be a top car mechanic..when its simply not true, it may help for sure, all said, offcourse the accounting background is good to have.
        I would strongly suggest that your Accounting videos/courses are more than enough for a lot of finance/banking jobs that i’ve had a chance to interview for, work in. In fact at one of my intermediate accounting course, i ended up getting a A simply because i had done your vidoes before. Even CFA is basically useless (especially L2) and i have cleared all levels of this program..JUST NOT practical enough!


        1. Thanks for your feedback! Yes, I somewhat agree with what you said, but everyone has a different learning style. So some people may benefit from earlier exposure via formal classes.

      2. Any recommendations for someone with a small accounting background who wants to further their knowledge in it?

        My degree didn’t focus that much on accounting.

  8. How do you think my chances are to break in in Singapore/Asia in general?
    I am at the Eastern Europe target (but like I assume no one in Asia knows where the hell I come from) and will be a last semester exchange student in Seoul, but really don’t feel like coming home. I have solid Big 4 M&A internship experience (6 months) and currently pursuing full time IB analyst position (lot of modeling and project finance).
    Any chances to break in? And by breaking in, I mean everything – IB/Corp dev (this especially)/Start-up biz dev/anything transaction or strategy related.

    Cheers! Great site

    1. I think you have a chance, yes, but places like China/Korea/Japan are basically impossible unless you know the language at a professional level, which really means that you pretty much have to be local to get a job there (except for maybe Japan, since they’re actively seeking foreigners these days).

      In Singapore you’d have a better shot, but if your university isn’t well-known it will still be tough. I would probably aim for a Big 4 role there initially and then leverage that to move elsewhere. We’re running an interview soon with someone who did this in Singapore.

      1. I’m not aiming at China/Hong Kong/Japan as I know they prefer locals or demand language skills.

        What to you think about start-ups/VC industry there? Cold e-mailing?

        Looking forward to the interview.

        1. Yes, probably cold-emailing, networking, meeting people at conferences, etc. There are more start-ups in Singapore now but it’s still a pretty traditional place in terms of careers, and I don’t think there’s a ton of VC activity.

          1. Thanks. Do you know about any exotics places which let you practice tech/VC or startups? Like, Africa/South American etc. Any countries accepting English speaking people?

          2. I am not sure offhand, but you generally need to know the local language in South America. In Africa you might get by with English but I don’t think there is much tech start-up activity there, even in South Africa.

  9. Good point on the communication skills. Indians & Chinese are pouring into US universities in droves these days, most of them pretty smart and hardworking kids. But almost nothing frustrates me more than having to interview a dude I can barely understand, regardless of the fact that his GPA is probably a 3.8+ For those still learning English I’d recommend accent-reduction training.

    1. Harsher than the way I would have phrased it, but yes, that is what I was getting at. People got really annoyed when Paul Graham made a similar comment about startup founders with strong accents having more difficulties, but there is some truth to that…

  10. Hey Brian I have been trying to schedule in multiple informational interviews in a day. I live far away from the city and it costs a lot of money to get to the city.
    In one of your posts you say to give a specific date and time but it is impossible to have a free banker on that specific day and within a reasonable time of eachother.
    Is it ok if I ask a banker ” are there any days and times which do not work for you in the next week”? and not give a specific date and time?

    1. Yes you could do that as well, but it’s better to be more specific if possible.

    2. M&I - Nicole

      No, I’d just ask him which days he’s free, and suggest a few days that suit him. You can ask him which days he isn’t available but to be honest things may change, and even if he commits to meeting with you one day, he may cancel, which is very typical for bankers given their schedule. So the best bet, perhaps, is to stay in the city for longer.

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