Pitch Anything: “The Game” for Investment Banking?
It’s 11 PM and you’re sitting down at a bar with a friend. You see 2 gorgeous blondes stroll over and sit down across from you (if you’re female, just imagine this from your perspective instead).
You strategize with your friend about what to say and who to approach, you think of the perfect opening line, and then you go up and make your move.
The first girl stops you in your tracks, glares at you, and says, “If you’re going to recite lines from that book, we’ve heard them all before – you can go away now.”
Ouch. What went wrong?
The problem is that it’s 2005 and Neil Strauss has just published The Game, detailing the secret society of pickup artists and the exact tactics they use to get beautiful women night after night.
It became so popular in New York that women learned all about it and instantly knew when a guy was using tactics from the book.
And now a new book by Oren Klaff, a capital markets banker based in LA, might just do the same thing for the world of business and investment banking.
It’s called Pitch Anything, but it could be titled “Persuade Anyone” because that’s what it’s about: how to present an idea so that the other person gets intrigued and ultimately signs on the line which is dotted (yes, Glengarry Glen Ross should be part of your required viewing).
“Wait a minute! I don’t want to work on the sell-side, why would I ever need this? I am a math genius and can sit behind the computer, look at spreadsheets all day, never talk to people, and still make bank!!”
I see where you’re coming from, but even on the buy-side you’ll need to persuade people and pitch your ideas all the time:
- You just got a horrible bonus, only 1% of your P&L. You want to negotiate a better number for next year – how do you approach your fund manager?
- You have a new investment idea and need to present it to the investment committee at your firm. What story will convince them to say “yes”?
- You’ve had enough and are quitting your fund to start a new hedge fund. You need to raise $500 million – how do you sell investors on the idea?
Of course, if you want to keep your bottom-tier bonus, never get any respect from anyone else, and never get the funds to start your own firm, feel free to keep staring at Excel.
When Oren first contacted me and told me about the book, I was skeptical: I get tons of pitches and requests each day and everyone wants me to promote their products and help them out with random favors.
So I let it sit for a while and didn’t get around to reading it until my flight got delayed on a recent trip, I ran out of battery, and I had nothing to do.
And then I almost missed my flight because I couldn’t put it down once I started reading.
The Big Idea(s)
There are many big ideas here, but the ones that stood out most:
- The way you pitch something and the way the other person perceives it are completely different.
- Setting the frame makes all the difference when pitching anything or talking to anyone.
- Don’t pitch numbers or logic – tell stories.
A “frame” is just the way a person views the world and what he uses to doubt whatever you’re pitching.
If he digs into your numbers and calculations and keeps questioning those, he’s using the analyst frame; if he spends 30 minutes talking about himself and then looks out the window when you get a turn to speak, he’s using the power frame.
There are others, and there’s an appropriate way to respond to each of them and “break” the person out of whatever he’s using to belittle you.
How to Use the Book
The section on frames and how to respond to frames, by itself, is so insightful that you’ll probably think of dozens of uses just from that (I recommended the book to other friends after finishing that part).
Here are a few situations where you could use the advice in the book:
Handling Co-Worker Harassment
Let’s say you just started working on the trading desk and the other traders are giving you crap for being the new guy. In addition to making you get lunch each day, they’re also making you pick up their dry cleaning and get gifts for their families.
There are 2 bad ways to handle this situation:
- Do nothing and ignore the traders as they make fun of you.
- “Argue” your way out of it by telling them to respect you.
Doing #1 is the equivalent of getting a terminal illness and not going to see the doctor: you can ignore it, but you’re still going to die.
#2 won’t work because of the same reason it didn’t work on the bully in the playground when you were 10: he’ll ignore you and keep pulling your pants down anyway.
In the book, Oren goes through a few examples of how to use a power-busting frame and other tactics to handle a situation like this and re-assert yourself by lightly defying “the authorities.”
It doesn’t require memorizing long scripts or anything like that, but it does require going outside your comfort zone – but if you want to advance in the industry you better get used to that.
Raising Funds… for Your New Hedge Fund, or Even a Student Group
You’ve dreamed of starting your own hedge fund since you were 10 and first saw Wall Street.
And now, after 15 years of working at other peoples’ funds, you’re ready to raise the $500 million of capital you need for your own.
You’re in a meeting with a potential investor and he is using the analyst frame to nit-pick your numbers and press you on whether or not you can really achieve the returns you’ve outlined.
“So I’ve looked at your IRR calculation here based on the funds invested and the potential cash flow coming from these investments and I wanted to know how you derived the margin right here…”
You do not want to get into an argument over the numbers or go into nitty-gritty detail in response to this.
If they want more detail, you can send it to them after the meeting.
In a situation like this you’d apply intrigue or suspense (by telling a story or starting to tell them something surprising and leaving it open-ended) to get the other person to step back from the numbers.
Oren has a few examples of doing this aggressively in the book – you may not want to implement everything he suggests, but using just the basic ideas can take you a long way.
This first section on frames could be applied to almost any social situation; the other parts of the book are more applicable to pitching itself, but remember: much of your life consists of pitching and persuading other people.
So if you’ve spent more time developing your IQ rather than your EQ, this should be required reading.
Though I’m a big fan, the book is not without problems.
First, if you’re a new analyst or associate, you can’t literally apply all the strategies and stories that Oren shares in the book.
If you show up to work on the first day and start “defying” your MD he’ll get pissed and you will develop a bad reputation.
So you have to do it in moderation and not get carried away with following it to a tee.
Another issue is that the deals described in the book, while big (millions / tens of millions and up) to a normal person, are small by the standards of bulge bracket investment banks.
In practice, most pitches from investment bankers for mega-deals are practically identical – hitting emotional triggers all the time might work, but it may also backfire if the audience is sophisticated and wants things presented in a certain way.
Finally, similar to other popular business books (The 4-Hour Workweek), sometimes the author makes everything seem too easy.
It would have been interesting to explore when the strategies here don’t work as well, or whether they apply to much larger deals as well.
Do You Actually Need to Read This Book?
I’ve gotten lots of questions on what the culture of Wall Street is like and whether or not it’s really a frat house.
Experienced traders aside, at most investment banks analysts and associates are more nerdy than fratty.
That’s what happens when you recruit top-performing students at top schools: you get a bunch of math wizards who are great at Excel but not so great at having difficult conversations.
If you already have a lot of real-world experience dealing with skeptical people, persuading others, and pitching your ideas, maybe you’re an exception to this rule.
But if not, I can’t recommend Pitch Anything highly enough – and at the very least, you’ll be entertained by all the stories within.
The Next Neil Strauss?
So will Pitch Anything become The Game of the investment banking world?
While guys who want to get more girls read everything they can get their hands on, bankers have no time to read or do anything besides pitch, deal, and occasionally snort cocaine.
So unlike that situation with the 2 blondes back in 2005, you won’t suddenly have a market where everyone knows your tricks.
And that’s great news for you, because you can pick up Pitch Anything and start applying the tactics right now – when no one else knows how to respond to your newfound superpowers.
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Bottles and Bottles? How You Really Win Clients and Land Mega-Deals as an Investment Banker
Why does the mainstream media hate Wall Street so much?
You can think of dozens of reasons, but one of the biggest is that they don’t understand what bankers really do to earn their fees.
They see news of million-dollar bonuses and assume that financiers earn those bonuses by sitting around and playing Monopoly.
But you don’t earn massive fees by playing board games all day – it’s a process that takes years, which is one reason why bankers make the money they do.
And the infamous “pitch” has very little to do with it.
It’s All About the Pitch, Right?
The most common, wrong suggestion I’ve seen before is that “Bankers win clients by pitching them.”
But that’s like saying that you got into Harvard or Oxford by submitting a really good application – technically true, but not the full story.
Yes, the application is critical and if your essays suck, you’re screwed – but you got into a top school because you spent years developing the skills and experiences to do so, and you then presented them in the best possible light.
It’s the same with winning clients as a banker: your pitch needs to be on-point for you to win the deal, but the process of putting yourself in the position to pitch for the deal starts long before that.
What Really Happens
As you move up from Associate to VP and beyond, gradually you’re tasked with more and more sourcing work: finding potential clients, getting to know them, and then pitching for a deal when the time is right.
Managing Directors spend almost no time on deal execution – unless it’s a massive transaction that requires their involvement – and instead spend most of their time on finding new clients and serving existing ones.
If you already work with a company on all their M&A deals and your bank has been advising them for the past 20 years, you’ll probably continue to do so in the future.
Like legacy admissions in university or Roger Sterling and Lucky Strike, it’s a good bet that you’ll receive the benefit of all that history unless you make a colossal screw-up.
So it’s more interesting to look at how you find new clients – companies your bank has never worked with before.
This entire process is more applicable to smaller firms than to bulge bracket banks, because there the “legacy” factor is high and you mostly work with huge companies that everyone already knows about.
But even at huge firms, you still need to find new clients because existing companies get acquired, merge, and go out of business all the time.
In sales, a “lead” is just a potential customer – someone who might sign up for the products or services you’re offering.
It’s the same idea in banking, but since your leads are fewer in number and are worth much more, some strategies don’t work so well.
What Doesn’t Work
Strategies like online marketing (paying for ads on websites, Google, Facebook, etc.), TV/radio/direct mail advertising, and posting flyers would never work.
It may sound silly to even point this out, but I’ve actually seen some banks use Google AdWords to market themselves to clients and I have no idea why they bother.
All these methods are too impersonal – it’s like walking into Armani and having a robot display a list of recommended clothes for you rather than having a real live person greet you, chat for a while, find out what you’re looking for, and then suggest something good.
When the number of clients is low and the per-client value is high, you need to get very personal to make deals happen.
PE / VC / HF Referrals
One way to do this is to go through your friends on the buy-side, see what portfolio companies they have, what sectors they’re interested in, and who else they’ve been speaking with lately.
Let’s say you’re an MD who has worked with a private equity firm for 10+ years. At your next catch-up meeting with them, you might casually ask how their portfolio companies are doing (translation: are any of these companies ready to sell, refinance debt, or go public?).
If the PE Partner likes you and wants to give you business, he might refer you to the CEO or CFO and say, “Hey portfolio company, this banker’s good – you should get to know him.”
Or if a deal is imminent, he might tell you directly: “They’re going public next year, and the pitch is coming up next month – we’ll be sure to include you.”
In tech and healthcare groups, venture capitalists are arguably more important and bankers get referrals to startups via VCs.
Just like with your own networking efforts, cold-calling is less effective than meeting in-person first or getting referrals – but sometimes it works.
You’re far more likely to see cold-calling at smaller banks where you have to fight for every deal – and if you’re a summer analyst there you might get tasked with poring through lists of companies and finding contact information.
Cold-calling is also more common at small and middle-market private equity firms, some of which are notorious for making their newly hired associates cold-call companies all day long.
Bankers also spend a lot of time on the conference circuit, meeting with executives at events (CES, Davos, etc.).
These are like information sessions: if you can stand out from everyone else and then follow-up appropriately, your chances of success go way up.
The real action at conferences happens offstage, so bankers skip keynotes and panels and schedule as many 1-on-1 meetings as possible during the day.
Wouldn’t it be nice if banks just called you when they wanted to hire someone?
When companies want to sell or raise capital, they sometimes contact banks directly – this scenario is much more likely when a lesser-known company wants to work with a bulge bracket bank and has no other way to get on their radar.
Sometimes investors also contact bankers directly and provide the introduction, especially if they’re pressuring the company to sell so they can realize their returns.
Wining & Dining: Building the Relationship
Once you’ve contacted or been contacted by the executives at this potential client, you need to build the relationship.
If it’s an inbound contact and they urgently need to sell or raise capital, you won’t do this and you may be asked to pitch for the business right away.
But if the deal is further off in the future, you need to take time to build trust and convince the CEO that you’re not just another Gordon Gekko or Patrick Bateman character waiting in the shadows to decapitate him and steal all his money.
You do that by:
- Coming up with acquisition ideas and meeting with the executives to discuss what areas they might want to expand into.
- Giving market updates to the executives and telling them what’s going on in the M&A or capital markets.
- Meeting casually for lunch or dinner to catch up on what the company has been doing and their future plans.
- Being “on call” to answer whatever questions they have, whenever they have them.
The tricky part is that you don’t get paid for any of this – and the entire process could take years before you see any revenue.
Sure, making $10 million on a single deal sounds great – but if it takes 10 years of relationship building to get there, the NPV is much lower than $10 million.
This is the slowest and most extended part of the “client-winning” process, and if you’re not interested in relationships, this is where you’ll fail.
But if you like meeting and greeting and can’t stand Excel, then you might make a great MD – even if you’re a lousy analyst.
How does a company decide when it should sell, buy another company, go public, or raise capital?
Sometimes it’s forced to sell by investors who want to realize their returns (Amazon / Zappos) – going back to our theme of NPV, the longer an investment stays unrealized, the harder it is to get solid returns.
Other times the executives reach the decision themselves – the CFO looks at their cash flow projections and realizes their burn rate is too high, so they decide to raise debt or equity.
And still other times, bankers “plant” the idea in the CEO’s mind.
While you don’t have to plant this idea in a dream within a dream within a dream within a dream, you do have to be subtle about it – going out and blatantly pitching an LBO won’t work even if you really want a PE firm to buy the company you’re speaking with.
Instead, bankers are more likely to make casual references to private equity firms and leveraged buyouts elsewhere in the market when they meet with the company to discuss other topics.
Over time, if the CEO and Board buy into the idea or show interest, the bankers keep selling them on it and gradually start to reveal more and more information.
The best bankers – the true rain-makers – are the ones who are best at “selling” the company on a transaction, even if the management team had no interest initially.
Regardless of whether the idea was planted or original, once the company decides it’s ready to sell or raise capital, it then pits bankers against each other in a bake-off.
Sometimes if a company has a special relationship with just 1 banker and has never spoken to others, it will skip the pitch and give the business to that banker.
But that’s more common at private and smaller companies where there’s not as much oversight from the Board of Directors – at anything bigger the Board usually requires the management team to solicit competitive offers.
At this point they would contact all the bankers they’ve gotten to know over the years and tell them what they’re planning, send over relevant financial information, and invite them to pitch for the deal.
The number of banks invited depends on the deal type – IPOs have many banks, whereas in M&A deals there’s just 1 or 2 advising the buyer and seller – and whether or not the company wants to stick with the bankers it knows best or go for a broader set.
Who Wins the Deal?
This must come down to whether or not you’ve dotted all the i’s and crossed all the t’s in your pitch book, right? And whether or not you remembered to change the font size on every single page, right?
Nope – most of the time the pitch book itself is irrelevant to winning the deal, even if you pulled 4 all-nighters to create it.
What matters is how much the company likes the senior bankers, what the senior bankers say, and how they say it – and what they say compared to the other bankers pitching for the deal.
Let’s say you go in and claim that the company is worth $500 million and that you can complete the sale process in 6 months. Then another banker goes in and says the company is worth $400 million and that the sale process will take 12 months.
You might assume that you’ll win since your claims are more aggressive and will result in a better price for investors – and sometimes that’s true.
But the CEO and other Board members/executives could also look at your pitch and think that your numbers are unrealistic and that you’re not being honest – especially if everyone else there is predicting lower valuations.
So you need to use a careful blend of salesmanship and pragmatism to win deals.
After the Pitch
There may be a clear “winner,” but more often than not, the company will follow up with multiple banks to see what the fee structures are like and what their recommendations are in more detail.
For smaller companies and deals, the fees make a bigger difference and sometimes a bank will win the deal by promising lower fees or a structure that rewards them for better results (e.g. 0.75% under $500 million and 1.5% for the amount above $500 million).
Most of the time, though, it comes down to all of the above factors and the company considers everything when making a decision.
This is not a rational or logical process – just like selecting which applicants will receive interviews, it’s random and fraught with emotion.
If you think executives are rational just because hundreds of millions or billions of dollars are involved, nothing could be further from the truth – sometimes the more money that’s involved, the less rational the deal (AOL / Time Warner).
Putting everything together, here’s an example of how you, after you become a Managing Director, might meet a CEO, develop the relationship, and then pitch for the deal:
5 years ago you were having a catch-up meeting with a local VC and he mentioned that a tech startup in their portfolio was hot and would change the world of online media.
He gave you an introduction, so you met with the CEO, learned about his vision for the business, and got an idea of the company’s financial performance.
A year later, you caught up with the CEO once again and gave him an update on the capital markets and what IPOs were pricing at. The company was not yet cash flow-positive, but they had killer revenue growth.
The next year (3 years ago), the IPO markets were closed but the CEO wanted to use his stock to acquire smaller competitors – so you ran a buy-side M&A process for him over the course of 6 months. It never went anywhere since they couldn’t find anything good and got distracted by other issues.
Then, 2 years ago, the company finally turned cash flow-positive and started thinking about an IPO, which they told you about during your quarterly meeting with them.
You made your analyst monkey stay awake for 60 hours straight to prepare a 200-page pitch book laying out all the nuances, but then the CEO decided to hold off until the market got better.
Finally, a few weeks ago the CEO contacted you again just before another meeting and said that they are now serious about selling and want to hear your thoughts – so he invited you in to pitch for the deal.
Not only did this process take 5 years, but there’s no guarantee that this planned sell-side M&A deal will even happen – or that the mandate will go to your bank.
Maybe no one will be interested; maybe the CEO will change his mind yet again; or maybe investors will pressure them to go public instead.
And you ran a failed buy-side M&A process for them a few years ago.
This is why investment banking is such a tough business: you could do everything right for 5 years and still lose the deal because your fees are 0.1% too expensive, or because the CEO gets emotional and happens to like an unknown banker more.
Wait, This Sounds Boring!
One time I was explaining this process to a friend who was still in university and he said, “Wow that sounds boring – I’d rather do modeling and analytical work.”
If your IQ is higher than your EQ, it may not sound too appealing to develop relationships like this and constantly pitch for new business.
But as Jonathan Knee points out in The Accidental Investment Banker (highly recommended), all deals start to look the same after a while.
You learn a lot at first and valuing and modeling companies seems exciting when you’re new, but they become routine and boring once you’ve done them 500 times.
We’re more interested in stories and inter-personal drama than we are in staring at Excel all day – so even if the process above doesn’t sound interesting right now, you may change your mind in a few years.
You might assume that you should move to the buy-side if you’re not interested in any of this, but that’s only partially true – in PE and VC you still do a lot of relationship-building, meeting with new companies, and so on.
So if it’s really not your cup of tea, think about hedge funds or trading – where you can make bank without talking to people or leaving your 8 computer screens.
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Investment Banking Recruiting in the UK: All About Competency Questions, Assessment Centers and More
It would be easy to dismiss this and say, “Banking recruiting and interviews are the same everywhere!” – but that’s just not true.
There are huge differences in Europe and Australia compared to the US (Asia, the Middle East, South Africa, and so on are somewhere in between), and you’re going to learn how to approach everything from competency questions to assessment centers and numerical tests in this interview with a reader who just won an IB offer in London.
Q: Can you tell us about your background and how you broke into the industry?
A: Sure. I went to high school in a North African country, then graduated from a top undergraduate business school in Canada, and then earned an MSc in Finance at a top university in London.
I was 100% certain I would do investment banking, but I was never able to get an internship in the industry due to personal reasons. But while I was in school I did a lot of extracurricular activities and got exposed to financial modeling through my involvement in one of the biggest student funds in Canada.
Even though I hadn’t completed an internship, I did a lot of research beforehand and was well-prepared for the full-time recruiting process at my school.
I also speak 4 languages, which is very helpful in London as language skills are more highly valued here than in North America.
Your online courses also helped me a lot and allowed me to talk about M&A deals and LBOs nearly as well as someone who had completed many M&A internships.
Q: Great, glad to hear it. You’ve lived in so many different places that you must know how recruiting differs everywhere. Can you walk us through how recruiting in the UK differs from what you see in North America?
A: Sure. Here’s how I would summarize the process:
- You apply online by submitting your CV, cover letter, and competency questions, and then get selected for first-round interviews based on the strength of your application.
- If you do well, you advance to an assessment center (rather than the Superday interviews you see in the US) and you participate in group exercises, tests, interviews, and presentations there. If you do well, you receive an offer.
- In addition, you also have to complete aptitude tests (numerical, verbal, and reasoning) somewhere along the way in this application process.
You might have to take them before you apply (Barclays and Credit Suisse), after your online application is screened (Deutsche Bank and UBS), or after you pass the first round of interviews (Macquarie).
Some people underestimate these tests, but they’re extremely important – banks screen candidates based on the results, and often you get rejected not because of your CV, but rather because of your test results.
If you pass the tests, recruiters will review your entire application once again and then decide whether or not they’ll invite you to interviews – the one exception is Macquarie, where you need to be successful in the first round to be invited to the exams in the first place.
Q: Awesome, thanks for the overview and for mentioning the importance of these tests. I want to jump back into that, but one other question on recruiting at a high-level: it seems there are mixed opinions on whether or not you can just apply online in Europe and get interviews without networking.
What do you think? Does that only work if you go to a top school or you get lucky?
A: Networking is important, but not as important as it is in North America – in London students apply from all over Europe and also from other places like Asia. Networking at information sessions is incredibly difficult because 20+ students surround each banker and it’s almost impossible for them to remember each student.
Unlike presentations in the US, information sessions here are aimed at students applying to full-time, internship, and spring programs (which allow 1st year students to spend 1 week at a specific bank) – since everyone goes to the presentations, the applicant pool is very large and it’s hard to stand out via networking.
It’s still important to attend the sessions because some banks ask students who came to fill in an online form – that way they can see who’s serious about working at the bank.
Q: You mentioned “competency questions” before – I’m sure UK readers are familiar with them, but for everyone else reading, what are they and how important are they?
A: Essentially they are written versions of the standard “fit” questions you receive in all interviews, but they have a word limit and you must complete them along with your online application, CV, and cover letter. Examples of competency questions for banks:
- “What is the personal achievement you are most proud of? What did you learn from this experience and how does it set you apart from others? Please do not exceed 200 words in your answer.”
- “One of our core values is client focus. If you were to win a new client for our firm, who would they be and how would our bank help them achieve their goals? Please do not exceed 200 words in your answer.”
- “Describe a recent situation where you had to set extremely high standards for yourself. What did you do to achieve these standards and exceed expectations? Please do not exceed 250 words.”
An individual bank might ask between 5 and 10 of these questions and the total word count for your answers might be around 1,000 words (perhaps more if they ask more questions).
Sometimes the word count limits are much shorter as well – 50-75 words – which actually makes the questions more difficult because you must be concise.
The questions themselves are as important as the rest of your application. Since the applicant pool in London is larger and more diverse than in the US, recruiters are more selective – or at least more willing to reject someone because of small problems in their application.
Q: Do you have any tips on successfully answering competency questions? Let’s say you get a question on how well you’ve performed under pressure or with a strict deadline. How would you answer it concisely?
A: I’ve always used the techniques you recommended when answering these questions – they’re the same as normal “fit” interview questions, but in written form instead. Normally I use the STAR (Situation, Task, Action, Result) approach:
- Situation: We only had a few weeks left in our internship to deliver the project that the client wanted, and we were well-behind schedule.
- Task: Finish the remaining 50% of the project, when we only had 2 weeks left and the first 50% of the project took us 8 weeks.
- Action: I spoke to the rest of our team and decided which features were the most important to include and which ones would be time-consuming but not as useful to the client; we also leveraged the company’s resources and we found a lot of what we needed via contacts in other departments, saving us time and reducing the need to add more members to our team at the last minute.
- Result: Despite being behind schedule, we delivered 90% of what the client wanted by the end of the internship – it wasn’t the 100% we had set out to deliver, but they were very happy with the end result and ended up giving more business to the company.
That’s just an example – in real-life you might add more details for the type of work you did, the company you worked at, and so on. But you must be concise or they won’t read your answer.
The #1 mistake applicants make is trying to sound “creative” or original when answering these questions.
Just be honest and give a genuine answer, based on a structure like the one I recommended above – they’re not testing your creativity with these questions, but rather how much you’ve learned from your experiences over time and how well you can articulate the key points.
Q: Right, so it sounds like these competency questions are not much different from the normal “fit” questions you would get in an interview. What about the aptitude tests you mentioned earlier? Any tips on what you might see on those and how to prepare?
A: They’re very similar to what you see on standardized tests such as the GMAT – the key is to practice as much as possible beforehand so that nothing surprises you.
The biggest mistake you can make with these is “dramatizing” and over-thinking the answers – on timed standardized tests that is a blunder you can’t afford to make.
They’re just like any other standardized exam: move as quickly as you can, skip anything you don’t know, and come back later to answer anything you skipped the first time. And make sure you go through at least a few practice tests before the real exam, as it’s easy to forget how to take standardized exams well if you haven’t practiced since high school.
If you want the best practice around, sign up for the online aptitude tests and package deals offered on Job Test Prep.
They have a bunch of free tests and their full courses are top-notch, with full score reports and detailed explanations.
Interviews and Assessment Centers
Q: How do you think interviews themselves in the UK differ? Do you still start by walking through your CV and answering the usual “fit” and technical questions?
A: Yes, 99% of the time interviews still start with the famous “Walk me through your CV” question. But many of the interviews here are more “fit”-focused and do not go as in-depth on the technical side. Unlike the US or Canada, most of the interview questions in London are competency-based.
In addition to your guides, I also went through every single behavioral question on this list and made sure that I could answer everything reasonably well.
M&I Note: Before someone leaves a comment saying that you received a plethora of technical questions, your experiences may vary – I’m sure that some offices and groups ask more technical questions than others, and you’ll certainly have to demonstrate technical knowledge at assessment centers (see below).
Q: So let’s say you get past the first round of interviews – what’s a typical assessment center like? How long does it last, how many people are there, and what types of exercises do you complete?
A: I thought assessment centers were more “fun” and diverse than the standard interviews you go through. Usually everything is conducted in small groups (10-20 people) and the assessment center itself lasts an entire day, similar to a Superday in the US.
You might get asked to participate in the following activities:
- Aptitude Tests (numerical, verbal, and reasoning): They do this to see whether or not applicants cheated in the first round with these tests – since they’re online many people get friends to help or look for answers on the Internet, which are both bad ideas.
- Individual Case Study: Sometimes you’re given a case study and are asked to analyze it and make a recommendation or decision within a fixed timeframe. Afterward you’ll have to discuss it with the recruiters.
- Group Presentations: Here, you’re split into groups of 4-6 people and the entire group gets a case study to complete. Recruiters observe you while you work on it, and then you must present your recommendations to bankers at the end.
- Interviews: Generally you go through 3-5 interviews, one of which is related to the group presentations and the individual case study – the other interviews are a mix of competency-based and technical questions.
Some banks like to be more creative and will ask applicants to “role-play” – for example, interviewees might be asked to act as investment bankers representing the bank, while the interviewers pretend to be potential clients.
Banks use assessment centers because traditional 1-on-1 interviews are not the best way to assess candidates – many people can sound impressive in a 30-minute interview, but fail to perform once they actually receive an offer.
The exercises at an assessment center let them assess how well you’d work in a team, present to clients, and complete other tasks as a banker.
M&I Note: I think assessment centers are a great idea and that banks in the US should use them as well. Many senior bankers wish they could give candidates a 1-week trial on the job before giving them an offer, and assessment centers would be a good proxy for that.
Q: That sounds more fun than standard final round interviews, though I can see how it could also turn into a bad reality TV show. What mistakes do candidates make at assessment centers that prevent them from getting offers?
A: The main mistake is to act like a “leader” during group work and presentations. You might assume that banks only give offers to leaders, or at least to people who are giving orders – but that’s completely wrong.
In fact, it can backfire and hurt everyone else if you try to do that.
Recruiters notice this and won’t give out offers to anyone who keeps giving orders and trying to “show off” – that means you lack leadership skills.
Meanwhile, other applicants try to talk a lot to stand out – but they don’t say anything meaningful or relevant. Rather than trying to dominate the group presentation and discussion, you should respect everyone else, listen to contributions from others, make good suggestions, and come up with solid solutions.
You also want to show that you’re having fun and enjoying the experience rather than being extremely serious.
I’ve seen applicants who have remained more quiet receive offers because they’ve respected everyone else and made solid contributions when needed – those who attempt to “show off” or do all the talking generally do not receive offers.
Q: So let’s say you get a group exercise where you’re asked to analyze a company’s options – sell, acquire another company, or continue to operate as-is – and make a recommendation on what they should do. You have a few hours to prepare, and 30 minutes to present your findings.
How would you approach that question at an assessment center?
A: I had to work on a similar individual case study at an assessment center, but it was a bit shorter and they gave me the numbers, valuation, and a few DCF models.
I started by giving a brief presentation of the company – their industry, history, and most well-known products – and then I walked the recruiters through the company’s past and current strategies. I mentioned a few relevant figures such as the EBITDA and P/E multiples as well.
They had already given me the valuation and important figures such as the P/E multiple of the combined company post-acquisition, so all I had to do was show that the acquisitions in question were accretive.
I concluded by benchmarking the strategies of each potential target company against those of the acquirer – in my case each acquisition was accretive, so it was more about the strategic fit with the acquirer and which one would produce the best combined company.
The key factors in handling these exercises:
- Be logical – There are no correct answers most of the time, as the recruiters are just assessing how well you think and analyze problems. Focus on explaining your reasoning in detail rather than finding the “right” answer.
- Do not overcomplicate your presentation – Forget about fancy formatting, going through hypothetical scenarios, or adding complexities to the question. You are under extreme time pressure and do not have time to go into unnecessary detail.
- Be extremely structured in your response – Again, it’s better to be “boring” and follow a structure rather than showing off your creativity and confusing your interviewers. See the articles here on case studies and private equity case studies for examples.
Overall, relax and don’t dwell on every little detail – they’re also testing your ability to improvise and discuss topics you’ve recently learned about because you do that all the time as a banker.
Q: Great, thanks for all these tips and for sharing your experiences!
A: No problem – happy to contribute.
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