How to get into an Investment Bank. Personal experience

How to get an offer from an Investment Bank? I’ll tell you how I prepared for interviews with local Russian investment and Bulge Bracket banks and how I got into VTB and Goldman Sachs. I’ll share with you as well some background materials and tips.

[Learn more about the course Investment Banking Interview Prep]

About myself

After graduating from MGIMO (Moscow, Russia) I received an offer from IBD and Structuring departments of the VTB Capital Bank. As a result, I joined the Structuring team in which I dealt with solutions in the sphere of complicated M&A / Private Equity transactions as well as with structural financing and risk management on currency, interest and commodities markets. Only a year later I was transferred to the position of analyst at the Goldman Sachs Moscow office.

Examples of transactions:

  • consulting the largest Russian gold mining company on 100% consolidation of shares;
  • structuring warrant-investments into one of the most fast-growing e-commerce companies in Eastern Europe;
  • preparation of a $300 mln prepay-transaction for a major Russian oil company;
  • structural financing of one of the largest world producers of fertilizers with price-cutting at the expense of collar sales + advance-arrears swaps.

After several years of work in the industry, I finally decided to leave Goldman to concentrate on developing my start-up. That is what I am up to nowadays.

Successful experience of passing the selection process in several investment banks helped me work out a formula of the most efficient preparation. I believe that it will be useful to experienced candidates in saving a lot of time. And for those who do not know how to begin, it will serve as a road-map in the process of preparation.

Recruiting in investment banks

As a rule, the selection process in investment banks can be divided into 4 stages:

  • Screening of resume and motivation letters;
  • Online tests;
  • First round of interviews (with analysts and managers) or an assessment-center (group case + series of blitz interviews)
  • Second round of interviews (with vice-presidents and managing directors)

Criteria of selection in different banks are virtually nonexistent. The team looks at:

  • technical skills of the candidate;
  • motivation & fit;
  • presentation skills;
  • teamwork / leadership skills;
  • attention to detail;
  • problem-solving & analytical skills.

As a rule, the first three criteria turn to be the top priority for the team because all the rest cannot be truly and objectively evaluated within the interview format.

1.    Writing a resume and a motivation letter for an investment bank

Time for preparation – 3 days

RESUME AND CL

During the screening process the analyst will spend no more than 5-10 seconds evaluating the resume. During preparation, you should seek perfectly clear structure and an accurate format.

  • Maximum one page
  • No photo
  • Clear structure:
    • education
    • work experience, including the one in student organizations
    • extracurricular activities, hobbies and skills
  • Industry standard – M&I template
  • Only pdf, accurate format
  • Structure of each bloc:
    • general description
    • detailed description of 2-3 projects with emphasis on the result
  • Maximum of quantitatively measurable achievements and active verbs
  • Extracurricular activities and interests are an excellent way to single out oneself and to build relations with the team members during the interview

Lately, banks have stopped asking for motivation letters. But in case you still need to send a Cover Letter:

  • Maximum one page
  • Clear structure:
    • Introduction (the unique possibility to be of interest to the reader is to tell him who you are and what links you to the company: for example, team members with whom you communicated)
    • Your background work experience (tell them about the most relevant projects you worked on)
    • Why you fit (stress the fact that your experience and skills match the bank’s needs)
    • Conclusion (indicate your contact information and thank for the attention)
  • An example of a decent CL
    • Seek this kind of structure and word accuracy

2. Online tests in investment banks

Time for preparation: one week

Some investment banks require candidates to pass numerical / verbal online tests. I was lucky – Goldman Sachs does not have such a requirement.

The online tests are quite typical (SHL / Kenexa / Talent Q – tasks of middle-level complexity of the mathematical part of GMAT/GRE) and are way easier than analog ones in consulting (PST, hello!). As practice shows, solving about 5-10 trial variants is enough to get used to the format and to learn how to calculate correctly the time – often 1-2 minutes is allocated to one question.

Prep strategy of those, who have successfully passed this stage of selection:

  • Download free test versions (about 5-7 tests are in free access)
  • Solve the first several variants within a time limit (1,5-2 minutes for one question)
  • Find problem spots
  • Solve typical tasks from GMAT/GRE, spending more time on tasks in which most of the mistakes were committed and/or more than 2 minutes were spent
  • Solve the rest of the tests with a time limit
  • Sleep well and pass the online tests the next day with renewed strength

3. Investment Bank Assessment Centers

Time for preparation: 1 day 

Local investment banks invite candidates for assessment on most of vacancies. Recruiting process in BB banks most often does not include this stage.

The assessment itself is a group case and a series of blitz interviews. My approach to this stage:

  • listen attentively and analyze what other participants say
    • in no way interrupt others
    • follow all the variants of a case solving
  • take initiative and propose rational proposals
    • allocate time when deciding on and choosing the team’s member in charge of the timing
    • change orientation of the discussion
    • become the team’s member who presents the final solution
  • stay relaxed and sure of myself
    • when a disagreement may arise within the team
    • in the moment of presentation, when the questioner will most probably begin to ask provocative questions

4. Technical questions

Time for preparation: 4-6 weeks

The failed technical part of the interview is in most cases the reason for refusal of a candidate.  As of today, BIWS alone does not cover sufficient range of issues to get into IBD.

How I prepared for this stage:

  • I passed the Financial Modeling Fundamentals course offered by BIWS. What did I get from it?
    • A good basis and understanding of main concepts of financial modeling
    • Simple and detailed explanation of fundamental issues on different topics (Accounting, Multiples, DCF)
    • This course includes a series of additional case studies: which are, to my mind, a waste of time. I did not read them and do not advise you
  • Studied the BIWS IB Interview Guide. As a result:
    • I worked through 70% of questions which are regularly asked during interviews
    • Got a clear understanding of the approach and format of answers to questions which the questioner awaits
  • Examined materials of AMT trainings. What do they give?
    • answers to a layer of difficult questions (additional 10-15%)
    • absolute clear understanding of the basics
  • Systematically participated in all interviews related to corporate finance and went to them. Why is it important?
    • regretfully, as of now, there is no single material which represents answers to more than 90% of questions asked during interviews in the top local and BB banks. You need to get the rest through your own experience
    • ability to pass an interview is a skill which can be trained. Each extra interview besides practice in answering difficult questions mentioned above ads self-confidence and versatility

5. Industry Experience needed for Investment Banking

Time for preparation: 2 weeks

Quite often a candidate passing an interview is expected to show a solid level of understanding at least of one branch of economy. Ideally, you are expected to demonstrate experience in using technical skills.

Here the relevant experience can be of assistance. If you don’t have it, you need to choose an industry and independently examine its business model drivers and main company indicators, the market’s structure and principal players.

Be ready to discuss one of the public companies of this sector. Quite often you can be asked to present your own investment idea in this industry.

6. Investment Bank Fit Part (Motivation questions)

Time for preparation: 1 week

Thorough preparation for previous parts of the interview mentioned above already demonstrates your motivation to the team. However, vague stories taken from personal experience, lack of understanding of the industry’s operation model, as well as of the tasks the candidate would have had to face if he passed the interview, quite often meant failure even of for very strong applicants.

Several investment banks (including Goldman) use motivation video-interviews where you are invited to record your answers on a camera. You are given 20 seconds to prepare yourself for each question, and each answer should not be longer than 1 minute.

Thus, I would divide all questions in this area into 3 blocs:

  • About myself / personal experience
    • CV-based
    • Teamwork & Leadership
    • Strength & Weaknesses
    • Problem-solving abilities
  • «Why?»
  • Understanding of the internal processes
    • How work in the department is organized
    • Range of tasks the team’s members face depending on the position
    • Types of transactions the team carries out and their main stages

When answering questions, I suggest using the method of detailed structured narration. Examples of such detailed answers can be found in the BIWS IB Interview Guide.

Yuptalk.ru / www.mergersandinquisitions.com portals can help you get a true picture of an industry. A good grasp of a sector will allow you to avoid trivial questions and will give each member of the team a possibility to ask more precise and specific ones.

7. News and macro

Time for preparation: 15-20 minutes daily

What is expected from you?

  • Key business news
  • News which can render influence on the business of investment banks
    • Regulative changes
    • News about transactions on a local market with financial details
  • News about the industry chosen by you
    • Legislative changes
    • Strategic initiatives of companies
  • Macroeconomics
    • Dynamics of main macro-indicators in Russia, the US, euro zone
    • Key trends and your opinion

How to prepare?

  • read Bloomberg, FT and/or WSJ
  • keep an eye on companies in the industry chosen by you
  • before each interview carry out research on M&A, IPO, DCM transactions on the market and memorise key financial details

8. Brainteasers

Time for preparation: 40 minutes daily

Brainteasers test your resilience and quick-wittedness. Since this type of questions is quite subjective, brainteasers often do no play a significant role when making the final decision on a candidate (but approaches differ depending on the team).

You are expected to give a clear logical reasoning or creative approach to solving the task. A correct answer plays a much less important role than the argumentation you demonstrate during the interview.

Some try to study beforehand many examples (such as “How to move Fudzi mountains”, etc.). I consider this a waste of time, since those who really appreciate creative thinking select new interesting brainteasers every year. But those who ask the most commonly encountered questions most often do not pay much attention to them at all.

9. FAQ

Do you need to know English to get into Investment Banking?

  • Yes, to receive an offer you need to have fluent English

How important is the CFA in the selection process for Investment Banking?

  • Almost not important at all, if you have financial background. Having successfully finished the first round may slightly help with screening. In general, the material does not significantly correlate with compulsory selection requirements and only partially covers the main issues. That is why the decision to spend more than 200 hours must be motivated by the desire to enlarge and to structure the understanding of Finance in its whole, but in no way by the intention to prepare oneself for the interview (I passed the first level myself and have never regretted it)

How important is a strong university in the selection process for an Investment Bank?

  • It is important, but more at the screening stage. For those with non-profile education / coming from non-top institutions the most probable way to pass screening is networking or available relevant experience

Whether relevant experience is important?

  • It is important, but can be compensated with brilliant preparation and advantage over other candidates on most selection criteria

Whether it is worth reading Aswath Damodaran, Joshua Rosenbaum, Brealy Myers, Rotschild Interview Guide, etc, to prepare oneself for an interview in an investment bank?

  • See the CFA section

Whether it is important to get acquainted with the team before the beginning of the selection process?

  • Not necessarily, but highly advisable. Acquaintance will help to melt the ice and will create perfect atmosphere during interview
    • Go to events organized by banks
    • Go to meetings with bankers in the framework of seminars organized by the universities’ student clubs
    • Find people in Linkedin / in other social nets and make appointments for coffee
    • Remember that your interview begins when you have introduced yourself and have talked to a team’s member
    • Do your homework

In conclusion, I hope reading about my experience was useful. If you have any questions, please write a comment below or apply for the IB Interview prep course, where we will go over the main topics and I will give you feedback on your interview prep.

Thanks for reading,

Sergey Pestov