The Prospectus Blog

The Investment Banking Interview

It is no secret that the investment banking interview process is incredibly competitive. What may be surprising is that there is actually a well-defined sequence of steps one can take to dramatically improve chances of receiving an offer.

In this article we provide an overview of the process, as well as the most common interview questions you will likely face.

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Bain Group recapitalizes its BMC investment

In our LBO courses, our students learn that private equity investors have 3 strategies that they can deploy to exit their investments – 1) sell the investment company to a strategic or financial acquirer; 2) take the company public; or 3) recapitalize their investment, which involves paying themselves a dividend and financing it via newly borrowed debt. Bain Group’s recent decision on its BMC investment is a good example of this recapitalization strategy.

Bain Group Seeks $750 Million Payday From BMC

By Sridhar Natarajan and Matt Robinson, Bloomberg

The Bain Capital LLC consortium that bought BMC Software Inc. in a $6.7 billion September leveraged buyout is wasting no time extracting cash from the computer-network software maker after sales declined.

The proceeds from a $750 million junk-bond sale this week will be used to pay BMC’s owners a dividend, enabling them to recover 60 percent of the capital they contributed to purchase the Houston-based company seven months ago. By contrast, the average payout to private-equity funds created as far back as 2007 is less than 50 percent, according to Seattle-based data provider PitchBook Data Inc.

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For investment banks, M&A league table rankings are just as important as the deal fees…

With M&A league tables serving as a constant barometer (they can be found in every single pitchbook) of investment banks’ success and activity in advising their clients, it’s not totally surprising that several investment banks decided to forego fees in exchange for advisory deal recognition.

Morgan Stanley, Goldman Said to Swap Fees for Deal Credit – Bloomberg

By David Welch, Bloomberg

Morgan Stanley (MS) and Goldman Sachs Group Inc. both decided last month that it was worth losing millions of dollars in fees to get credit on a big merger they didn’t work on, four people with knowledge of the matter said.

The investment banks asked for credit in league tables — rankings of advisers on mergers and acquisitions maintained by both Bloomberg LP and Dealogic — for working on the $25 billion sale of Forest Laboratories Inc. to Actavis Inc. last month. Neither actually had a role on the deal, said the people who asked not to be identified discussing confidential information.

Instead, the two banks, using previous contracts with Forest, negotiated to get credit for the deal in exchange for millions of dollars in fees they were owed, the people said. The contracts had a clause, commonly known as a tail, that entitled them to fees even if the company was sold by another bank, they said. After the deal was announced they each agreed to cut the fees they were due in exchange for being able to claim the league-table credit.

The trade highlights the importance of league tables to investment banks — which use them to pitch for new business — and the lengths to which banks will go to climb the rankings. Firms also agree to provide financing or other services to get credit on deals they played almost no role in. The Forest deal helped Morgan Stanley solidify its position as the top M&A adviser this year, in both Bloomberg’s and Dealogic’s rankings.

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Matan Feldman interviewed on HuffPost Live about why banks are giving analysts more time off

Wall Street Prep Partners with MasterStreet to Offer Financial Modeling Classes

NEW YORK, NY January 22, 2014 MasterStreet ( and Wall Street Prep ( are pleased to announce a new partnership that will make Wall Street Prep’s financial modeling classes available to professionals through MasterStreet’s free search engine and booking platform for business, technology, and design classes and training.

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Matan Feldman Interviewed on Wall Street Journal’s NewsHub

Goldman Seeks to Improve Working Conditions for Junior Staffers – WSJ

goldmanProgram Seeks to Cut Weekend Work, Streamline Functions

Goldman Sachs said it has spent the past year working to improve the work-life balance of most-junior employees, known on Wall Street as analysts, by reducing their hours and other measures.

By Shayndi Raice

Maybe you don’t have to work seven days a week to succeed at Goldman Sachs Group Inc.

The New York banking company said it has spent the past year working to improve the work-life balance of most-junior employees, known on Wall Street as analysts, by reducing their hours and other measures.

The moves come as banks across the industry struggle to keep young workers who increasingly are favoring the better hours at hedge funds and private-equity firms and the lavish perks at technology startups over Wall Street’s grinding analyst programs.

“Banks over the last couple of years, especially the [biggest], are frustrated that they cannot retain people,” said Matan Feldman, founder and managing partner of Wall Street Prep Inc., a training program for investment bankers.

Goldman long has been viewed as a fast track to wealth and a wellspring of talent. Some of its top executives began their careers in its much-copied analyst program, which started in 1982. Since then, the programs have become synonymous with grueling work loads, late nights and depressingly frequent orders for takeout food.

But earlier this year, Goldman formed a task force made up of senior staff from different businesses within the firm to improve quality of life and promote career-development opportunities for junior employees. It has implemented the task force’s suggestions.

This isn’t the first time banks have faced a war for talent. In the dot-com boom in the early 2000s, college graduates increasingly turned to technology jobs over investment banking. Banks pumped up their salaries and made lifestyle concessions, such as free dinners and car service home, for analysts staying late.

But this time banks, which are under public and regulatory pressure to keep pay down, can’t merely boost compensation to lure young people.

One of Goldman’s goals is to find ways to help young employees finish their work during the regular five-day workweek and avoid all-nighters. Weekend work should be reserved for “critical client activity,” the task force found.

For example, when a more-senior analyst commissions a client presentation, the task force has advised asking for a short outline rather than a full presentation that could run 100 pages or more.

Goldman also created new technology that makes it easier for senior bankers to let analysts know what kind of information they need. In an attempt to minimize email traffic, the technology lets senior bankers input specific requests through a portal that can be accessed by the analyst anywhere. This allows senior bankers to be more explicit in their requests, ensuring the junior analysts have a shot at getting the information right the first time, a Goldman spokesman said.

The task force came on the heels of Goldman’s decision last year to do away with the two-year contracts for most analysts hired out of college. Instead, the firm said it would hire recent college graduates as full-time employees.

Goldman hired 332 analysts to begin work in 2014, up 14% from 2013, the spokesman said. He added that the firm is betting that hiring more analysts will spread the work among a wider group of people.

“The goal is for our analysts to want to be here for a career,” said David Solomon, co-head of Goldman’s investment-banking division. “We want them to be challenged, but also to operate at a pace where they’re going to stay here and learn important skills that are going to stick.”

Goldman Chairman and Chief Executive Lloyd Blankfein told a group of departing summer interns during a question-and-answer session this month that they would do well to “lighten up,” according to a video on its website. “People at the age of the people in this room could also relax a little bit, too,” he said.

Scott Rostan, founder and CEO of industry-training firm Training The Street Inc., said that unlike in the 1990s, when Wall Street analysts rarely quit their posts, junior staffers today are far less likely to finish their full two-year terms. He said some banks are seeing between 60% and 80% of analysts bolt before their two years are up.

“Lifestyle is very important, especially for millennials now,” said Mr. Rostan. “Behind the scenes, [banks] are all somewhat on different levels how we retain our talent. They’re not sure how to do it because the common lever in the past was pay, but they can’t do that.”

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TV Tokyo gives you an inside peak into a Wall Street Prep Boot Camp

Matan Feldman TV Tokyo Interview

Matan Feldman TV Tokyo Interview

TV Tokyo is one of Japan’s largest TV networks, so when they decided to do a story on Wall Street Prep we were honored.

Below is the story, which includes footage from our August New York City Financial Modeling Boot Camp.

Watch interviews with students and Wall Street Prep Founder Matan Feldman, and see our brilliant instructor Ziv Feldman in action.

(it’s in Japanese but you’ll get the picture).

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Financial Modeling Video Series

Quick Lesson: Accretion Dilution Model

An important part of investment banking is understanding mergers and acquisitions (M&A). Within M&A, One of the core models investment banking analysts and associates have to build when analyzing an acquisition is the accretion/dilution model. The underlying purpose of such an analysis is to assess the impact of an acquisition on the acquirer’s expected future earnings per share (EPS). Continue reading

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Financial Modeling Video Series

Quick Lesson: Trading Comps

In the two-part video below,  we’re going to walk through the single most common model in investment banking: The trading comparables (comps) model. The comps model is at once the most ubiquitous and the most straight-forward model you’ll likely be asked to build as an investment banking analyst or associate. Continue reading

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Financial Modeling Video Series

Quick Lesson: Simple LBO Model

In this video tutorial, we’ll build a leveraged buyout (LBO) model, given some operating and valuation assumptions, in Excel. The goal of this video is to show you that an LBO model is actually a very simple transaction at its core – and quite similar to the mechanics involved when purchasing a home. If after watching this video you want to take your LBO modeling to the next level, see Wall Street Prep’s advanced LBO modeling course. Continue reading