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400 IB Questions Verified Answers Let's say I'm working on an IPO for a client. Can you describe briefly what I would do? (5) ️1. Assuming you've won the lead left at the bakeoff , you MEET with the CLIENT and gather basic financial, industry, and customer information 2. Next you are goi...

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400 IB Questions Verified Answers

Let's say I'm working on an IPO for a client. Can you describe briefly what I would do? (5) ✔️1.
Assuming you've won the lead left at the bakeoff , you MEET with the CLIENT and gather basic financial,
industry, and customer information

2. Next you are going to meet with other BANKERS and LAWYERS to DRAFT S-1 registration (which
describes the company's business to investors)

3. Receive comments on S1 from SEC and keep revising until it is complete.

4. Next, you'll go on a ROAD SHOW where you present the company to INSTITUTIONAL INVESTORS (this
is where you build the book and extract how many shares a company wants to buy at what price)

5. the company begins trading on an exchange after you've raised capital from investors



What's in a (overview) pitch book? (5) What's it twofold purpose? ✔️Convince the potential buyer that
the companies on offer are good value

Convince the potential buyer that the bank making the pitch is the best possible bank for the deal1.
Bank "CREDENTIALS" (similar deals they've done to "prove" their expertise).

2. Summary of a company's OPTIONS (or "strategic alternatives" )

3. VALUATION and appropriate financial MODELS

4. Potential acquisition TARGETS (buy-side M&A deal) or potential buyers (sell-side

M&A deal)

5. Summary and key recommendations.



Walk me through the process of a typical sell-side M&A deal.

1. seller contacts you (the Investment Bank) ✔️Conflicts check

Deciding buyers

Creating Teaser

Contact buyers

Sending out Phase I Bid Letter

Decide Phase II buyers left in process

Create CIM

,Respond to Due Diligence

Receive Final Bids

Decide winner

Announcement, closing, and integration



Walk me through the process of a typical buy-side M&A deal. ✔️1. Spend ALOT of time doing
RESEARCH on potential acquisition targets, go through multiple cycles of selection and filtering with the
company you're representing.

2. Narrow down the list based on the feedback and decide which ones to approach.

3. Conduct meetings and gauge the receptivity of each potential seller.

4. conduct more in-

depth due diligence and figure out your offer price you will give to acquisition target.

5. Negotiate the price and key terms of the Purchase Agreement and then announce

the transaction.



1. Walk me through a debt issuance/financing deal. What is the main difference between this and an
IPO? ✔️1. Meet with the client and gather basic financial, industry, and customer information.

2. Work closely with DCM / Leveraged Finance to develop a debt financing or LBO MODEL for the
company and figure out what kind of LEVERAGE, COVERAGE ratios, and COVENANTS might be
appropriate

3. Create a CIM describing all of this.

4. Go out to potential debt investors and win commitments from them to finance

the deal.



Don't need SEC approval because the debt is not sold to the general public (sold to II)



How are Equity Capital Markets (ECM) and Debt Capital Markets (DCM) different from M&A or industry
groups? 2-part answer ✔️-ECM and DCM are both more "markets-based" than M&A. Your tasks are
related to the market and following trends as well as making recommendations to industry and product
groups

-In M&A your job is to execute sell-side and buy-side transactions

,In ECM/DCM you go more in-depth on certain parts of the deal process, but you don't get as broad a
view as you might in other groups.



What's the difference between DCM and Leveraged Finance? (2 main differences) ✔️They're similar
but Leveraged Finance is more "modeling-intensive" and does more of the deal execution with industry
and M&A groups on LBOs and debt financings.



DCM, by contrast, is more closely tied to the markets and tracks trends and relevant data.



1. Explain what a divestiture is

2. What is the important thing you have to create?

3. How do divestitures compare to regular M&A deals? ✔️-It's when a company (public or private)
decides to sell off a specific division rather than sell the entire company.

-you have to create a "standalone operating model" for the particular division they're selling

-the transaction structure and valuation are more complex than they would be for a "plain-vanilla" M&A
deal.



Imagine you want to draft a 1-slide company profile for an investor. What would you put there? ✔️Put
the name of the company in the header, then divide the slide into 4 equal parts



the top-left is for the business description, headquarters, and key executives.



Put a stock chart and the key historical and projected financial metrics and multiples on the top right.



The bottom left can have descriptions of products and services,



and the bottom right should have key geographies with a color-coded map to make it look pretty."

, Let's say you're hired as the financial advisor for a company. What value could you add for them if they
ask you about their suggested growth / M&A strategy? ✔️-first you'd want to see what their expansion
goals are and how they can best achieve them

- (3 ways to change your company) whether it's by partnering with another company, expanding with a
merger or acquisition, or expanding organically with new products.



-As the investment banker, you could make introductions to potential M&A targets, and help with
negotiating, and what type of prices to expect



What two questions should YOU ask when getting investing questions? ✔️1. Always ask what the
investor or business GOALS are.

2. Always ask if there are any TIME CONSTRAINTS/LIMITATIONS



Let's say you had $10 million to invest in anything. What would you do with it? What questions will you
ask yourself? ✔️Ask a question to yourself

1. Well I'd first ask myself Are they looking to have big capital gains over 30- 40 years? or maybe looking
for tax-free retirement income?

2. So if they're investing over 30-40 years and going for high capital gains, a well-diversified portfolio is
probably best;

3. tax-free income, maybe look at municipal bonds



If you owned a small business and were approached by a larger company about an acquisition, how
would you think about the offer, and how would you make a decision on what to do (3 things)?
✔️break it down into three things

1. Price

2. Form of payment - cash, stock, or debt

3. Future plans for the company vis-à-vis your own plans.



Let's say you could start any type of business you wanted, and you had $1 million in initial funds. What
type of business would you start (think business qualities) ✔️-NICHE business with HIGH MARGINS

that requires LITTLE STARTUP CAPITAL and LITTLE ONGOING MAINTENANCE market

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