Goldman Sachs IB Interview Questions

Use CREI: name your leadership style as behavior, connect it to one part of Goldman's culture its bankers described to you, prove it with a story of your own, and close on how you would contribute to that team.

Use TECH4: give a realistic range you've heard from bankers, explain what drives it (live deals, pitches, staffing), describe how a week actually runs, and close on why you're ready for it, with no hint of complaint.

Dilutive, before synergies and other deal adjustments. In an all-stock deal, a buyer with a lower P/E (share price divided by earnings per share) issues shares valued at a low multiple to buy earnings priced at a higher one. Its earnings per share (EPS) fall. Synergies, or paying partly with cash or debt, can make the deal accretive, meaning EPS rise. A lower purchase price reduces the dilution.

Shareholders have limited liability, so their losses stop at what they paid. That makes equity work like a call option on the company's assets, with a strike price equal to the debt. In bankruptcy the assets may be worth less than the debt today. The case is not resolved yet, though, and asset values still have time to move. So there is some chance equity ends up with something, and the market puts a positive price on that chance.

The discount rate turns money you expect to get later into what it is worth today. It combines three things: the time value of money (a dollar today is worth more than a dollar next year), a risk premium (extra return demanded because each year's payoff is uncertain, either $100 or $0, to the extent that risk can't be diversified away), and opportunity cost (the return the client gives up by not putting the $100 into another investment of similar risk). Skip it and you treat $50 expected in year 10 as equal to $50 in hand today. That overstates the coin's value.

Pick one trend you can defend and give it in four slots. Headline: a one-line summary of the trend (the what). Drivers: the technology, regulatory or consumer shifts behind it (the why now). Outlook: the tailwinds that could speed it up and the headwinds that could slow or stop it. Proof: two or three concrete deals or companies that show the trend is real. A tailwind is a force that helps the trend. A headwind is a risk or blocker that works against it.

A company usually goes public to raise new capital for growth and to give its existing shareholders (founders, employees, and venture capital or private equity investors) a liquid, tradable stock they can sell. Public stock also works as currency for acquisitions and employee pay, and it makes later fundraising easier. The company pays for this. It takes on underwriting fees, much heavier disclosure duties, and quarterly scrutiny, and it usually dilutes its existing owners.

Give a short, structured view of three things. Growth: is the economy expanding or slowing? Inflation: are prices rising faster or slower than the central bank's target? Interest rates: what is the central bank doing about it? Then tie that view to investment banking. Rates and confidence drive the cost of financing, company valuations, and how willing buyers and sellers are to do deals. Back each point with one recent data point you have actually read. End with your own view and one thing you are watching.

Use CREI with TREND inside it: name one group, give your one reason for it, prove the interest with two trends in that sector (one narrow, one broad) and a deal, then close on why that makes it your group.

Answer in three slots, in this order. First, Details: the acquirer (the buyer) and the target (the company it buys), the deal size, the premium (how much above the target's pre-announcement share price the buyer paid), the valuation multiple (enterprise value, the total price including net debt, divided by revenue or EBITDA, meaning earnings before interest, taxes, depreciation and amortization), and whether it was paid in cash or stock. Second, the Hook: one sentence that starts "I found this interesting because..." and ties the deal to a trend or company you follow. Third, the Rationale. Give the strategic logic: synergies, which are cost savings or extra revenue that only exist once the two firms combine, or a defensive move against a competitor. Then give the financial logic: whether the deal is accretive, meaning it raises the buyer's earnings per share, plus tax effects and use of excess cash.

A DCF (discounted cash flow) analysis values a company as the present value of the cash it will generate in the future. Present value is what future money is worth today. You project the company's unlevered free cash flow for about five to ten years and estimate a terminal value for all the years after that. Then you discount both back to today at the weighted average cost of capital (WACC) to get enterprise value. Last, you bridge from enterprise value to equity value and divide by diluted shares to get an implied share price.

Take a convertible bond: a bond the holder can exchange for a fixed number of the issuer's shares. To value it, split it in two. The first piece is a straight bond: the coupons and principal discounted at the rate the company pays on its ordinary debt. The second is a call option on the stock (the right to buy shares at a fixed price), priced with an option model such as Black-Scholes. Then add the two together. The same method works for any special security. Break it into pieces you already know how to price, value each one, and combine them. Subtract any right the issuer holds, such as a call.