Know Your Audience

We've spoken with readers who over the last recruiting cycle interviewed with Blackstone, JP Morgan, BoA/Merrill, Goldman Sachs, and others.

These were applicants who ranked at the top of their classes at target schools. Their resumes and cover letters were in top shape, yet they still didn't land offers.

What was the problem?

As good as these candidates looked on paper, they did not understand their audience -- the interviewers.

Here are some important insights on unsuccessful answers to the commonly asked questions in finance interviews.

(1) Why investment banking?

Unsuccessful responses:

"I want to work in an environment where I have social impact -- and given the level of capital and advisory services that your bank offers to clients, I will be in a great position to influence the financing decisions of clients."

"I like the excitement of working with smart people and contributing my background in science to conducting rigorous due diligence on target firms."

These responses, though true, do not convince the interviewers that you understand the significance of your role. Yes, banks in theory do have a social impact, but this is a macro-level view of IBD. The second answer is much more on a micro-level, but it doesn't convey a full perspective of what the IBD role entails.

In our experience, it's essential to communicate that you understand the nature of the IBD role. Here's a strong answer to the question (note that this response is more or less what we said to land offers at GS and other firms):

"As an analyst, I'm looking forward to excelling in a team culture where I get to deliver the highest-level quality in advisory and financing solutions to a broad base of clients. Moreover, from speaking with alumni who work here, I am confident that I will find the work intellectually simulating for the following three reasons..."

(2) Why Blackstone/JP Morgan/another firm?

Unsuccessful responses.

"Your firm is versatile in its specialties - from IBD to risk management."

"Blackstone is always on the top of the league tables."

If you're too broad, it becomes apparent to the interviewers that you didn't do intensive research on the bank and its reputation among those who work there.

If you're too specific, you risk the chance of being completely wrong. As the financial landscape changes, it's important to have the most current, up-to-date information on how the firm stands out.

The best way to understand your audience is to talk to people who work at the firm - get on the phone and speak with alums, friends of friends, and the like. You will pick up on what is important to employees, senior management, and ultimately your interviewers.

Preparing for Fall Recruiting

The journey to landing a summer internship at your desired investment bank or management consulting firm starts now.

There is usually a rush of students asking for help in August/September. It is better to get on the application and interview preparation process earlier. July is the ideal time to begin.

Why?

• Starting in August, bulge bracket firms have a "short list" of candidates to interview. Banks can fill up their entire classes by the end of the month.
• Many schools start in August and banks are busy preparing for on campus presentations. Their resume drop deadlines are also in August.
• If you wait to contact an alumni at a bank in August, chances are that you won't have time to develop that relationship for it to be an asset for you in the resume review round.
• For consulting, you need to practice, practice, practice! Case interviews test presentation skills, natural quantitative ability, and analytical skills. It takes time to develop and refine these skills.

Breaking in from a non-business Graduate School

From a reader:

I graduated from a top 25 public school in 2008 with a degree in Neuroscience. I will be graduating with a MS in Biomedical Science this June from a top research school (not a target). Prior to this year, I never had much exposure to the financial field. However after taking healthcare administration, management, and law courses, I found business to be much more aligned with my goals.

1. As of right now, I would ultimately like to end in finance. Does this require me to start in finance, such as IBD?

Since you will be graduating from a Masters Program in the sciences, it may be difficult for you to directly break into a finance position at a bulge bracket firm. However, alums from your undergrad are well represented at many finance firms, and it would be your best option to start getting on the phone and emailing them about your interest. The more people you talk to, the more likely it is that you will get to assess your fit for the industry and figure out exactly what part of finance (sales, trading, asset management, banking, etc.) that you would like to pursue. Once you figure that out, you will be more successful in telling your story and can begin applying anywhere and everywhere you can. Start at the local to medium sized shops, since you are graduating from a non-business oriented program. You can make the switch to banking/consulting, but you need to be strategic with how you describe the evolution of your interests and why you want to pursue those fields only now and not as an undergrad.

2. I know there are consulting firms, such as PWC, that cater towards health industries. Hopefully my experience in the medical field will help make me a stronger candidate. However will this help my application for IBD?

Yes, definitely look into consulting shops that focus on science, medicine, pharmaceuticals, and other areas that relate to your academic background. You can leverage past consulting experience in the sciences to an IBD role in technology, healthcare, or another relevant field. The transition is made easier once you have some business background on your resume.

3. How possible is it for me to get hired by top firms if I apply now?

Honestly, it's very unlikely to get hired at this moment since A. we're still in a downturn and B. most of the hiring at bulge brackets has been completed (full time hiring begins in August and finished around December). That said, if you get on the phone and tell your story to alums or your other contacts, you may have a good shot at landing positions at firms with less formal recruiting cycles. Don't just rely on submitting resumes through company websites though, as firms receive literally thousands of applications and it's difficult to be noticed that way.

How to make the most of a rejection

Summer internship interviews are well under way.

Those who will interview at bulge brackets and management consulting firms have most likely received the good news.

Some firms receive over 1,000 applications from a target school for a summer internship position. They don't even bother notifying rejected applicants of their status.

How do you get a response?

Human Resources may have passed up your resume/cover letter. When deciding who to interview, the recruiting team divides candidacy into three groups:

1. Definitely interview

2. Interview time permitting - the wait list

3. A definite no

Those who are in the waitlist bucket often did not know that they just fell short of getting the interview. It happens that one student we've worked with was in the waitlist queue at several firms.

How did he find this out? He emailed a contact he had made at a networking session about his candidacy, and followed up with a phone call - asking for his status. The contact got in touch with HR and found out that he was on the wait list. This may have been a "nice no", but the student followed up a week later and asked if he was still in the running. He didn't get the interview slot.

BUT he made the effort to ask what he could have done better. He didn't have finance experience and those who received interviews did. The student made a point to get an unpaid internship that summer, and come full time recruiting, emailed the contact he had made to let him know how his internship went. He received the full time interview, second round invite, and the offer.

I'm surprised at how few people - if any - reach out to their interviewers or recruiting teams and ask what they could have done better to get selected. Most banks and consulting firms are looking for a similar skill set, give or take, and you would have no clue how they perceive the strength of your candidacy had you not asked.

If you were just short of receiving an interview invite or the offer, follow up and ask what you could have done better. Not only does that give you the opportunity to improve for the next recruiting cycle, but I guarantee someone - HR, an alum, a contact - will remember you, and most likely give you another shot over someone they don't know.

Second Round interviews at McKinsey, Bain and Boston Consulting Group

Congratulations to those who are preparing for final rounds for the super selective summer internship spots at MBB.

It's been stated how few the spots are at these firms. There are literally only a handful at some of the smaller regional offices.

So this is what you should expect to position yourself optimally to nail the final round:

1. The second round case interviews will be more in-depth and complex in testing your business sense. The structure or framework that you use to attack the problem will have to incorporate more concepts exhaustively - being MECE will be more difficult, as the case will not be straightforwardly a declining profits, increasing cost, or merger strategy case.

2. Since the second round interviews are longer, there is more room for error in how you set up your initial plan of attack. For example, if you get a market sizing question, there will be several ways to answer it, and having the right approach is essential to doing well. These are not cut and dry the same as the Case in Point examples, as you want to essentially replicate or refine upon the market sizing approach the consultant used in his/her actual work.

3. The people interviewing you will be more senior at the firm - you are guaranteed to meet with at least one manager or partner. The more senior people will have insight on the continuity of certain people they want to hire. So, utilize the resources the firms provide you - they often give you an alumni contact or interview buddy who will go over mock interviews. They will emphasize to you the core competencies the particular firm is looking for. Thus, it's essential that you not only hit home those points, but also convey an understanding of how McKinsey is different from Bain/BCG, and vice versa.

4. Nailing the behavioral part of the interview becomes even more important in the final round. The firm is potentially hiring you as a full time employee, as the conversion ratio from internships to a FT offer is incredibly high - from 90 to 100% according to office and year. So, you need to get along with the interviewers on a more personal and conversational level.

Behavioral interviews at McKinsey, Bain and BCG

Nailing the case is necessary but not sufficient for landing you the offer, especially since there are an extremely small number of internship spots open.

The behavioral interview is just as important.

Behavioral questions are designed to see how you will perform in a professional, team-oriented environment. They also give the interviewer an opportunity to determine what your strengths and weaknesses are.

The format of the behavioral interview varies according to firm:

McKinsey has the most structured behavioral interview. The interviewer will ask you to go in depth into a leadership experience, and he or she will probe you on all the details: how others reacted to your ideas, how you were able to overcome resistance to your leadership, what the ultimate impact of your work. There are other common behavioral questions that will be asked, as leadership is one of them

Bain will take an experience off of your resume and ask you pointed questions on what you did, in the same vein as McKinsey's interview.

Boston Consulting Group asked the most questions on different experiences off interviewees' resumes. These questions were less in-depth than the previous two. These questions seemed the most "rapid fire", as the interviewers were very precise in their questioning and were looking for clarification or explanation on specific traits - leadership, collaboration, discipline, public speaking skills.

Ace eight common technical questions for finance

In preparation for those interviews, here's a list of the more technical questions you should know how to hit a home run on. These were actual questions asked at numerous bulge bracket investment banks in the past two years.

Especially if you had a behavioral / all fit first round interview, you can bet that the second round will have more technical curve balls. These were asked in both sales and trading and investment banking positions.

Share your mock answers in a comment, and we'll critique them.

1. What are the ways to value a company? Which method generally offers the highest valuation for companies?

2. How have deals in the industrials [or any other] industry been financed in the last two years? How do you predict that financing will change in 2010?

3. Explain the percentage of debt and equity used in a current M&A deal. What valuation did the target have? Do you think this was a reasonable valuation? What changes to this valuation would you have made? Why?

4. Which industry would you go long on for 2010? Short on?

5. What omissions on the financial statements led investors to believe that Lehman Brothers, Bear Stearns, and other firms were not only illiquid but insolvent?

6. What is the difference between a firm that is illiquid and one that is insolvent? Which problem was more prevalent in late 2007? Which problem is more prevalent in 2010?

7. What will be the Fed's response to continued weakness in the economy in early 2010?

8. What are regulatory problems governments are trying to resolve with impending legislation?