IBD Technical Interview Drills

Reviewed by Fallon Han· Updated 2026-06-01 06:06:45.969

This conversation was generated using Cook'd AI's career assistant and reviewed by Fallon Han from our editorial team for accuracy.

I am a final-year economics student in the UK on a Graduate Route visa, and I want a realistic first-round interview for IBD analyst roles at bulge bracket banks. Please make this a very technical mock focused on merger valuation, accretion and dilution, and fast market-sizing follow-ups. I want to answer under pressure and get instant critique after each response.

Understood. I will run this like a real first-round IBD interview for a BB bank. I will keep the pace tight, push on deal mechanics, and after each answer I will give direct feedback on structure, accuracy, and what would have scored better. First question: Walk me through, at a high level, how you would value a target in an M and A deal, and then explain which valuation method you would prioritize for a UK listed target with limited public comps.

I would start with a DCF to estimate intrinsic value using forecast FCFs discounted at WACC, then look at trading comps and precedent transactions to triangulate valuation. For a UK listed target with limited public comps, I would probably prioritize precedents and maybe use a DCF as a cross-check because it captures standalone value and long-term assumptions.

Good structure, but a bit generic for a first-round IBD answer. What was strong: - You named the main valuation methods quickly - You correctly used DCF, trading comps, and precedents in the standard order What needs tightening: - For a listed target, trading comps are usually more relevant than precedents for current market value, while precedents help show control premium and paid multiples - Saying you would prioritize precedents because comps are limited is not ideal unless the company is truly unique or illiquid - A stronger answer would mention enterprise value, if there are synergies, and whether the buyer is strategic or financial Improved version: For a UK listed target, I would usually anchor on trading comps and DCF, then use precedent transactions to assess control premium and likely takeout range. If the business has stable cash flows, DCF is useful as a sanity check, but market-based methods are typically more relevant in live M and A pricing. Next question: Assume Buyer A wants to acquire Target B for 10.0 billion pounds using 60 percent stock and 40 percent cash. Buyer A has 1.0 billion shares outstanding at 20 pounds per share, net income of 2.0 billion pounds, and Target B has net income of 300 million pounds. Ignore synergies and financing costs. Is the deal accretive or dilutive? Talk me through the logic before calculating.

Since the buyer is using stock and cash, I would compare pro forma EPS to the buyer's standalone EPS. Buyer A's EPS is 2.0 pounds, because 2.0 billion net income over 1.0 billion shares. Target B's purchase price is 10.0 billion, so 6.0 billion stock and 4.0 billion cash. At 20 pounds per share, the buyer issues 300 million new shares. The combined net income would be 2.3 billion, and shares would be 1.3 billion, so EPS is about 1.77 pounds. Since that is below 2.0 pounds, the deal is dilutive.

That was solid and mostly correct. What you did well: - You used the right EPS framework - You correctly separated stock and cash consideration - Your dilution conclusion is correct Small corrections: - You should mention the cash portion is funded with cash or debt, and if you ignore financing costs, cash itself does not affect shares outstanding - The 6.0 billion stock at 20 pounds implies 300 million new shares, correct - Pro forma EPS is 2.3 billion divided by 1.3 billion, which is 1.769 pounds, so yes, dilutive How to sound sharper: State the formula first, then calculate fast. Now a more difficult follow-up: What if Buyer A can realize 200 million pounds of annual synergies, but there are also 100 million pounds of after-tax integration costs in year one. Assuming all else stays the same, would the deal likely still be accretive or dilutive on a steady-state basis, and why?

In steady state, I would focus on the recurring synergies and ignore the one-time integration costs after year one. So the incremental net income from the deal would be Target B's 300 million plus 200 million synergies, which equals 500 million. Pro forma net income becomes 2.5 billion, and with 1.3 billion shares, EPS is about 1.92 pounds. That is still below 2.0 pounds, so it would remain slightly dilutive on a steady-state basis.

Good answer, and your arithmetic is right. What was strong: - You distinguished between recurring synergies and one-time integration costs - You correctly judged steady-state accretion based on ongoing earnings, not year-one deal costs What to improve: - Be careful saying you should "ignore" integration costs. In a real accretion/dilution analysis, year one is often still reported separately, because those costs affect near-term accretion - You should explicitly say that the 100 million after-tax integration costs make the deal even more dilutive in year one - Since the steady-state EPS is 1.92 versus 2.00, your conclusion that it remains slightly dilutive is correct Fast market-sizing follow-up: Estimate how many investment banking analyst hires a bulge bracket bank in London might make across M and A, ECM, and general coverage in a year. I do not need perfect accuracy. I want your assumptions and a quick estimate.

I would estimate maybe 80 to 150 analyst hires in London across those groups for a bulge bracket bank. My reasoning is that each product or coverage team may take a small class, perhaps 10 to 20 analysts, and a large bank in London probably has several teams. If I had to give one number, I would say around 100 analyst hires per year.

Reasonable estimate, but you can make it more interview-ready. What was good: - You gave a range and then a point estimate - You did not overclaim precision What would score better: - Break the estimate into parts: for example, 20 to 30 in M and A, 20 to 30 in ECM, and the remainder in coverage and other groups - Tie it to class size and the number of teams, not just a broad guess - In a London BB context, 100 is plausible, but your range is a bit wide without a clearer framework Stronger version: I would estimate around 80 to 120 analyst hires annually in London across those areas, with M and A and ECM taking smaller classes and coverage accounting for the largest share. Final technical question, and keep it concise: If the target trades at 12 times EBITDA, the buyer trades at 10 times EBITDA, and the buyer issues stock at a higher multiple than the target, what is the basic intuition for why a stock-for-stock deal may be dilutive even before synergies?