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How to Answer “Why Investment Banking”?

Along with “walk me through your resume”, this is one of the questions you will always get in an investment banking interview. We already cover this question in our behavioural interview section, but since so many aspiring bankers continue to get it wrong we are expanding on the purpose of the question and what the answer should be.

There 100% is a right answer for this question, which you must tailor to your personal experience, and this is not a question that will get you the job – this is a question that will lose you the job early if you screw it up.

The answer should be “I want to work in investment banking because of 1) aspect of banking; 2) aspect of banking; 3) aspect of banking”.

We use this variant of the right answer (as an example, we are going to have the candidate come from a commercial banking background):

  1. Transactions/deals – I do have exposure to transactions such as acquisition finance, but I want to be always involved in new deals and support the deal team in making transactions happen in a dynamic environment
  2. Origination – I want to be further upstream in the process in supporting idea generation and the catalyst rather than more after-the-fact work (the financing of the transaction). I want to be the first to know about a deal and push it past the finish line.
  3. Valuation – I want to see what something is worth and use analytical skills in this regard. I like seeing what drives prices and returns and enjoy critical thinking.

Accordingly, we have successfully communicated that we want to work in a capacity that has three aspects that are intrinsic to investment banking. For your own homework, you adjust these based on your previous work experience.

If you already work in capital markets, but not banking, you focus on how you liked transactions but want to be on the banking front in the process. If you already work in corporate advisory (Deloitte/PwC/Mid-Market), you want to focus on how you want more scale and see the ramifications of deals involving public markets.

If you work on a farm, you need to talk about how the sales guy who offered you a wheat forward was neat, but you would rather buy your neighbour’s plot and fire one of the workers (synergy), selling the tractors and buying a new state-of-the-art John Deere. Never show weakness – if you have an interview, you have a shot at the offer – even if you think your experience is poor compared to the other candidates. You worked on the best farm in Canada where you learned a ton about corporate finance, period.

One of the major mistakes candidates like to make is deviating from the script because they think that their answer is too similar to everyone else’s. That’s not the right approach – there is a right answer for this question, and if everyone had a different answer half of the IB floor would be trapeze artists and bassoon players.

One answer that candidates like but is wrong is:

“I want to work with the best and the brightest because then I can work as much as I can and learn as much as I can – and there is no better spot for that as a young professional than RBC / McKinsey / Facebook.”

See the problem there? It’s not banking specific and people treat it as a fluffy answer because you could say that for practically any respectable professional career. This is not to say it would not fly in another type of interview, but bankers have heard this enough and seen enough people leave to not like it.

Why This Answer is Important

As far as behavioral or fit interview questions go, this is not unique to banking – this is a question that should and will be asked in any job interview. If you don’t have an answer that conveys an understanding of the job and a real rationale for why you want to do it, the employer will think you will either kite in a few months, not put in your full efforts or undergo additional training so you can properly understand the role.

The answer that you give is not necessarily the right answer for yourself (probably 50% of junior bankers have successfully lied past this question – although they tend to burn out before their two-year analyst contract is up), but hopefully is part of the right answer for yourself.

Get to know the answer well – we would imagine that after walking through an LBO with PIK interest and mezzanine debt Before losing the job due to fluffing this question could sting.

Related Reading for Investment Banking

Investment BankingShould You Start Your Investment Banking Job Early? · Investment Banking Teaser · Why Investment Banking? · Breaking into Investment Banking as a Big 4 Accountant in Audit · Investment Banking Credit Ratings Advisory · WACC and Optimal Capital Structure Reviews · Investment Banking in Canada ·
Matt
ex investment banking associate
https://www.linkedin.com/in/matt-walker-ssh/

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