Knowing a formula is not enough when an interviewer changes the assumptions. Learn how to explain accounting, valuation, and deal logic clearly under pressure.
Almost every rejected candidate says the same thing afterwards: "I knew this at home." At home, you answer your own version of a question at your own pace.
In the room, a banker changes an assumption, skips the formula, or asks for the other side. Technicals are a speaking skill under pressure, which is why candidates who read hundreds of questions still freeze on a follow-up.
Start with the investment banking interview questions guide for HireVue, superday, and behavioural context. This article focuses only on accounting, valuation, and deal logic.
Start for free to map technical prep to each bank, division, and interview stage instead of working through one generic question PDF.
What interviewers actually mean by "IB technicals"
The phrase covers three topics. Accounting questions ask whether you can trace one change through the income statement, balance sheet, and cash flow statement.
Valuation questions test when a DCF, comps, or precedent method fits and when it misleads. Deal and credit questions use accretion, an LBO sketch, or covenant headroom to test decisions under imperfect information.
Strong candidates treat all three as spoken reasoning rather than silent memorisation. When an interviewer asks what happens if tax is zero, they are checking whether your explanation survives a changed assumption.
Depth also shifts by division. A markets superday may stop at commercial awareness and product questions, while M&A or leveraged finance often pushes all three topics. Match your preparation to the division, not the longest PDF you found.
How technical rounds are actually scored
Interviewers want to know whether you can trace downstream effects, state assumptions, recover when challenged, and explain technical ideas in plain language.
Strong answers have a clear sequence and explain why something happens. Weak answers wander, dump formulas without context, and freeze when the scenario changes. Build your preparation around those signals rather than the number of questions completed.
Building fluency without flashcard burnout
Live interviews reward verbal reasoning under interruption, not silent recall, so treat prep as a speaking exercise from day one. Speak before you read: two timed verbal answers daily, recorded on your phone, expose gaps that flashcards hide. Add one twist to each question by changing tax, leverage, or working capital after the walkthrough. Rotate topics across the week and keep an error log so the same superday failure does not repeat itself.
A workable weekly minimum is ninety minutes: thirty minutes on three-statement twists (see our three statement interview questions guide), thirty minutes on valuation scenarios like DCF direction and comps sanity checks, and thirty minutes on a mixed mock with a peer who interrupts you every twenty seconds. If you only have one week before a superday, flip that ratio to two-thirds timed mocks and one-third reading.
Answering technicals when you get interrupted
Most technical prep online is static, flashcards, PDF lists, YouTube walkthroughs, but live rounds are dynamic. Interviewers interrupt, swap assumptions, and ask "why" before you finish the algebra. A three-beat verbal structure survives that better than a memorised paragraph: frame the question in five to ten seconds by naming the bucket and your starting assumption, walk the mechanism in forty-five to sixty seconds in plain language before any formula, then check for ten to fifteen seconds by stating what would change the conclusion.
For "depreciation rises by ten pounds," start by calling it a non-cash income statement charge. Net income falls unless the tax shield offsets part of the change. Cash flow from operations adds depreciation back, while PP&E falls on the balance sheet.
If the interviewer adds debt financing, include interest expense and the cash interest payment. If tax becomes zero, remove the tax effect and keep the rest of the linkage.
Practise with a friend who can interrupt every twenty seconds. If your logic survives those changes, you are ready for the interview rather than only ready to read the answer.
How deep technicals go by stage
Technical depth changes by stage. A first phone screen usually stays light, with accounting one-liners, an EV bridge, and clear communication.
A second round adds changes to linkage and DCF questions. A superday for IB and leveraged finance can add mixed mocks, paper LBO direction, and division-specific judgement. Markets routes often put more weight on commercial awareness. Before a phone interview, do not spend three days on paper LBOs unless the team tests sponsor-style maths.
Equations to know and how to practise them
Candidates search for equations because bankers expect them to explain maths without opening Excel. The full equation table and second-round follow-ups live in our investment bank second-round guide. Start with three formulas you should state quickly: the enterprise value bridge, unlevered free cash flow as the DCF building block, and WACC as the discount rate linking risk to value. If your interview is within two weeks, rehearse each one out loud and explain why it matters.
Three-statement linkage: the non-negotiable foundation
Most technical interviews still begin here because it is the fastest way to test whether your thinking is grounded. For scenarios, follow-up changes, and a one-week plan, see our three statement interview questions guide. Start with a non-cash charge such as higher depreciation, then practise working-capital and financing changes. State tax, timing, and whether cash moves before the interviewer asks.
A useful daily routine is twenty minutes: ten minutes of verbal walkthroughs, ten minutes of interviewer-style twists. If your explanation cannot survive a basic twist, it is memorised rather than understood, and the gap will show up in front of a banker eventually.
DCF intuition without hiding behind algebra
You do not need to derive every equation from scratch in an interview. You do need to explain why discounted cash flow works: enterprise value comes from future unlevered free cash flow, the discount rate reflects risk and opportunity cost, and terminal value can dominate if assumptions get sloppy. Interviewers often ask which assumptions are fragile or when a DCF becomes less credible. For a focused explanation and one-week practice plan, see our DCF interview questions guide.
M&A technicals as a logic test, not a formula test
M&A questions are not only about landing on a final accretion or dilution percentage. They test value transfer and financing trade-offs: why a strategic buyer might pay more than a sponsor, how financing affects EPS, and where integration risk can damage the economics. Define the objective, list purchase price, financing, synergies, and amortisation, then state what likely happens and why. For focused practice on these drivers, see our accretion dilution interview questions guide.
Paper LBOs matter even outside sponsor groups
Many candidates postpone LBO work because they expect it only in private equity interviews. A paper LBO also tests leverage intuition, returns thinking, and mental arithmetic in generalist IB interviews.
You do not need a full spreadsheet. Use entry value and leverage, cash generation and debt paydown, then exit assumptions and a rough IRR range. The paper LBO interview guide builds speed and rounding discipline.
Sample questions and the frameworks that survive follow-ups
Generic question banks list prompts without structure. Use these frameworks instead, so a follow-up does not collapse your answer.
| Question | Strong opening and likely follow-up |
|---|---|
| Walk me through the statements if depreciation rises by £10 | Start with the non-cash charge, CFO add-back, and lower PP&E. Expect a change to tax or financing. |
| How do you value a company? | Choose methods for the sector and available data, then sanity-check them. Expect a question about when DCF fails. |
| What happens to WACC if rates rise? | Cost of debt and equity tend to rise, so DCF value falls, all else equal. Expect a sector comparison. |
| Is the deal accretive or dilutive? | Compare pro-forma EPS with standalone EPS using price, financing, synergies, and amortisation. Expect delayed synergies. |
| Is 12x EV/EBITDA expensive? | Compare peers, history, growth, and risk. Expect leverage to change the conclusion. |
| Sketch a paper LBO | Use entry value, debt, cash generation, debt paydown, exit value, and rough IRR. Expect exit multiple compression. |
Practise each row out loud with a timer. Ninety seconds is the target length for second-round and superday technical slots; shorter is fine as long as the logic stays crisp.
Division-specific depth: M&A, markets, and leveraged finance
Not every desk tests the same stack, so align prep with the division on your application tracker rather than a one-size-fits-all pack.
| Division route | Technical emphasis and depth |
|---|---|
| M&A / coverage | Three statements, valuation, accretion or dilution, and deal judgement. Medium to high from second round. |
| Leveraged finance / DCM | Leverage, coverage, covenants, and downside cases. High depth, overlapping with credit interview questions. |
| ECM | Comps, market timing, dilution, and investor positioning. Medium depth with less full LBO work. |
| Sales and trading | Macro, product basics, and commercial awareness. Lower pure accounting depth. |
| Restructuring | Downside cases, capital structure, and liquidity. High judgement depth. |
If you are interviewing across divisions, keep one accounting base and swap the top layer: an ECM candidate still needs EV bridge fluency, and an S&T candidate still needs clean verbal communication when a macro follow-up arrives. Bank-specific processes weight these differently too; UBS global banking and Deutsche Bank IB paths typically test technicals from second round onward, while markets routes lean commercial awareness over full LBOs.
Quick reference for the night before a phone screen or superday
Say each line out loud once. If you stumble, practise that topic in the linked guide before your next mock.
| Topic | Answer skeleton and deep dive |
|---|---|
| D&A +£10 | Income statement down, CFO add-back, PP&E down, cash unchanged unless tax shifts. See the three statement guide. |
| EV bridge | Equity value plus net debt and relevant adjustments. See the valuation guide. |
| DCF | Unlevered FCF, WACC, terminal value, and sensitivity. See the DCF guide. |
| Accretion / dilution | Pro-forma EPS against standalone EPS using price, financing, and synergies. See the accretion guide. |
| Paper LBO | Entry leverage, cash flow paydown, exit multiple, and rough IRR. See the paper LBO guide. |
| Credit downside | Leverage, interest coverage, liquidity, and covenant headroom. See the credit guide. |
A four-week plan if interviews are already moving
Give week one to accounting fluency with three-statement questions every day. Give week two to valuation intuition, DCF assumptions, comps logic, and sanity checks using our valuation interview questions guide. Give week three to M&A accretion or dilution and mini cases. Give week four to timed mixed mocks that include paper LBO direction. Record two answers daily, keep an error log, and retest weak topics within seventy-two hours.
Mistakes that cost offers
Most technical rejections are process failures, not intelligence failures. Memorised answers break on the first follow-up, so lead with the logic and state assumptions early.
Perfect precision can slow your thinking and increase errors. Use sensible ranges and explain the direction first. Speak answers out loud so your knowledge does not stay silent under pressure.
Prioritise your weakest topic before a final round. Drop the habit of collecting new question lists. Two timed answers each day, matched to the firm and division, will do more for you.
What to do after reading this
Studying investment banking technical interview questions this cycle? Practise interrupted answers out loud, then map prep to the stage of each live application.
Return to the 400 IB questions / investment banking interview questions guide when you need process context across behavioural and technical stages. For paper LBO maths, use the paper LBO interview guide.