Veritas Financial GroupIntroduction to the Financial Universe

Week 7 – Interview Prep

How to Get the Job

• Know your stuff• Foundational finance knowledge

• Submit a respectable resume• Both in appearance and substance

• Present yourself well in the interview• Both in appearance and substance

The Resume

• Generally the first thing employers look at• Sometimes the only thing they look at in making a

decision about whether to invite for interviews

• Three important areas on a student resume• 1) Education & GPA• 2) Prior work/professional experience• 3) Leadership experience

• Skills/Interests/Languages sections are also great ways for making conversation with interviewers

The Resume

• The first and most important rule:• If you can’t talk about it, don’t put it on your resume.

Period.• The only thing worse than an empty resume is a padded

resume for a candidate who can’t talk about half of the items listed.

• Do include any relevant experiences, skills, or classes

• Don’t exaggerate (think language skills)• Recruiters will be making decisions on most

resumes within 1-2 minutes!

Resume Best Practices

• Think S.T.A.R.: Situation, Task, Action, Result• Use action verbs for all of your points

• “Awarded X prize for outstanding academic performance and community leadership”

• “Developed a presentation for X non-profit organization which was presented to the leadership team”

• “Analyzed empirical data on congressional voting patterns for an academic research project”

• Clearly identify the name, location, and dates for every entry

• Variety of styles are OK, but clarity is key

“I don’t have anything to put on my resume. What do I do?!”

• You’ve done more than you think.• High school activities/events are generally fine for

freshmen/sophomores• Education should include relevant coursework,

independent studies, thesis work. GPA and SAT/GMAT/etc. optional if they are strong.

• Leadership includes on-campus orgs., summer programs, finance organizations (hint, hint)

• “Member” entries are OK, but not ideal.

Interviews & the Recruiting Process

• Typical recruiting cycle:• Resume Drop (Round 0)• On-Campus Interviews (Round 1)• Callback Interviews (Round 2)

• Different firms have different-sized “funnels” when it comes to hiring.• i.e. Some firms give lots of Round 1 interviews and cut

for Round 2; Some firms are more selective in Round 1 interviews

• Two types of interviews: fit vs. technical

Round 1 – The Fit Interview

• On-Campus interviews are generally “fit” interviews for the firm as a whole.

• Interviewer(s) will probably not be from your specific division/office/group/etc.

• Generally a single, 20 to 30 minute, 1-on-1 or 2-on-1 interview at the Charles Hotel or Harvard offices in BofA building

• Questions focus on you as a person and how you “mesh” with the firm. Are you a “fit”?

Round 1 – Sample Questions

• Walk me through your resume.

• Why do you want to do investment banking/investment management/whatever career you plan to pursue?

• Why do you want to work for <firm>?

• Why did you go to Harvard?

• Why did you major in <subject>?

• Why are you involved with <activity>?

• What’s your greatest strength / weakness?

• Tell me about a time when you failed.

• Tell me about a time you led a team.

• Give me an example of a project that you’ve done that involved heavy analytical thinking.

Round 1 – Sample Technical Questions

• How do you value a company?• What is the formula for the capital asset pricing model (CAPM)?• What are the different multiples that can be used to value a company?• What is beta?• What is the difference between a balance sheet and income statement?

How are they related?• What is EBITDA?• What is Free Cash Flow? How is it calculated?• What happens to each of the three primary financial statements when

you change a) gross margin, b) capital expenditures, c) any other change?

• Don’t worry, these are questions you’ll answer as a junior, possibly sophomore.

So…how do you value a company?• There are three primary ways to value a company:

(1) Discounted Cash Flow (“DCF”)

• Forecast Free Cash Flows for 5-10 years

• FCF = EBIT * (1-t)

+ Depreciation & Amortization

- Capital Expenditures

- Net increase in working capital

+ Other cash items

• Calculate Terminal Value

• TV = FCFYr5 * (1+g)

(r-g)

• Discount future cash flows and terminal value by the WACC

• WACC = Weighted Average Cost of Capital

• WACC = Kd * (D/D+E)*(1-t) + Ke * (E/D+E)

• Kd = Cost of Debt

• Ke (CAPM) = Rf + β*(Rm – Rf)

So…how do you value a company?

(2) Trading multiples of comparable companies

• Find comparable publicly traded companies: “comps”

• Determine relevant trading multiples (e.g. EV/EBITDA, P/E, EV/Revenue, etc)

• Apply multiple to target’s metric

(3) Precedent transaction multiples

• Find comparable publicly traded companies: “comps”

• Determine relevant transaction multiples (e.g. EV/EBITDA, P/E, EV/Revenue, EV/Reserves, etc)

• Apply multiple to target’s metric

• Note: precedent transactions include a premium for control (~20-30%)

Round 2 – The Callback

• Be prepared for a “Superday” of four to eight interviews with all sorts of professionals.• A few junior people, a few senior people, and a few in-

between.

• Many of these will be people in the group you’re interviewing for. They will be working with you throughout the summer.• Are you the kind of person who they’d want to be around

14+ hours a day?• Do you have some idea of what you’re doing, and are

you willing to learn as you go?

Interview Appearance Tips

• Wear a suit. Period. (goes for ladies and gents)• Gents: light, neutral-colored shirt. White, light blue are

always ok. Maybe light green.• Ladies: light-colored blouse. White or any light color

should do.• Avoid perfume/cologne and flashy jewelry

(watch and college ring are generally fine)• Goal: your outfit should be “polished but forgettable.”

Stand out for your dialogue and skills, not your attire.• You’re always on. Even at lunch. Remember to breathe,

and it will be over before you know it.

Do you have any questions for me?

Saying “No” is never a good idea.

• Ask questions that show you’ve researched:• Good: I’ve read that your firm has a formal mentoring

program for summer associates. Can you talk about how associates are assigned to mentors?

• Bad: Tell me about your summer program.• Good: What does the career track look like for a new

analyst? How do formal evaluations affect my level of responsibility at the firm?

• Bad: So, what’s the bonus situation like here?

Additional Sample Questions

Finance• What did the Dow close at today?• Are there any stocks you follow?• What is oil trading at?• How would you invest $100,000 for a client?• How many degrees are there between the minute and

hour hand when a clock says 3:15?

Consulting

• How long does it take that Starbucks to sell enough coffee to fill the gas tank of a Hummer?

• There’s a client with a shrinking profit margin who called us in to help. Where do we start?

Additional Sample Questions

Law School• Why do you want to go to law school?• Why do you want to go to this law school?• What areas of law are you particular excited about?

Why?

Business School (2+2)

• Why do you want to go to business school?• Are you ready for business school?• Why should we admit someone on the younger side

when we have applicants with more work experience?

FCF and CAPM

WACC