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Banking Associate Interview Questions

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Pre-deal situation BuyCo plans to acquire 100% shares of SellCo in a stock-for-stock transaction. BuyCo has a net income of $300,000 and 100,000 shares outstanding Market shareprice of BuyCo is $50.0 Pre-deal EPS = $3.0 Pre-deal P/E = 16.7x SellCo has a net income of $100,000 and 50,000 shares outstanding Market shareprice of SellCo is $60.0 Pre-deal EPS = $2.0 Pre-deal P/E = 30.0x The deal BuyCo agrees to pay a premium for control of 30%, so the offer price for one SellCo share is 1.3*$60.0 = $78.0 Stock-for-stock exchange ratio is $78/$50 = 1.56 of BuyCo shares for one SellCo share BuyCo issues 1.56*50,000 = 78,000 new shares to exchange them for all the SellCo shares outstanding Total shares of NewCo = 100,000 (pre-deal shares of BuyCo) + 78,000 (new shares) = 178,000 shares NewCo expected EPS = Total net income/Total shares outstanding = ($300,000+$100,000)/178,000 = $2.25 NewCo expected shareprice = (P/E of BuyCo)*(expected EPS) = 16.7x*$2.25 = $37.45 Post-deal situation EPS of NewCo fall from $3.0 to $2.25, so the deal is 25% dilutive for BuyCo shareholders BuyCo shareholders own 100,000/178,000 = 56.18% of NewCo SellCo shareholders own 78,000/178,000 = 43.82% of NewCo http://en.wikipedia.org/wiki/Accretion/dilution_analysis

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I got hung up on th math

Describe the LBO process?

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If you were a kitchen appliance, what sould you be?

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I was expecting very technical questions but did not get any questions i thought were hard. In retrospect, i think they expect you to be pretty smart after getting your mba from a top school. I think they were most interested in finding out if they liked you enough to work with you in a highly intense work environment where you are expected to do everything quickly and perfectly -- no fails allowed. Your resume and past experience is very important, you must have some solid accomplishments and prove it. Must be a quick thinker in the interview and don't show any weakness because this truly is a highly intense environment.

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What makes you superior to the other candidates?

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Describe how you would handle a difficult customer on the phone

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Tell me about a time....

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What was the first Mutual Fund in America? (my interviewer gave the incorrect response, Wellington Fund)

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What do you know about the company?

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Why do want to work for QL's?

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