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If you’ve ever interviewed in Europe, you might have lingering nightmares about case studies in interviews and at assessment centers.
But the contagion is spreading!
Over the years, more students and professionals at all levels – in all regions – have been receiving case studies and modeling tests as part of the interview process.
If you approach them incorrectly, they could sink your chances.
But if you do them correctly, they might be the difference between “Offer” and never hearing back from the bank:
Types of Case Studies
You can divide case studies according to two main categories:
- Type: Qualitative or quantitative. Do you read information and make a recommendation, or do you build a model and calculate numbers?
- Time: Do you have 5 minutes? 30 minutes? 2 hours? 1 week? Shorter case studies are “speed tests,” while longer ones are more about your thought process and presentation skills.
For investment banking, specifically, these types of case studies are most common:
- 3-Statement Models – You might receive a company’s financial statements in Excel and then get 20-30 minutes, up to 2-3 hours, depending on the complexity, to build a 3-statement projection model for the company.
- Qualitative M&A Discussions – Should Company A acquire Company B, C, or D? What are the key deal issues that might come up? Sometimes you’ll have to back up your reasoning with simple calculations, but you’ll rarely build complex merger models due to time constraints.
- Financing Discussions – Should Company A raise Debt or Equity to fund its planned acquisition or expansion? You can’t make this type of recommendation without looking at the numbers, so these case studies will be more quantitative.
LBO case studies are possible, but more likely for experienced candidates.
I haven’t seen that many examples of time-pressured valuation/DCF-based case studies. They tend to be more common in investment banking case competitions, where you work in a team and you have days or weeks to finish.
The case study I’m covering here is based on a 3-statement projection model for Illinois Tool Works [ITW], a mid-sized manufacturer.
It falls squarely in the “speed test” category since it’s a 30-minute case:
YouTube Tutorial and Step-by-Step Walkthrough:
What Are They Looking For?
Bankers do not expect perfection with any of these tests.
In fact, standards are quite low because most people do not even finish!
Interviewers want to verify that you understand the basics and have a strong enough foundation to learn more.
The biggest mistakes in time-pressured cases studies include:
- Over-Thinking or Over-Complicating the Assumptions – You are completing a speed test, which means you have to go against your perfectionist/OCD tendencies.
- Not Understanding the Type of Case Study – Many people attempt to turn qualitative cases into quantitative ones, or vice versa.
- Not Finishing – If you don’t finish, you won’t be able to answer follow-up questions or present your findings. So, if you get a modeling case study, you better know the most common Excel shortcuts.
Take Me to the Examples and Walkthrough, Please
This case study is a bit tricky because they’ve given us some, but not all, of the assumptions:
The perfectionist/OCD way to handle that is to over-think minor details, such as whether you should use an average for Days Sales Outstanding or make it increase gradually over time.
The correct way to handle that is to make a quick decision and move on, so you actually finish in 30 minutes.
For this case study, we recommend the following completion order:
- Fill Out All the Assumptions First – You don’t want to jump between schedules constantly if you can avoid it – each jump costs you precious time.
- Fill Out the Entire Income Statement – See above.
- Fill Out What You Can of the Balance Sheet – This approach breaks down when you get to the Balance Sheet because some BS line items depend on IS line items, but others will be linked to the CFS.
- Fill Out the Entire Cash Flow Statement – Items here are simple percentage assumptions, absolute numbers, or reflections of changes in Balance Sheet line items.
- Finish Linking the Balance Sheet – Go back and complete the items that link to CFS line items. Cash and Equity should make the Balance Sheet balance.
- Check Your Work and Answer the Questions (If You Have Time) – If the Balance Sheet doesn’t balance, you need to find the error quickly.
I’m not going to do a step-by-step walkthrough with screenshots of everything because that’s better done in video format.
But I will highlight the tips and tricks you can use to finish these tests on time:
1) Don’t Enter Unnecessary Information
In time-pressured cases, every second counts. You can’t spend time entering data or formulas that are not required, or you’ll never finish.
Here’s an example:
2) If a Scenario Won’t Come Up, Don’t Build a Formula to Handle It
The perfect example of this one is the Amortization formula for the Debt:
It’s better to use a MIN formula to ensure that we never amortize more than the total remaining Debt balance.
But it’s irrelevant here because 5 * 10% = 50%, and there are no optional repayments, so that outcome is not possible; entering a MIN formula would waste precious seconds.
3) Use Beginning Balances to Avoid Circular References
Note that in this model, circular references could come up with Interest Income, but not Interest Expense, since the change in Debt is not linked to Net Income.
Still, we avoid this potential problem altogether by using the Beginning Balances to calculate the Interest Income and Interest Expense:
Using the Average Balances would be more accurate, but, at least for Interest Income, it would introduce a circular reference and make the model more unstable.
You do NOT want that in a time-pressured case because one small mistake or modification could cause a cascading series of #REF! errors throughout the model.
4) Fill Out the Entire Column First, and THEN Copy It Over
ITW’s Income Statement has 17 rows.
You could fill in the projection for each line item (Revenue, COGS, etc.), copy it across with Ctrl + R, and then move to the next row and do the same thing.
But it’s much faster if you finish the entire projected column first and then copy over that entire column:
This point might seem minor, but 5 vs. 85 keystrokes could represent 1-2 minutes of lost time, which is a lot for a 30-minute test.
5) Look at the Color Coding of Cells for Hints
If you don’t know if something should be an average or a hard-coded number, you can often look at the color coding of cells to figure it out: Black for formulas, blue for hard-coded numbers, and green for links to other worksheets.
You can enter dummy values into cells and see what font color comes up:
6) Remember the Rules for BS/CFS Links
I’ve seen a lot of mistakes with signs on the Balance Sheet.
Students often try to “figure out” if they should add or subtract when a Balance Sheet item depends on the same item in a previous year and a line item on the Cash Flow Statement.
But that’s unnecessary: If you’re linking to a Cash Flow Statement line item, and you’re on the Assets side of the BS, you subtract the CFS line item; on the L&E side, you add it.
If you know this simple rule, you can avoid headaches by minimizing the number of decisions you have to make.
7) Make Equity Your “Catch-All” If You Don’t Know Where Something Goes
You may not know what an item on the Cash Flow Statement flows into on the Balance Sheet: Where do “Other Non-Cash Items” and “Other Financing Items” go, for example?
The truth is, those items probably flow into multiple different Balance Sheet line items.
But doing that in a time-pressured test is a recipe for disaster.
If you don’t know where something goes, and especially if it’s small, non-recurring, or 0, make it flow into Equity:
There are some limits to this strategy: For example, you can’t take items that obviously flow into something else (like CapEx and Depreciation for PP&E) and link them to Equity.
But for small, non-recurring, or zeroed-out line items, this trick works well.
How Do You Improve Your Ability to Complete Case Studies?
A lot of people say, “Practice,” and I partially agree with that.
But you need deliberate practice as well.
It’s best to get actual case study examples rather than picking random companies and building models for them because:
- The focus is different. If you build models for random companies, you’ll spend a lot of time searching for data and adjusting the financial statements. But time-pressured case studies rarely, if ever, ask you to do that.
- It’s hard to “come up with” the right scenario to analyze. If you don’t pick the right company, the answers to questions such as the best acquisition candidate or Debt vs. Equity will be too easy or too difficult.
Putting It All Together: What You Need for IB Interviews
Over the past few weeks, we’ve covered topics related to the qualitative and quantitative side of interviews.
Here are the most important tasks to complete, even with extremely limited time:
- Draft Your “Story” – You need a 100-150-word outline and a 200-300-word full version.
- Outline Your 3 “Short Stories” – You can use these to answer questions about your leadership skills, work experience, challenges, failures, etc.
- Select 3 Strengths and 3 Weaknesses – These are what you say in an interview, not your real weaknesses.
- Prepare for the Top 3 Objections Bankers Will Raise About Your Background – Compare yourself to the “Ideal Candidate” that bankers are seeking, and see where you come up short.
- Look Up 1 Deal the Bank Has Worked on Recently – You need to walk in knowing something about the bank and group, or the interview is over.
- Prepare for 1 In-Depth Deal/Market/Company Discussion – We didn’t cover this topic in this series, but previous articles on deal discussions apply.
- (If Applicable) Prepare for 2 Discussions of Your Own Deals – If you’ve had previous IB, PE, or Big 4 experience, you must to be prepared to discuss a few deals you have worked on.
- Learn as Much as You Can of the Technical Side – It’s not possible to “learn” everything in a day or a week. But you can focus on the most important concepts (accounting and valuation/DCF analysis) and get decent results even if you have limited time.
You can finish almost everything on this list, except for the last item, in 1-2 days.
None of it requires advanced math, an Ivy League degree, or connections to rich and powerful people.
So, get started – no excuses.
Series – Interview Prep:
About the Author
Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.
On an MBA Course
Inna Semenyuk is currently enrolled on the full-time MBA programme at Imperial College Business School. She's spent the last 9 years in marketing communications and feels that the MBA at Imperial will help her to consolidate her career aspirations.
What have you been doing since graduating from your Bachelors degree?
- Having graduated from Moscow State University, I enjoyed 9 year-long marketing communications career. I was happy not only to be responsible for the company’s client relationships and new business, but also for the overall performance in Russia as I took on the Chief Operating Officer role at Grayling in Moscow.
- Having worked and lived in Russia for most of my life, I moved to London with the communications agency I have been working with to run creative marketing communications strategy for British Airways as well as run the agency’s key client programme and new business.
Why did you decide to study for an MBA?
- Throughout my marketing communications work experience I have always been interested in deeper insights of the business – whether it is developing a campaign that connects with a company’s business objectives and really getting under the skin of the client’s business, to understanding how PR agency business operates in order for my work to be more effective and bring more value. That way it was also much more exciting and rewarding for me as I could see the real value I could bring to the businesses. I thought that the natural enthusiasm and ability to learn was great, however it would be at its best when supported by an MBA education which provides unprecedented learning experience and expanding one’s knowledge about the businesses.
- Having studied the MBA market for some time, I was confident that having chosen Imperial I am going for one of the world's best MBA programmes that will help me achieve my personal and career goals – and so far my experience at Imperial Business School has definitely proven me right.
Why did you apply to Imperial?
- I studied the business school market for some time before making the decision to apply for Imperial College MBA. I considered international ratings, MBA programme's content, post-MBA employment ratings and most importantly, the reputation and feedback from the alumni.
- I already heard a lot about Imperial College Business School and had a few people providing very positive feedback about their experience there.
- I have been impressed with the professors' personalities and experience - the School attracts leading talent from all over the world.
- It also has a variety of electives reflecting the needs of the modern business world, and boasts a strong career service, enabling students with tools to progress in their career.
- The school also runs an International Exposure Week, providing an amazing opportunity for students to visit two emerging markets - China or Brazil.
How did you research where to study?
- I have been looking at Financial Times ratings and major international ratings for the business schools, as well as speaking with people within my network who did an MBA at top business schools in London.
- I have also paid attention to the schools’ social media channels and researched feedback the alumni were providing about their experiences.
- The programme and the teaching/professor team has also been one of the most important criteria for selecting the school – and in my opinion Imperial Business School is the best fit for me in terms of my existing experience and career aspirations.
How did you prepare for the GMAT?
- There is a GMAT waiver at Imperial Business School for the candidates that demonstrate high academic achievements, as well have over 6 years of experience and score high during the interview process. That was exactly my situation and therefore I did not have to provide a GMAT score within my application for Imperial Business School.
What did you write about in your admissions essay?
- My admissions essay was a reflection on my experience and aspirations and how this means I would fit into the Imperial ethos. In my opinion, Imperial College has a unique position of being one of the leaders in innovation and it makes a significant impact on the Business School’s programme – it is very interactive, brings enormous practical value and brings the best academic and business minds together. My essay therefore was an observation of these advantages and synergies and why I would love to study at Imperial Business School and what is special about me and my experience and why the school should accept me for the programme.
Do you have any advice for people struggling to write their essay?
- In my experience, writer’s block is absolutely natural in the situation when one is making a big change like leaving their job behind and embarking on an MBA programme. Dramatically changing one’s life is not easy and indeed it is very challenging to summarise one’s aspirations in a couple of pages of text.
- I would recommend starting with talking to a family member or a friend and telling them why you would like to do an MBA. Do it a few times – and you will see how the less important items are not making it to the next round and how you are focusing on what’s really important.
- Once you are familiar with what you want to say – write it down. Then leave it, sleep on it, open in the morning, read, edit – essay done.
What are your family’s and friend’s opinions on you embarking on such a challenging programme?
- My family and friends have been and still are very supportive of me embarking on the programme as they see the value it will bring. It’s not easy for them to face the fact that I see my cohort, professors and books much more often than my family and friends, but I think they understand.
Are you enjoying the programme?
- The MBA is an extremely challenging, yet rewarding and enriching experience. It is indeed hard to digest big amounts of information – however you learn so much and expand your knowledge and horizons significantly – it’s absolutely worth the effort. I personally enjoy the challenge and in fact would find it discouraging if it was too easy to study – it would simply mean I am not learning much. To go further you have to commit and make a significant effort – it’s never easy but very rewarding.
Do you feel the programme will equip you with the skills to apply your business knowledge in the global environment?
- Imperial MBA has an amazing international environment – it attracts best talent (both professors and students) from all over the world ensuring cultural exchange and providing insights into the aspects of managing businesses in the global environment. Combined with the Global Exposure Week (a trip to China which will demonstrate the emerging market trends in the global world), it creates a perfect atmosphere for internationally-minded people who think big.
How many hours outside of class are you putting in?
- Imperial MBA requires some serious dedication and time investment – all for one’s own good. Like most of my fellow students, I spend most of the hours outside of school reading the materials in preparation for the lectures, completing quizzes and trying to get the most of the educational opportunities the programme provides.
How is your work/life balance and do you have much time to socialise outside of class, whether with fellow students, friends or family?
- Work-life balance, in my opinion, is extremely important. In most cases studies take the priority over seeing family and friends (mostly because the programme is very intense and runs across 12 months and time pressure is very high), however the MBA programme creates great opportunities to socialise with the cohort and alumni that should not be neglected at all – as the fellow students whom we are both studying and socialising with are forming a strong network of personal and professional contacts that one will strongly benefit from going forward.
Are the school and staff well connected in the business world?
- One of the advantages of the Imperial MBA is that it has strong connection to the business world and is very valuable practically. Not only the professors are the leading names in the business world, the school often organises events securing the attendance of top business men and women.
Do you think the fees will prove worth it? Are you getting any financial help?
- An MBA is a significant investment into one’s career (one should be mindful not only of the fees but also of the living costs that are very high in London) and hence it is very important to take the most of it. It will be as worth as much as one puts into their studies.
- Financing an MBA indeed is a very sensitive area – while there is much information available in terms of consumer loans, for international students like me options are limited (for example, if I wished to have a consumer loan for my studies, I would have to do it in my own country – which means higher interest rates and commissions). Therefore the best would be to apply for scholarship and explore further scholarship opportunities available in the country where the person applying for an MBA is coming form.
What’s your plan for the future?
- MBA provides an incredible experience that starts with reflecting on one’s aspirations and career goals and getting business knowledge essential for progressing in one’s career. I feel that the Imperial MBA is helping me to understand my aspirations better, shape up my future career plans and gives me clear tools and skills that will make the new career plan work.
- It is very important to highlight that an MBA programme is not some kind of factory producing overly confident careerists. It connects you with amazing people from all over the world who form a significant part of your professional and personal network, whom you go through many challenges and exercises with together and learn a lot about yourself. It’s a tremendous life-changing experience.
Do you feel that the programme will meet your career requirements?
- In my opinion Personal Leadership Journey is one of the most valuable programmes that Imperial MBA offers as not only it taps into one’s existing knowledge and career experience, but it equips people with tools to learn more about themselves, explore and reflect on the priorities and goals in order to define further career goals and construct the career going forward.
- It is extremely valuable that the programme is a combination of one-to-one sessions with a dedicated career consultant, career intensives that provide access to other career consultants and a series or recruitment events and networking opportunities that make a full spectrum of career strategy. With such massive support MBA students only have the right to succeed in their future career choices.
Find out more about the full-time MBA at Imperial
Next page: Graham Parkhouse - Durham