How to Learn Technicals for Investment Banking

In this article, we’ll walk you through how to learn technicals for investment banking. We are gearing this article towards college freshmen & sophomores and first year MBA students. The advice we share with you will give you a blueprint to efficiently learn technical (saving time and money). We’ll also teach you how to think critically as a consumer about all the different course products in the market.

Clarifying the Objective

The first thing you should do is to understand your objective. For the vast majority of you, your objective is to win an investment banking internship offer. Prep activities that help us achieve this objective, do. Prep activities that don’t help you achieve this objective, don’t do.

How is technicals relevant for this objective? It’s relevant because technicals is one of the two main question topics in interviews. The other topic is behavioral.

In order to win investment banking internship offers, you have to pass interviews. And to pass interviews, you have to be strong with technicals.

How to Learn Technicals for Investment Banking

So, how do you learn technical for investment banking interviews? Since 10X EBITDA’s founding in 2016, we’ve helped many clients win top IBD SA offers. Here is how we guide them to become good at technicals. For each step, we tell you exactly which resource to use. This prep stack alone is sufficient to get someone good enough with technicals to pass Goldman Sachs interviews.

Step 1A: Gain conceptual understanding of core topics. Use Financial Modeling Course ($79).

Step 1B: Gain mechanical understanding of core topics. Same resource as Step 1A.

Step 2: Review technical interview questions. Use Core Technicals Guide (Free).

Step 3: Do mock interviews. Practice it with friends and peers (Free).

That’s it. The above resources are all you need to learn technicals for interviews. In terms of time and money, it’ll take you 2-3 weeks and cost only $79 in total.

Bet you didn’t know learning technicals can be that convenient.

By contrast, if you google investment banking prep, you’ll find websites that want to sell you courses for hundreds of dollars. They make learning technicals appear as if it takes an extensive amount of time. If you buy multiple courses here and there, it will take you years to finish. Cost can easily add up to $1,000.

We’ll discuss these steps in greater depth below.

How to Learn Technicals for Investment Banking: Step 1A and Step 1B

Step 1A: Gain conceptual understanding of the core topics. For investment banking, you need to understand the concepts of 6 main topics. They are accounting, valuation metrics & multiples, capital structure, DCF, LBO, M&A. Just these 6 topics. That’s all.

Step 1B: Gain mechanical understanding of the core topics. Ultimately, investment banking applies the concepts mentioned in Step 1A through financial modeling in Excel. You should learn how to do this so that you can elevate your understanding of the 6 core topics. Without this step, everything you learn in Step 1A will remain very abstract. With this step, the things you learn in Step 1A will become a lot more substantial and concrete.

We recommend you to use Financial Modeling Course. The course is taught by a Goldman Sachs investment banker. You’ll learn how to do things the way it’s done at Goldman. Using this course, college freshmen and sophomores with no prior finance background can finish Step 1A and 1B in 1-2 weeks.

One thing to bear in mind is that you should do Step 1A and Step 1B for each concept, BEFORE moving onto the next concept. In other words, Step 1A and Step 1B are done in parallel. For example, if you are learning about 3-statements, you should learn its concept and then how to model it. Then, you move on to the next concept.

What you shouldn’t do is doing this sequentially where you finish Step 1A for all 6 topics and then start Step 1B from the beginning for all 6 topics. That will be very inefficient.

If you use the course we recommend, you should just follow the program’s flow. The course has a curriculum that covers Step 1A and Step 1B for each concept.

How to Learn Technicals for Investment Banking: Step 2 and Step 3

Step 2: Review technical interview questions. This part is very straightforward. Take a look at the common technical questions that interviewers ask in investment banking interviews. We have the Core Technicals Guide on our website and you can also download it as a PDF. We’ll regularly update it with more technical questions that come up in interviews. This is a great starting point to apply what you learned in Step 1 in an interview style Q&A format.

Though this part is very straightforward, it’s not really simple. When you’re doing Step 2, you have to appreciate not only the content of the response but also the delivery. Ultimately, the quality of your response is a function of content (right or wrong) and delivery. Every response written in the Core Technicals Guide is representative of an answer that we’d approve in our private coaching. We spent A LOT of time being thoughtful about how to craft the delivery so that it makes the candidate come across as technically fluent and masterful.

In other words, when you’re working on Step 2, you have to learn not only how to apply the concepts to solve the common technical problems, but also how to deliver them fluently.

Step 3: Do mock interviews. You should practice with friends and family. Find people to do mock interviews with and listen to their feedback. This puts you under live fire and helps you mentally acquaint with thinking through technical problems in an interview environment. Equally important, mock interviewers can point out critical flaws that you might not be aware of.

How to Pick the Right Course to Learn Technicals

There are countless courses being marketed that prepare you for investment banking technicals. Not all courses are created the same. We’ll help you understand how to think critically as a consumer about these courses.

Content Extensiveness is a Common Pitfall

First, pay attention to how extensive the content is. “This course has 200 hours of content”. Or “you’ll gain access to 20 PDF files with over 3,000 pages”. If you don’t think critically about this, you might be tempted to think the more extensive the content, the more bang for your bucks.

In the early 2000s, when this industry first began to develop, content extensiveness was a good thing. Back then, there were little to no content available. So, course developers wanted to cover as much ground as possible. However, over the past 20 years, as courses market how much content they have, course developers started to jam more and more peripheral and obscure content, increasing the size of the course so that it appears more impressive.

The problem? The content is overwhelming. You spend hundreds of dollars to buy a course. Now you have to spend hundreds of hours learning peripheral and obscure concepts. Most investment banking technical interview questions focus on the commonly utilized concepts. These concepts don’t take that long to learn. However, the courses will spend disproportionate amount of time on obscure technical concepts (i.e. how to build this super granular schedule to reflect this random M&A rule to calculate tax-deductibility of this expense) that you’ll probably never use. As a result, so many students come to our interview coaching program having already spent close to a thousand dollars on courses AND STILL not technically strong. Why not? It’s because the money and time were all spent on PERIPHERAL and OBSCURE technicals.

The Financial Modeling Course we recommend you to use above focuses on things that come up in interviews. The instructor focused extensively on teaching the concepts as concisely as possible. It helps you become strong at technical and respects your time and money.

Learning Effectiveness is Not the Same

Second, not all courses are created equal in terms of the learning effectiveness.

You might notice see that most courses divide the curriculum into modules with names that reflect the core topics (i.e. Module 1: Financial Statements; Module 2: Discounted Cash Flow; Module 3: M&A). The reality is that most college freshmen, sophomores and first year MBA students are beginners without industry experience. And so as go about selecting a course, you naturally do word association – whether the courses cover these topics that you know are important for investment banking interviews.

The problem? The logical flow of finance is not divided along these lines. These are important skillsets but they are not representative of the logical flow of technical. And so when you take the course, it takes a lot longer for you to piece everything together and make sense of everything.

By contrast, the Financial Modeling Course we recommend is structured to reflect the natural finance logical flow. If you take a look at the course’s marketing page, you’ll see that we tell you that the program will certainly cover all the core topics. However, the actual flow of the lessons will reflect the natural logical flow of finance. This makes the learning process A LOT more intuitive, thereby significantly shortening the time it takes to learn finance. It also makes the experience a lot more enjoyable.

How Strong is the Instructor’s Technicals?

You should pay attention to the course instructor’s background. Some investment banking courses are produced by people who didn’t even break into the top investment banks. Some are taught by people who might’ve worked in investment banking a couple decades ago. This should be an easy filter.

The Financial Modeling Course we sell on our website is taught by a former Goldman Sachs Investment Banking Analyst at one of Goldman’s top groups. By the way, here’s another big deal. In Goldman’s formal reviews, the instructor was commented as one of the group’s most technical analysts and one of the best modelers. The instructor was also staffed on some of the largest M&A deals. You’ll learn from a very technical instructor who has won offers from firms you want to join.

Right vs. Wrong

Some courses contain wrong information. There are a number of technical concepts and formulas that the most popular finance courses use that are actually wrong. This is unfortunately not something you’ll be able to tell on your own so we won’t dwell on this.

What Resources to Avoid

There’s one resource you should avoid using to learn investment banking technicals: finance books written for practitioners. These books are so dry and granular that they are HORRIBLE for interview prep.

Don’t get me wrong. They are fantastic books. A lot of them have 5-star reviews. But they are written with a different audience in mind – practitioners. They teach people already in the industry how to do things. These books are not written to teach college freshmen / sophomores and MBA students how to prepare for interview technical questions.

Conclusion

Hopefully you have a much better idea now on how to learn technicals for investment banking. If you have any questions, please contact us at [email protected].

About 10X EBITDA

We are a small team composed of former investment banking professionals from Goldman Sachs and investment professionals from the world’s top private equity firms and hedge funds, such as KKR, TPG, Carlyle, Warburg, D.E. Shaw, Citadel, etc. Our mission is to cultivate the next generation of top talent for Wall Street and to help candidates bring their careers to new heights. We’re based in the United States, but we have expertise across Europe and Asia as well.