When David Capaldi joined the Johnson School of Management at Cornell last year, after a long career as an investment banker, he found that MBA students were worried about their Wall Street job interviews.
That was partly because the banks were moving their interview schedules forward from January and February into December, says Capaldi, associate director of career management at the B-school. “People had counted on studying up on possible interview questions during the January break, and suddenly they didn’t have that time,” he says.
Not only that, he adds, but some MBA students are changing careers, going into finance from another field, and fear that their finance skills are a little shaky.
So Capaldi teamed up with Knopman Marks Training, a New York City firm that has been helping people cram for the Series 7, Series 24, and other FINRA exams for the past 20 years. The result is an app, called Cornell-Knopman Interview Prep for IB. It’s available as a free download from the Apple App store.
The app offers hundreds of technical questions like this one:
Executive Transport Inc. is considering buying Startup Transport Inc. Precedent transactions have been executed at 6.7x EBITDA. Startup Transport has 54 million shares outstanding, LTM EBITDA of $126m, net debt of 97m, and cash of 12m. Based on the median of the precedent transactions, what is a reasonable acquisition price per share for Startup Transport Inc.? (Answer below.)
Knopman Marks principal Brian Marks sees another use for the app, besides giving Wall Street hopefuls’ technical knowledge a workout. “Interviews vary so widely from one firm to another, and even one candidate to another, that you may not get that many technical questions,” he says. “But if you’re worried about the technical part, it will make it harder to concentrate on the rest of the conversation. So going in prepared is a confidence-builder—and, in any job interview, confidence is about 80% of the battle.”
Ready for the correct answer to the question above? It’s $13.84.
Here’s how the app explains it: Applying the 6.7x precedent transactions multiple to Startup Transport Inc.’s LTM EBIDTA gives an EV of 6.7 x 126 = 844.2. Market cap = EV – net debt = 747.2. (Note that cash is not required explicitly, it is baked into the net debt.) Share price = market cap/shares outstanding = 747.2/54 = 13.84.
But you knew that, right?