Superday technicals

Final-round interviews for investment banking, corporate banking, research, asset management, trading, and similar finance roles are often called a Superday. You sit several interviews, one after another, on the same day. The day may include a case or a modelling test. Use what follows as a general knowledge framework and a way to prepare. It is not written for one firm. The rounds and the format follow the employer's notice.

What a Superday usually includes

1. Several interviews, one-to-one or two-to-one. The interviewers may come from different teams and different levels.
2. Behavioural and motivation questions: why this industry, why this department, why this firm, why this city.
3. Technical questions: accounting, valuation, corporate finance, and markets.
4. A case or a test: you read material within a time limit and give an investment recommendation, or you build a simple financial model, or you write a 1-page memo.
5. A group task. Some firms use one. It looks at how you work with others and how you speak.

Accounting basics: the 3 statements and how they link

You need to be able to say the following out loud.

1. The income statement: revenue, costs, gross profit, operating expenses, operating profit, interest, profit before tax, income tax, net profit.
2. The balance sheet: assets = liabilities + owners' equity.
3. The cash flow statement: operating, investing, and financing. Operating cash flow starts from net profit, adds back non-cash expenses (such as depreciation and amortisation), and adjusts for the change in working capital.
4. The classic question: depreciation increases by 10. How do the 3 statements change? State your assumed tax rate first. On the income statement, operating profit falls by 10. Use that tax rate to work out how far net profit falls. On the cash flow statement, start from net profit and add back depreciation of 10. The net change in operating cash flow equals the tax you no longer pay. On the balance sheet, fixed assets fall by 10, cash rises by the tax saved, and retained earnings fall by the fall in net profit. The two sides balance.
5. Working capital: an increase in accounts receivable means cash falls. An increase in accounts payable means cash rises.
6. Common follow-up questions: the point in time at which revenue is recognised; how an inventory costing method affects profit; where goodwill comes from.

Valuation methods

1. Comparable companies. Choose listed companies close in business, size, growth, and region. Calculate valuation multiples (such as EV/EBITDA, P/E, and EV/Sales) and apply a range to the target. You need to be able to say why you chose those companies.
2. Precedent transactions. Use multiples from similar acquisitions. They usually include a control premium.
3. Discounted cash flow (DCF):
   • Free cash flow in the forecast period = EBIT x (1 - tax rate) + depreciation and amortisation - capital expenditure - the increase in working capital.
   • The discount rate is usually the weighted average cost of capital (WACC).
   • Terminal value: the perpetuity-growth method, or the exit-multiple method.
   • Subtract net debt and the other adjustments from enterprise value. That gives equity value. Divide by the diluted number of shares. That gives the value per share.
4. Enterprise value belongs to all providers of capital. Equity value belongs only to shareholders. EV/EBITDA is the multiple that matches enterprise value. P/E is the multiple that matches equity value.
5. Common follow-up questions: which method usually produces the highest value, and why; what a rise in WACC does to the valuation; why the perpetual growth rate should not be higher than long-run economic growth.

Corporate finance and acquisitions

1. Accretion or dilution: compare earnings per share after the transaction with earnings per share before it. When the payment is in shares, compare the reciprocal of the acquirer's P/E, the reciprocal of the target's P/E, and the cost of financing.
2. The basic logic of an LBO: you buy the company with a larger amount of debt, you repay that debt with the target's cash flow, and you realise an equity return at exit. The return comes from growth in EBITDA, from expansion in the multiple, and from paying down the debt.
3. Capital structure: the cost of debt is usually lower than the cost of equity, because interest is tax-deductible and creditors rank ahead in repayment. A debt level that is too high raises the risk of financial distress.
4. The basic steps of an initial public offering and of a placing: due diligence, the offering document, the roadshow, pricing, and listing. In Hong Kong, the listing rules and the regulation are split between Hong Kong Exchanges and Clearing and the Securities and Futures Commission, each for the relevant part. In the interview, explain each party's role. You do not need to memorise the detailed provisions.

Market questions

1. How to prepare: read the financial news at a fixed time each day. Record 3 items: the move in the main equity indices, the level of the main interest rates and the direction of the change, and the main exchange rates. Note the date and the source.
2. Prepare at least 2 topics you can discuss in depth. One is macro, such as the path of interest rates, exchange rates, or commodity prices. One is an industry or a company, such as a change in an industry's earnings, or a transaction you are following.
3. How to shape the answer: the facts (what happened, and the figures you cite, with the source), then the mechanism (why), then the effect (on which assets, industries, and clients), then your view and the risks.
4. Recommending a stock: a short account of the business, the investment logic (2 or 3 points), the basis for the valuation, the main risks, and what would make you change your view. Do not recommend a company whose business model you cannot explain.
5. Bond basics: price and yield move in opposite directions; duration measures sensitivity to interest rates; the general meaning of an inverted yield curve.

Preparation that is specific to Hong Kong

1. The basic working of the Hong Kong dollar Linked Exchange Rate System: the Hong Kong dollar is pegged to the US dollar, and the Hong Kong Monetary Authority maintains the peg. In an interview, a clear account of the basic mechanism is enough.
2. The basic idea of the mutual-access schemes between the Mainland and Hong Kong (Stock Connect, Bond Connect, and others).
3. You need to be able to read material in both Chinese and English. Some material may be in Chinese only, or in English only.
4. When you cite a figure, name the source and the date. Do not use a number you cannot check.

Cases and modelling tests

1. Read the question and the time limit first. Decide what you must hand in: a 1-page recommendation, a table, or a few slides.
2. Use about 30% of the time to read and plan, 50% to calculate or write, and the remaining time to check.
3. In a model, keep inputs, calculations, and outputs apart. Group the assumptions and mark them with colour, so the interviewer can see them.
4. Lead with the conclusion. Line 1 is the recommendation. Then give 2 or 3 reasons and the key figures. End with the risks.
5. If you cannot finish, write down your assumptions and how you would treat the unfinished parts.

Behavioural and motivation questions

1. Why this department: tie the answer to the actual work, such as executing trades, covering clients, or writing research, and show how your experience matches.
2. Why Hong Kong: you can answer from angles such as the market's links between the Mainland and international markets, your languages, and your study or work in Hong Kong. The answer must be true.
3. A failure: set out the facts, your responsibility, the steps you took to correct it, and the result afterwards.
4. The questions you ask: prepare 3 to 5, on how the team works, training for new joiners, and the types of projects. Do not ask for information that is already on the website.

A 2-week preparation plan (an example)

1. Days 1 to 3: the 3 statements and the questions on how they link. Say 10 of them out loud each day.
2. Days 4 to 6: valuation methods. Calculate one simplified DCF by hand, and one comparable-company valuation by hand.
3. Days 7 to 8: the basic ideas of mergers and of an LBO.
4. Days 9 to 10: market topics and a stock recommendation, written on 1 page.
5. Days 11 to 12: mock interviews with classmates. Time them, record them, and listen back.
6. Day 13: one timed case or modelling exercise.
7. Day 14: review the questions you got wrong. Sort out your clothes, the route, and the documents you need.

On the day

1. Treat every round as the first round. A weak earlier round should not affect the next one.
2. If you do not know a technical question, say how you would approach it and where you are unsure. Do not make up an answer.
3. Write down each interviewer's name and what you discussed, so you can send a thank-you email afterwards.
4. Do not, in any round, speak negatively about another firm or a former employer.

Sources

• This piece is a general arrangement of knowledge and methods.
• Where the piece describes the roles of Hong Kong regulators, follow the explanations on the websites of Hong Kong Exchanges and Clearing, the Securities and Futures Commission, and the Hong Kong Monetary Authority.