The Technical Interview Trap: Why Memorizing Questions Won't Save You

You have the networking spreadsheet. You nailed your "Story." You got the First Round Interview.

Now comes the part everyone dreads: The Technicals.

Most candidates panic and buy a generic "400 Questions" guide. They spend weeks memorizing definitions of EBITDA and beta. Then they walk into the interview, get asked a slightly nuanced question, and freeze.

In Crack the Street, I explain why this happens: Investment Bankers don't want to hire robots; they want to hire thinkers.

If you memorize that "Depreciation goes up by $10," but you can't explain why Deferred Tax Liabilities might change, you are dead in the water. Senior bankers are experts at asking follow-up questions to find the exact edge of your knowledge—and then pushing you off it.

Here is how to pivot from "memorization" to "mastery" so you can handle anything they throw at you.

1. The "Pressure Test" Reality

Technicals aren't just a knowledge test; they are a stress test. As I write in the book, interviewers will often deliberately pose trick questions or change a variable in a standard formula just to see if you crumble.

The Goal:

You don't need to be a walking encyclopedia. You need to be in the "Top Quartile". You need to demonstrate that you understand the flow of money through a business, not just the accounting equation.

2. The "Big Three" Concepts You Must Own

Forget memorizing 400 definitions. If you intuitively grasp these three concepts, you can answer 90% of interview questions.

A. The Accounting Flow (The "Domino Effect")

The Classic Question:

"Walk me through how a $10 increase in Depreciation affects the three statements."

The Insight:

Most candidates get the Income Statement right but fail the "Linkage." You need to demonstrate how a single entry ripples through all three statements to keep the Balance Sheet balanced.

The Trap:

Candidates often say "Cash goes up by $10" (forgetting the tax impact) or they get to the Balance Sheet and say "Assets are down $10" but can't figure out why it doesn't balance.

The Banker's Answer:

You must connect the dots:

Income Statement:

Net Income drops (due to the expense).

Cash Flow Statement:

Net Income is lower, but we add back the full Depreciation (non-cash). Result: Cash actually increases (because you paid less in taxes).

Balance Sheet:

Cash is up, PP&E is down. The "hole" in equity (lower Retained Earnings from the Net Income drop) perfectly matches the net change in Assets.

Why this matters:

It proves you understand that the three statements are not separate lists—they are a single, interconnected organism.

B. The Valuation Triangulation

The Classic Question:

"What are the 3 ways to value a company?"

The Insight:

Don't just list them (DCF, Comps, Precedents). Explain when to use them. Why would you use a DCF for a pre-revenue tech startup? (Hint: You probably wouldn't, or you'd rely heavily on terminal value). Understanding the context separates the pros from the students.

C. The "Bridge" (Enterprise vs. Equity Value)

The Classic Question:

"How do you get from Enterprise Value to Equity Value?"

The Insight:

This is the most critical concept in M&A. Enterprise Value is the "House Price"; Equity Value is the "Down Payment." You need to understand how Debt, Cash, and Minority Interest act as the bridge between the two.

3. Don't Be a Robot

When an interviewer asks, "Which is cheaper, Debt or Equity?", don't just say "Debt." Say:

"Debt is cheaper because interest is tax-deductible and debt holders sit higher in the capital structure, taking less risk."

The "Why" matters more than the "What."

The Bottom Line

You can teach a monkey to calculate EBITDA. You cannot teach a monkey to understand why EBITDA is a proxy for cash flow but a terrible metric for a capital-intensive oil company.

Stop memorizing. Start understanding the machinery.

Master the Technical Interview

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