Front Office Investing interview prep.

Behavioural questions to expect

1. Walk me through your CV.
2. Tell me about your most impressive deal or situation analysis.
3. Tell me about a weakness, a failure, or feedback you've received and worked on.
4. Why event-driven? Why not long/short equity or another strategy?
5. Why the firm?
6. Why {hard-catalyst / soft-catalyst} event investing — or why a {single-manager / multi-manager pod} platform — over the alternative?
7. How would you describe the firm's event-driven process and edge in your own words?
8. How do you think the firm manages risk — on a single deal and at the book level?

Technical concepts to master

• Merger arb — spread, probability, and break risk math

  The arb spread · Annualized return · Probability-weighted return · Break price — what kills the trade · Deal-break risk taxonomy

• Deal-break risk — what kills a merger

  Antitrust / regulatory · Foreign / national security (CFIUS) · Financing · MAC / business deterioration · Shareholder vote / topping bid

• Capital structure priority + recovery + fulcrum security

  The waterfall — senior to junior · Recovery rates — directional norms · Fulcrum security · Going-concern vs liquidation EV · Absolute priority rule (APR)

• Special situations — events that surface value

  Spinoff · Sum-of-parts (SOTP) · Stub trade · Rights offering · Recap / tender / post-reorg equity

• Risk + sizing — surviving the broken deal

  Bounded single-deal loss · Diversification across deals · Hedging the consideration · Borrow, financing, and crowding

Practical drills

• Walk me through an announced merger arbitrage you'd put on today, in the firm's coverage. 5 min prep, 5-7 min delivery. Be ready to be probed for 10-15 min on the break risk, the spread math, and your sizing.
• A target is being acquired for $50/share in cash. It currently trades $46. It traded $38 before the deal was announced. Expected close is in 6 months. (a) Gross spread % and annualized return? (b) Downside-if-break? (c) If you think there's a 90% chance of closing, what's the expected return? (d) What probability of close does the spread imply (break-even)?
• A company in restructuring has a going-concern enterprise value of $800m. Its capital structure (at par): $500m first-lien secured, $400m senior unsecured notes, $150m subordinated notes, then common equity. Distribute the value under absolute priority. What recovers what, and which is the fulcrum security?

Smart-question anchors

• Situation sourcing — where the firm's ideas come from (announced deals, restructurings, spinoffs) and how an analyst contributes to the pipeline
• Diligence edge — how the firm gets comfortable on deal-break risk (legal / antitrust read, market checks) and on recovery in distressed names
• Risk + sizing in practice — single-deal caps, diversification, deal-break loss budgeting; one recent example where risk discipline mattered
• Expression toolkit — use of derivatives / hedges, active vs passive arbitrage, how stock-deal and special-situation trades get structured
• Analyst autonomy + PM partnership — how much an analyst's view drives sizing and the book; the path to running risk

Sourced from

Mergers & Inquisitions / Breaking Into Wall Street · Wall Street Oasis (WSO) · AnalystPrep — CFA Level II: Event-Driven Strategies & Merger Arbitrage · Wall Street Prep — Merger Arbitrage + Fulcrum Security · Restructuring Interviews / Sell Side Handbook — distressed debt · Special Situation Investments / Stock Spinoff Investing