Investment Banking Modeling Tests: What to Expect and How to Prep

Modeling tests used to feel like a PE-only gate. They are increasingly common in IB processes too, especially at elite boutiques and in associate-level hiring. The format is usually a timed Excel exercise: build or complete a DCF, merger accretion case, LBO sketch, or operating case under pressure. Interviewers are grading accuracy, structure, and whether your spreadsheet would survive a VP skim. This guide covers what to expect, how to practice, and the mistakes that kill otherwise strong candidates.

What a modeling test is (and is not)

It is not a week-long take-home with infinite polish. It is a constrained exam.

What interviewers grade

Pretty formatting is secondary. Broken links with blue/black font chaos and hardcodes buried in formulas are worse.

Timed DCF checklist

1. Separate assumptions block (growth, margins, WACC, tax, exit multiple / g)
2. Explicit UFCF build: EBIT(1−t) + D&A − CapEx − ΔNWC
3. Mid-year or year-end convention stated if you use one
4. Terminal value method labeled
5. Enterprise value → equity value → per share
6. Sensitivity table on WACC vs terminal assumption

UFCF = EBIT(1 − t) + D&A − CapEx − ΔNWC

If you finish early, do not decorate. Stress-check: does higher WACC lower value? Does higher g raise TV in Gordon growth? Does net debt bridge use the right cash and debt?

Timed merger checklist

1. Offer value and consideration mix
2. New shares issued (stock) and/or new interest (cash/debt)
3. Target NI included
4. Synergies after tax, costs to achieve timing
5. Incremental D&A from write-ups if required
6. Pro forma EPS vs standalone EPS
7. Sources = uses

Error checklist before you submit

How undergrads should prep (4 weeks)

Week 1: untimed DCF from a blank sheet daily; focus on structure.
Week 2: timed DCF down to 75 minutes; add a sensitivity.
Week 3: merger accretion case timed; cash vs stock toggle.
Week 4: mixed mocks; one full test with sleep deprivation simulation (evening after classes).

Also practice:

• Keyboard speed (copy formulas across, named structure without mouse addiction)
• Reading a prompt and outlining tabs for 3 minutes before typing
• Stopping when "good enough and correct" beats "beautiful and unfinished"

Weak vs strong test behavior

Boutique vs bulge bracket flavor

Elite boutiques often lean harder on modeling tests because the job is intensive live deal execution. Bulge brackets vary by group and region. Assessment centers outside the US may mix Excel with group exercises. Prep for a real timed build even if your first process is conversational. The skill transfers to superday whiteboard math too.

Connecting modeling tests to verbal interviews

If you can build UFCF cold, "walk me through a DCF" gets easier. If you can toggle cash vs stock accretion, the interview shortcut answers stop feeling abstract. Modeling tests and technical interviews are the same knowledge under different UI.

Practice on SheetRank

Graded deal flow is useful because it forces correctness under unknown inputs, not memorized template numbers. Use Catalyst-style three-statement / DCF work and Harborview-style merger work as your timed gym. Then recreate the same case in a blank workbook with a timer so you are not dependent on a pre-built shell.