Industrials
By SuperdayReps · Wharton MBA · ex-Greenhill · investment banking interview coaching
18 min read · updated October 10, 2026
An industrials interview is mostly the standard first round. The three statements, a DCF, terminal value, WACC, enterprise value against equity value, and the valuation methods all come up, and they are covered in the range of technicals and the lessons under it.
The tools in this group are the ones you already know. What sets it apart is how the customers buy. Most are companies, and some are governments, spending capital budgets on equipment, freight and maintenance, and a capital budget is among the first things cut when growth slows. So an industrials banker spends less time on method and more on where a company sits in the cycle.
That gives the sector layer three themes. The cycle, which changes which year of earnings you should value. Capital intensity, which decides how much of EBITDA is really cash. And long lead times, which make the order book a better guide to the future than the income statement.
The one-sentence answer: industrials value with the normal tools, but you have to pick the right earnings and the right multiple. Value a cyclical company on a normal year, not the peak, and pick a multiple that allows for capex when capex is large. Then read the order book, because for a company that delivers over years, backlog tells you what revenue is coming before the income statement does.
The map
A common split is capital goods, transportation, and commercial and professional services, with building products and chemicals often covered in the same group. A useful working map has seven buckets.
| Sub-sector | Examples | How it makes money | How it is valued |
|---|---|---|---|
| Aerospace and defence | Engine and airframe makers, parts suppliers, defence primes | Long programmes sold to airlines and governments, then decades of spare parts and service | EV / EBITDA and EV / EBIT, read through backlog; the aftermarket mix drives the multiple |
| Machinery and capital goods | Construction and farm equipment, pumps, automation, electrical equipment | Equipment sold into customers' capex budgets, plus parts and service | EV / EBITDA on mid-cycle earnings; EV / (EBITDA minus capex) for heavy manufacturers |
| Building products | HVAC, roofing, windows, insulation | Volumes tied to new construction and to repair and remodelling | EV / EBITDA, sensitive to housing starts and rates |
| Transportation | Railroads, trucking, airlines, shipping, logistics | Moving freight or people, priced per mile, per ton or per seat | EV / EBITDA and EV / EBITDAR where fleets are leased; NAV for shipping |
| Industrial distribution | Distributors of parts, tools, electrical and building supplies | A thin spread on high volume, with inventory as the main asset | EV / EBITDA, read through working capital |
| Commercial and professional services | Testing and inspection, staffing, facilities, waste | Recurring service contracts | EV / EBITDA; often richer, because capex is light |
| Chemicals | Commodity and specialty chemicals | Commodity: a spread over feedstock costs. Specialty: formulated products with pricing power | Commodity on mid-cycle earnings; specialty at higher, steadier multiples |
The sub-sectors differ in drivers far more than in method. A railroad, a distributor and a jet engine maker are all valued on EV / EBITDA; what changes is what moves EBITDA and how much capex it costs to keep it.
Interviewers often open with what you would look at first. A strong answer starts with how much of the revenue comes back every year, from parts, service and renewing contracts, against how much is one-off equipment sales. Then ask whether the customers all live in one volatile market, because a company that sells mostly to drillers, say, rises and falls with the oil price.
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Frequently asked
- What questions do industrials investment banking interviews ask?
- The standard first round plus a sector layer. The sector layer is the sub-sectors and how each one makes money, why industrials are cyclical and how that changes the earnings you put a multiple on, how much of EBITDA survives capex, backlog and book-to-bill for companies with long lead times, why manufacturers want more aftermarket and service revenue, how an unfunded pension enters enterprise value, and the operating metrics of airlines, trucking and shipping.
- How do you value a cyclical industrial company?
- On earnings that represent a normal year rather than the best or worst one. Bankers average EBITDA over a full cycle, or estimate a mid-cycle margin, and apply the peer multiple to that. Putting a multiple on peak earnings overstates the company, and a DCF whose final year sits at the top of the cycle bakes the peak into the terminal value.
- Would a healthcare company or an industrials company with the same EBITDA be worth more?
- Usually the healthcare company, if growth and margins really are the same, because it tends to need less capex and less working capital, so more of its EBITDA turns into free cash flow. Industrials are also more exposed to the economic cycle. It is a generalisation, though: a hospital chain is capital heavy and an industrial software or testing business can be very light.
- What is book-to-bill in industrials?
- New orders booked in a period divided by the revenue recognised in it. Above 1.0 means the backlog of signed but undelivered work is growing, below 1.0 means it is being worked down. For a plane or rail equipment maker with years of backlog, it says less about next quarter than about whether the order book is being refilled.
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