CFA® vs MBA in Private Equity
Hi all,
Need some advice from you guys. I am currently working as analyst at a mid-market private equity firm in Scandinavia, however in order to improve my career prospects within private equity I would like to further educate myself.
As I see it my two options are: CFA® or MBA. The question is which of these are best within private equity?
As I see it the CFA® gives me all the needed valuations and modelling tools which should prepare me make a buyside career. The definite advantage by taking the CFA® is that I can work while still studying.
Meanwhile the MBA gives me a strong network among business professionals as well as strategy and more soft tools for evaluating industries and businesses.
What are your take on this?
Thanks,
Lociano
The CFA program won't give you the modeling skills to prepare you for PE, but given you're already working in the industry you should get those via practical experience. You will not learn how to build a LBO model via the CFA program. You will gain conceptual valuation tools but nothing comprehensive. For example you will learn how to value a firm using FCFF but not how to build the model to accurately estimate FCFF.
Depending on the school you go to and the classes you take you may get a little of this in a MBA program but it will be at a high level.
My take is that an MBA is better than the CFA for private equity, for the reasons you mentioned above and given that a MBA will give you a better chance to work on building real models via case studies then breaking them apart in a class room setting as opposed to simply reading about concepts, terms and formulas via the CFA.
Appreciate your comments. Would a CAIA be better than the CFA, if lets assume that I had to chose between the two?
don't forget most folks on this site are not in europe (i think). At the european PE firm where I interned in central europe, everyone in the mid to high management positions had CFAs and the Partners were explicitly recommending CFA as they think it has more concrete skills than an MBA. They viewed the MBA as a bit fluffy. But that's probably their prejudice ...
I'm not that familiar with the curriculum of the CAIA. In that situation I'd go CFA. In my opinion it's better known and thus more respected. I think pursuing the CFA while currently employed is a very solid plan. You could always get your MBA later if you feel it's an important step.
Neither is a very good education really. It's all about the experience, which it sounds like you have, of course you're in scandinavia, which is even more back-water than say canada. Just apply around. Of course if you want a job in the states, refer to your experience as "european" rather than "scandinavian".
Given PE is also heavily into strategy/operations to assess a good investment opportunity, would definately say MBA more relevant as you will get a broader experience. Also having the alumni network as contact points is key. Personally found that CFA was either too technical or too focused on asset management / research (particularly Level 2/3), but of course also useful.
Wouldn't dismiss the Nordic funds so easily. Some good-size funds, particularly in Sweden (e.g. Nordic Capital $6bn, EQT $5.6bn, Altor, $2.8bn).
I would check out AnalystExams.com. They have an interesting poll on the subject.
"Insert Name", CFA, CAIA > "Insert Name", CFA > "Insert Name", CAIA
If you have a finance background why bother with an MBA - just to access the network? that's lame
People always hate on MBAs on this forum. A lot of "if you're in banking and want to continue, get a direct promote and stay on track" of "if you're at a MM PE firm and they make promotions sans-MBA, then don't get one and just keep on keeping on."
That seems so short-sided to me. For one, aren't we all a little sick of 100 hour weeks? Wouldn't 2 years without it be wonderful, especially if its not scoffed at as vacation but looked favorably upon? Why continue as a banker or investment professional withOUT an MBA, only to realize later that not having it seriously hurts your credentials outside your own firm? And limits your network? And makes it harder to transition if you so choose? And makes it harder to source deals in a proprietary way?
Quick story: someone I know at Monitor Clipper partners, principal without an MBA promoted directly. He's smart, a rockstar withIN MCP. But many people outside MCP don't know what it is. He is completely beholden to MCP - all nuts in one basket. Not great career diversification. Hard to be credentialized to go elsewhere if he wanted to. As he told me once, not getting the MBA is a huge regret because "I know I could add value, but I'd never make MD at another firm without having grown up in the likes of GS/MS and without a Stanford/Harvard MBA. There are too many others who have the 'right' background gunning for those positions."
Get the MBA. Take two years off. You can always continue in MM PE or the like, you're no WORSE off, really. But you are better positioned to make moves later. And chanes are no firm is a fairy tale land you really want to stay at forever.
So - CFA has absolutely no significance
MBA depends on what your background is and what firm you are looking at...
And it depends on the school - Harvard, Stanford and less so Wharton/Dartmouth/NYU/Columbia might give you an edge with consulting-driven powerhouses...
For others these schools are a nice add-on, but your IB track record is more important...
But be aware - you should be in the top 5-10% even at HBS to get a really interesting offer...
In Scandi, it will definitely help you with EQT or Nordic...
To those who think Scandi is PE backwater - YOU DON'T KNOW WHAT YOU ARE TALKING ABOUT... Look at the returns of Nordic...
Qui et impedit voluptas nam alias sit. Quis voluptatum ipsum beatae illum aperiam aut. Provident et est perspiciatis harum. Architecto saepe veritatis ut rerum.
Sunt dolorem beatae enim suscipit quaerat ut quia. Et enim expedita iure voluptas perferendis dolor recusandae. Delectus alias atque dolore et qui. Aut nesciunt error soluta et. Saepe ea laudantium voluptas vel aliquid earum.
Debitis et odit dolor doloribus nihil. Autem ad quibusdam non quasi. Adipisci quia voluptatibus et ratione amet.
Tenetur dolorum non nostrum sed illo. Aut nihil iure animi qui.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...