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The common path to PE seem to be 2 years as an analyst in IB, then starting as an associate at a PE firm. But after 2 years as an associate, I hear that firms will ask you to get an MBA. But after you get an MBA, don't you go back to PE as an associate?
So wouldn't it be better to jump to b-school right after IB instead of working in PE for 2 years?

For example, here's 3 different ppl's paths:

Person A: IB 3 years as analyst -> IB 3 years as associate -> now VP
Person B: IB 2 years as analyst -> MBA 2 years -> PE 2 years
Person C: IB 2 years as analyst -> PE 2 years as associate -> MBA 2 years

it seems that person A and B have the quicker path. So I guess my question is, why 2 years of PE after IB if you're going to be back on the same position after b-school?

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Comments (9)

  • illcaprice's picture

    Also assuming C, you would typically go back as Senior Associate with more responsibility and more pay.

  • ledger123's picture

    how many times does this come up... like philliesphan said, it is extremely difficult to get into pe post mba if you have dont prior pe experience.

  • Mandata's picture

    i apologize for the naive question, but why do PE firms require candidates to go get an MBA then?
    what do they learn that is so important for promotion?

  • jhoratio's picture

    An MBA program is good for PE for two main reasons - a) academically, it's good to have a conceptual basis for how businesses work. the analyst experience locks down your modeling skills, but that's hardly the be all end all of understanding how to invest in companies. Difference between being able to build a calculator and understanding math. b) the network you develop in b-school is a very valuable part of your experience

  • illcaprice's picture

    I would also add that perception is important in PE. It looks good to LPs to have MBAs on your roster. To build off of the above, the pe firm takes an active role in creating value in its investments via operational improvements. Understanding the different ways this can be accomplished is important aside from simply saying "we need to grow ebitda at x rate to generate our targeted irr". MBA can help with this.

  • In reply to illcaprice
    wamartinu's picture

    illcaprice:
    I would also add that perception is important in PE. It looks good to LPs to have MBAs on your roster. To build off of the above, the pe firm takes an active role in creating value in its investments via operational improvements. Understanding the different ways this can be accomplished is important aside from simply saying "we need to grow ebitda at x rate to generate our targeted irr". MBA can help with this.

    regarding learning about "operational improvement" , surely it would be more appropriate for someone to spend 2 years (after a 2-3 year stint in IBD) in MBB rather than pursue an MBA and then apply for PE jobs. I bet you'll learn much more about what makes businesses tick and how to improve their operations by doing 2 years at McKinsey rather than spending 2 years at HBS, for example. To sum up, in my opinion, 2 years in IBD+2 years in MBB>2 years in IBD+2 Years MBA . That way, one will have both "Financial Modelling" experience but also "Operational Improvement knowledge/business acumen". I think this is by far the best combination for someone to land a PE job (without the need of an MBA)! Would appreciate your comments/replies on this.

    CompBanker, since you are a PE guy,I would particularly appreciate your thoughts on what I just said.

  • wamartinu's picture

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  • In reply to wamartinu
    CompBanker's picture

    CompBanker