MBA Post-PE
I assumed this topic would be extensively covered somewhere on WSO, but I searched the site, and I wasn't able to find anything that was all that informative.
I am currently an associate at a lower-MM, niche PE fund. I truly like my job, and I'm learning a ton. More than I could have imagined. Interacting with CEOs and CFOs on a daily basis, participating in board meetings...it's all great experience that I really couldn't get anywhere else. My fund also doesn't have the 2 years in/out policy. It is feasible that I could stay, if I so desired.
However, the specific 'niche' that my firm specializes in is not where I see myself in the long run. I'm curious as to what my exit options would be post-MBA. I do not have prior IBD experience (accounting and consulting background). Would it be tough to find a position at a fund that has a different focus than my current fund after getting my MBA? What exit opportunities could I expect coming out of a T-5 MBA school? I would prefer some sort of finance/strategy role such as PE, a start-up, corp. dev., etc.
Before I landed my current job, an MBA sounded like a no-brainer. Now, though, I am wondering whether it is worth the risk. I could potentially stay at my current fund or transfer to another fund in the same space as a VP at some point in the future (although I'd like to leave the space, as I previously mentioned). Even if I get into a T-5 school, would it be worth it? For all I know, I may not even be able to get back into PE.
tldr is leaving PE for an MBA worth the risk if you might wish to get back into PE?
Any thoughts are welcome.
From what I understand, if you have pre-MBA PE experience, it gives you a big leg up for post-MBA PE recruiting (as many places want some pre-MBA investing experience). That said, I don't imagine it would be difficult to switch PE sectors post-MBA.. part of the point of getting an MBA is that it allows you to pivot/change careers.
Also, a big part of the decision will also be comp before/after MBA. How is your comp now?
You'll have opportunities during your MBA program to be considered by PE firms outside of your industry niche today. I'd say that if you choose not to do PE as a career path post-MBA, the longer you're out of PE (or most other finance verticals), the more difficult it will be to transition back in.
Actually in a freakishly similar situation to OP. Would greatly appreciate comments/PMs.
OP - I've heard another avenue post-MBA could be MBB, and since you have Pre-MBA PE exp, switching to a PE shop that values consultants would be doable (from what I hear).
To start, so you know where I'm coming from: I'm doing an MBA at H/W/S, did BB IB -> MM PE. My opinions are only mine and only reflect my limited experience.
I'm going to talk about what opportunities there are coming out of business school (from what I've seen), and then the "is it worth it?" question. I'm not going to discuss how to get into business school from you background or how to frame it, because I don't know. I'm not in admissions, and it's a black box to me.
To the OP's first question: yes, you can get back into PE, but some folks don't, whether by bad luck or having too narrow a focus or any other reason. For folks with real prior-PE experience (that means closing deals as the principle investor with control, not fund-of-funds or mezzanine or anything else related but-not-quite PE) who want to return to PE, conversion rate looks pretty good. I'd estimate ~75%, plus or minus 10 points on either side. The people who are successful get out and do leg work to source their own opportunities. It's hard work and you're going to be told "no" a lot. However, you only need to get one "yes". The opportunities do appear to be competitive, especially for OCR stuff. You're best bet is getting out there and building your network so you get an email or call before a posting ever goes on the job board. As far as changing industries/strategies is concerned, you can generally change one thing. So, for example, you can change fund size, but not industry focus. Or you can change focus, but not geography and size. So you can change, but at a certain point, if you change to much, you can start to erode your value proposition to the fund interviewing you.
Opportunities out PE? Yeah, you can find all sorts of stuff. Corp. Dev., Corp. Strategy, start-up, MBB...it's all here. If you're open to those sorts of things and not a die-hard PE guy, I don't think you'd have any problem finding SOMETHING you'd be happy with. As far as doing that and switching back to PE? Ehhh, maybe? I've never seen it at the post-MBA level (in my limited experience) and I would think if you're going to switch, the sooner the better.
Finally: is a t-5 MBA worth it? Well, maybe. It depends on whether you're going to judge your MBA by results (i.e., job at exit) or personal growth or whatever. There are no guarantees that you'll be able to get back to PE. Conversely, I know lots of people who skipped business school and subsequently hit ceilings in their career progression. So it's something you need to weigh, figure out how much risk you think there is to you, personally, and then decide if it's worth it. For me, I think it was probably worth it, but I was also in a traditional associate program.
Good luck, and I'm happy to elaborate on anything here. Maybe @CompBanker could weigh in here?
This is accurate as far as I've seen not having personally gone back for an MBA but seeing and hiring lots of people over the years in this position, so also take this based on my personal experience and observations and not as gospel. Getting back into PE post MBA is a good chance but not 100%. I'd also add that it depends on your definition of lower MM and niche. If it's really lower MM and a very narrow and odd niche, say EV pencil manufacturers in the industrial midwest (or larger $'s and infrastructure for example), it will narrow the possibilities. If it's $100-$250MM family owned and corporate spinoffs with an active bolt-on strategy in industries a, b, c & d in the lower 48 it'll be easier to get back in. You'll probably have to determine the risk/reward of your distinct situation with regard to getting back to PE. Although I would really not get it into your head that you're going to go from lower MM to BX or even a really top MM firm so if that's your reason for going back I'd temper that expectation. There are just so many people who work at those funds pre-MBA compared to spots available post that they'll tend to pick the guys who previously did it.
I'd also talk to your current fund and see what they say about a long term career plan and a partner track. Even if you go back to school and get into a size and strategy that you like more there's no guarantee that you'll be a long term person at the fund. Getting onto a partner track is really tough so you may do PE for a few years and be out the door. You'll have plenty of options so it's not like your career options would be limited to quick service food joints, but if you really like the people you work with, the fund's strategy is decent (you don't hate the product type), it's in a city you'd be happy with long term, etc. AND you'd really like to stay in PE as a career, it might not be a bad thing to stay if they'd offer up a partner/career track (I'm simplifying this process-they're not going to tell you 6 months into your gig that you'll be a partner in X years just because you asked).
I'll also second to say that if you decide to stay in the lower MM and just switch strategies I'd imagine the on campus recruiting will be much more limited and it'll be more up to you to reach out because lower MM PE just doesn't do annual formal recruiting as much (and I'm coming from something close to the latter of my above examples). Teams are small and like your partners, I'm much more willing to have associates skip an MBA and stay on so we simply don't have X number of spots open every year that we need to fill. So with the limited number of openings, we almost always get people through referrals or people who reached out to us early and have developed a relationship with us.
I'd second looking at CompBanker's post from a couple (?) of years ago about going back for an MBA even though he probably didn't need one.
Negative Basis Dingdong08
Solid advice. Appreciate it. I was able to find CompBanker's thread discussing his thought process, and it was very informative. It more or less echoes my thoughts on the subject. So, I am leaning towards applying down the road, as I think the experience will make it worth the risk (provided that I'm actually able to get into a top program). Also, as someone mentioned above, there are plenty of attractive options outside of PE, too.
Dingdong08
In another thread you mentioned how it's very hard these days to move up to the partner level, even if you're a post-MBA hired on "partner track." So, if you're a Post-MBA at a sizable MM PE firm and get pushed out after 3~4 years, what kind of exits (besides going to another firm) and comp level could one expect? Thanks.
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