MBB Consulting Over Banking in this Climate?

If you can get into MBB, then yeah go for it. It's pretty hard to get into these firms even in normal times.

im sure consulting is going to be affected by this downturn as firms cut back on certain services.

but it will be more secure than a bank laden with mortgage backed securities.

if you went to a boutique that wasn't suffering in the subprime mess, it might be better.

but i would suggest MBB consulting over banking in this climate.

consulting is diversified over the entire industry spectrum (although i guess you could argue so is m&a, but in the downturns deals are definitely a lot fewer)--while there will probably still be a downturn, it will definitely be not as bad as banking--especially since consulting firms have countercyclical offerings (cost/expense management, etc). but don't let the recruiting bs that they spew out fool you--they'll all be seeing lower revenues too

if you really want to do finance, then go to mm banks. theyre not pitching all day, theyre working on live deals. that space is very active, as it is much more resilient.

If you are really having trouble deciding between one or the other then you probably shouldn't do either. Bankers and consultants are a very different breed and lead very different lives. To do either well, you have to be 100% sure that is what you want to do. If not you will find yourself a miserable and looking for a way out pretty quick.

Disagree about having to be 100% sure to do well. Besides, even if you are mediocre, you'll still get the buyside interviews.

Does the role for consultants vs. bankers differ at buyside firms? Once there, is there a separation in responsibilities (e.g. bankers build LBOs, consultants do due diligence)?

lol @ tester123

Best,
SoulSearching

the reality is that it is just as hard, if not harder, to get into one of the MBB firms.

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Actually, going to MBB is almost always the better choice IMO, and especially in this economy

No it isn't. You should pick what interests you more. Consulting just will not prepare you in the same way for a finance career that banking can. If you are a hard-core numbers guy and not interested in going into management, then banking is for you. Consulting is great if you want to someday run your own company or work for a PE shop that focuses on operational improvements over leverage, then yes, it is the right way to go. But some people just aren't interested in that. It's like saying that going to Harvard over MIT is almost always a better idea. No, it isn't, it depends on what that individual is looking to do and where their interests lie.

agree with gomes.

besides, who wants to make 60k a year??

Consulting gives you a completely different skill set than a banker. If you are considering MBB as a back-up/alternative to banking, think about why you wanted to do banking. Many of the reasons to do banking (get into PE, make lots of money, be in NYC) don't exist for consulting. In terms of pay scale...check it:

25-26 year old's at Bank's make 300-350K (somewhere in the associate area).

25-26 year old's at MBB make 150-200K.

The difference becomes more disparate as experience increases - an EM at McKinsey probably makes about 250K max while a VP at an investment bank moves towards a half million.

The exit ops are completely different - in consulting, you can move into strategy/industry roles, while in banking you move into buyside finance or corporate finance roles...etc.

big unit,

Excuse for being naive, but I have to ask... I see as many MBB alumnus at respectful PE firms as BB analysts. Are they expected to carry different roles at PE firms, say, MBB alumnus involved in operational roles while BB analysts in investment role etc.

Thanks in advance.

I stand by what I said. Just as going to Harvard over MIT is almost always a better idea, so is going to MBB over banking. Thanks for the analogy.

Big unit your understanding of exit opportunities is pretty limited. Consultants have extremely similar finance exit opportunities (PE, HF, corp development), and of course much broader non-finance exit opportunities.

curiousG, I would say that it depends. Most of the people you see are probably on the deal side - i.e. they have the same roles as the ex bankers. A few PE firms have dedicated portfolio teams that are usually full of consultants or ex-industry folks.

maverickPE, thanks for your reply.

big unit, you're a fucking idiot.

Some would argue that going to the buyside is easier coming from MBB. Audax, MCP, Golden Gate Cap, and Bain Cap are some PE shops that prefer consultants over bankers. On a per hour basis, consulting and banking pay are the same. Yeah bonuses might be a lot better in banking than they are in consulting, but you're not working nearly as much. Of course you can be in New York for consulting.

Conclusion: big unit is a fucking idiot.

1) I don't think people are thinking of Audax when they think of PE.

2) "Per-hour pay" is a meaningless statistic when it comes to a salaried position.

Out of the consultants I knew who were interested in doing large cap PE, they placed almost as well as the bulge bracket bankers I knew. I did a few PE interviews but wasn't really interested in it - for the guys who were, they got interviews even at the non-consulting friendly places (KKR, TPG, etc.)

I'm sure the bankers are going to freak out, etc. etc. but that was the reality. Maybe it was a product of the bull market, I don't know.

Also, it is really stupid to cite the better money as a banker. Factor in the instability in bonus pool, lay-offs, hours, and the fact that post-tax, your bonus is not at all significant when viewed even in a 5-year horizon. I don't want to get into a banking vs. consulting argument (though I know some of you are itching for it) but they are fundamentally different industries.

this thread is basically each side trying to convince the other side which is better. ideating, you mentioned that you knew consultants that got into large cap PE, and thats great. all stars, regardless of background will end up in good places.

however, i still think banking provides the better platform to go into PE and other high-paying exit opportunities. how many consultants from smaller or less well known firms (not mbb) get into PE? not many. how many bankers do you see from "less prestigious" (notice the quotes) banks get into PE. quite a lot.

and to add to that, i'll take my "unstable bonus pool, threat of layoffs, etc" 120-150k salary (that's right, a 90k bonus is still a lot of money after taxes) over 60k, anyday of the week. but hey, maybe i'm a risk taker.

lol@you, retard. I love how your sophomoric laugh demonstrates how little you actually know; 90% of the consultants that I know got into PE in operations roles (but, I'm guessing you don't know what PE operations entail, so I'm not even going to explain it).

get back to text-booking and sucking c*ck for interviews.

hahaaha, b2 - YOU bringing up sucking cock is rich considering you're such a pro at it. Maybe you could give soulsearching some lessons? You blew me and Thain pretty good :]

I love how many lives I ruin on WSO... first joefish, and now, this clown! this is actually quite amusing :) it's quite powerful how some mere characters, emanating from my fingertips, on a computer screen can provoke such an intense reaction. I must be pretty f*cking awesome.

go back to your second-tier job... oh, wait, you don't even have that :)

Silly b2, I don't let little girls ruin my lives :]

I've been at one of MBB, so make sure you think about that when discussing the validity of my perception of exit opportunities...

"Many of the reasons to do banking (get into PE, make lots of money, be in NYC) don't exist for consulting."

Typicalbanker, you seemed pretty outraged by the above statement. Are you a consultant? I stand by what I said and I'm obviously right.

- Most PE shops don't look at consultants. I'm glad you mentioned Audax and a handful of other PE firms that take consultants. Lots of smaller firms take them. Of course, EVERY OTHER PE firm takes bankers aside from a select few. So thank you, in this case, the exception proves the general trend.

- A 1st year consultant makes about 50% of a 1st year banker/S&T. 75K all in, versus 130-150K all in. Though in a down-year for finance such as this, 1st year bankers are pulling closer to 110-130K, still quite a bit.

- Most BA's/AC's at McK/Bain don't work in the city, there are a very limited number of slots limited to a few Northeast schools (I worked in a different office)

Check out the team at Hellman & Friedman and tell me PE shops don't look into consultants.

^thats one shop. for every firm that looks into consultants, there are dozens more that dont (or at least primarly only look at bankers).

Not sure what it's like at the mega funds, but at my PE shop (MM), we have two verticals in our "investment professionals" listings. You wouldn't know it from the site (hell, I didn't know it until I got here), but there's a team that strictly does origination (all the ex-bankers/finance types) and there's a team that strictly deals with operations (all ex-consultants). On the junior level, however, the background is heavily finance-biased.

Regarding the original topic, MBB is always good but don't be fooled into thinking that it's a "safer" place than banks (or that you'll even get into one for that matter). MBB is quite selective and there are many people who fail on the case studies (lots of bankers for that matter). I have friends at the big 3 plus other notable firms such as monitor and parthenon and all have talked about ducking the swinging axe.

Well this definitely seems like an opinionated bunch, so hopefully I'll get some responses...

Out of these three career choices for right out of undergrad, which would be the best?

3 Positions:
1.) bulge-bracket investment banking
2.) McKinsey Corporate Performance group (mixture of strategy and financial analysis, analyst is the corporate finance specialist in the group)
3.) Bain generalist

There is no "best" out of undergrad -- you need to find out which one suits your personality.

1) BB Ibank- depends on which one. Many are very rocky these days and deal flow is slow in some sectors. If you enjoy corporate finance including accounting, cranking through models, formatting, etc., ibanking would be good for you.

2) I'm not sure what it does but it doesn't sound the same as being a business analyst at McKinsey. Obviously, McKinsey is a fantastic place to work but not sure what it'd be like for their "corporate finance". I will say that when our more senior guys (VP/SVP) checked out MBA resumes, McKinsey Corp Fin wasn't that interesting to them.

3) Bain is also a great place to work, depending on what office you go. Great opps into Bain Capital. But again, are you interested in learning operational efficiencies and making a company run smoother through "fixing" different parts of the company? Also, do you like case studies? A few of my friends absolutely hate them and just plain suck at them so they avoided those types of interviews altogether.

funny, all of these arguments seem to focus on how easy it is to get into PE.

just rhrowing it out there, PE is not going to be as big for the next 10 years (it's a cyclical business, big in the 80s, small in the 90s) as investor appetite for shitty debt goes down.

for all the bs that "operational PE" shops spew, let's be realistic...an operational improver can increase market value usually what, 5% (with no cap structure alteration)? without the leverage, there is no way that all these PE funds are going to keep clearing their IRR hurdles. personally, i think this bodes badly for both the consultants and the bankers...

i like how people talk about mbb as some sort of backup.

i went to a top target and getting into mbb was significantly harder than 'bulge-bracket' banks. the banks regularly took dumb jocks or kids with a passing interest in econ who got barely form a proper sentence. lehman and citi were well-known for taking 3.0-3.3 GPA kids who had little going for them.

by contrast, you didn't even get an interview at mckinsey without a kickass internship and a very high gpa. then, very few people made it past the first-round. it's actually harder to bs case studies since they're asking you to do math in your head and do numbers faster.

at my pe shop we take a good, hard look at mckinsey ba's analysts. and we definitely prefer them over random analysts from non-gs/ms banks.

just had to put that out there.