MBA exits - IB or Tech?

For top MBAs, is the Associate role in IB still attractive? Seems like everyone is heading to tech for the equity. What attracts folks to IB when Associates rarely exit to buyside?

Comments (35)

  • Business School in CorpStrat
Jun 11, 2022 - 11:46pm

So many tech startups implode. The popular move at least at the school I'm matriculating at is by far strategy/management consulting. Big Tech PM/corporate roles are sought after more I'd say than IB.

Jun 12, 2022 - 12:19am
hitherehello, what's your opinion? Comment below:

That's what I wonder. MBB leads to corp strat and ops roles in tech. I think IB could lead to Corp Dev and Finance roles in tech.

  • Business School in CorpStrat
Jun 12, 2022 - 11:53am

I personally don't think it is but many people claim it is. 

  • Associate 3 in IB-M&A
Jun 12, 2022 - 11:57am

The problem with IB from MBA is the associate/VP burnout rate is so high, and with likely MBA debt you need to incorporate that into your career calculus. You're likely either moving to a lower-paying corp dev role within 2-3 years, or you're stuck in IB/PE with a very high salary but terrible lifestyle. 

I'm risk averse and would still take that over tech (especially in current market) but consulting doesn't have quite the same burnout rate as IB so you can see where that's a more attractive option if that field is interesting to you.

  • Business School in CorpStrat
Jun 12, 2022 - 12:28pm

Great point. Definitely more WLB-friendly consulting firms out there than banks. Are consulting exits 3-5 years post MBA at higher salaries usually vs IB? I wish someone had hard data on that.

  • Associate 3 in IB-M&A
Jun 12, 2022 - 12:40pm

I'd say banking would have slightly higher exit salaries, as PE is a pretty common exit - less so for post-MBA consulting. But those hours are similar to IB, so if you take that out and only look down to lifestyle exits (40-60hr week jobs) they are likely about the same comp... corp dev and corp strat pay fairly equally, and you can get into either of those from both IB/consulting.

I think a greater % of people stay in consulting than staying in banking, and your stint there is less awful than an IB stint

  • Associate 1 in IB - Cov
Jun 12, 2022 - 12:55pm

Approximately 10% of my class chose to do the MBA to IB route and I cannot speak to the % that wanted corp strat/tech/consulting etc but it was likely multiples higher. 

I expect this trend to reverse itself somewhat. Over the last 10-15 years as tech has been unarguably the best performing sector meaning equity grants have been very lucrative, the losers, as many on this board note, are the old economy jobs that paid well for talent at the cost of bad WLB ie. IB. I think right now what we are witnessing, as tech is being massacred in the market, is the unwinding of that flow of graduates. Equity grants are unlikely to vest and employees, let's say in this case MBA grads with serious student debt, are now staring right down the barrel of having their debt service overwhelm their income (in an extreme case). I think prospective MBA candidates moving forward will see the equity as much less of a sure thing when weighing compensation opportunities and will instead look to the hard money that post-MBA IB provides.

Compensation aside. What attracted a lot of people to IB post-MBA has a lot to do with the structure and relative security of the recruiting process. Its well documented how to play the game and as long as you dot your i's and cross your t's, you will get that summer internship. Most other roles recruiting paths are not as structured and I think that turns off some people that are looking for relative stability. Secondly, career progression is extremely well defined. Loosely speaking, prospects can expect ~3 years of Associate and within a general degree of their own control, get a big promotion within a visible timeline. Not a lot of other jobs offer that. 

I can think of other reasons why it is attractive vs other options but really it always comes down to money. The experience you get is obviously great but any post-MBA job is going to give you experience. Boiling it down I think post-MBA IB path is here to stay/might grow.  

Jun 12, 2022 - 4:57pm
nychimp99, what's your opinion? Comment below:

Very helpful, and very much on point.

Another data-point for those considering MBA/post-MBA options: I've also seen far too many MBAs quit IB after 1.5 years (i.e. at the full bonus year mark), and approximately 80-90% quit within 2.5 years. Someone on this forum posted statistics for IB recruitment for CBS/other schools here: and they are broadly correct: i think less than 10% remained on as 1st year VPs.

Like the poster mentioned above, things might change now that the big tech correction is starting to impact overall compensation. However, I also think that for many MBAs, IB is never a long term career option. Many pick this career because of certainty, and lots of students pick IB because they want to pay off their debt faster and move on to something more sustainable. What changed during the tech boom (and COVID) was the MBA associates leaving earlier (1.5 years rather than the typical 2.5-3 year stint). BB comps are more or less in line with what big techs were paying (excluding the extraordinary bonus of 2021), so there really is no incentive for students to recruit for IB unless its something they already were set on doing, heading into B-school. Like the poster mentioned above, these are typically those who value certainty, and have a low risk profile. 

Also, another factor: the peer pressure of watching your friends in startups/big/tech/consulting enjoying their weekends/week-day evenings is a real thing. People conform to what others do around them, and this is particularly true for MBA students.

Having been involved in MBA recruiting, I can say for certain that my firm no longer counts on MBAs as a long term option, but given that now almost all analysts leave after their stint, they really have no other option but to fill these slots with MBAs. So in that sense, MBA recruitment is always here to stay. However, I do not think the interest in IB will continue to grow in the long term- there are far too many options now for students in tech/startups/big corporates/VCs, that students did not have 10/15 years ago. If you see the recruitment reports for some of the prominent schools, you can see that shift away from traditional financial services (IB) into other areas. 

  • Business School in CorpStrat
Jun 12, 2022 - 5:16pm

Thank you for sharing!

Definitely helps my perspective as I enter school this Fall.

  • Analyst 2 in IB - Gen
Jun 12, 2022 - 1:02pm

First year comp:

EB: $400-450

MBB: Low $200s 

Big Tech: High $100s - Low $200s

  • Business School in CorpStrat
Jun 12, 2022 - 8:34pm

Fairly accurate for BBs and some MMs. ~300-330K all-in first year. But agree with other poster, for EBs and some select boutiques: 400K+ first year all-in is the norm as per the past 2 years at least. Could change.

  • Associate 1 in IB - Cov
Jun 13, 2022 - 11:56am

100%+ for the full first year has been typical at EBs/certain botiques. Based on what I've gathered from classmates who were here pre-covid: $175 base (which used to be $150 before recent pay bumps) and ~$200 bonus for the full first year was historically a decent benchmark (excluding last year obviously, where bonuses were >$200). $350-$425 is probably the realistic middle of the curve in "normal times". 

Jun 12, 2022 - 8:01pm
MDR1, what's your opinion? Comment below:

Banking has gotten too much hate, but if you get a good group coming out, it's a fantastic option. Stable, high comp, awesome exit opportunities. If you do say GS TMT, you can exit to corp dev/strategy at big tech or a fast growing startup fairly easily. 

Most Helpful
  • Associate 2 in IB-M&A
Jun 12, 2022 - 8:06pm

Here's the thing with Tech - in my opinion, since 2008 the large tech firms have been able to effectively operate with next to zero financial discipline because interest rates were at or near zero. Their incentive was to build or buy the next big thing before anyone else, and since money was free, they could just spray and pray like VCs, in practice this means hiring like crazy and offering the most generous comp packages / WLB in history to attract the best talent who could come up with the next big thing(tm). However, everyone isn't top talent. Hence, you get MBAs getting hired (mostly) at 200k / year + equity as Product Marketing Managers that work maybe 15 hours a week (I'm exaggerating a bit but not much). Tech companies KNOW this, they aren't always hiring the best but shareholders and creditors will just keep funding them below what their projections would imply given...it's tech...so far easier to just hope you get the next unicorn idea / would-be founder on your team. 

The problem is the tide has gone out. Cost of capital is skyrocketing across the board and you can't just keep paying insane amounts of money to people who were popular in bschool to just not do much. 

So what does that mean? It means the party's over. Sure, Meta and Alphabet and the rest will still hire but it won't be the bonanza it has been. 

Jun 13, 2022 - 11:08am
anonguytoibd, what's your opinion? Comment below:

We can all agree that we are witnessing another tech bust. However, since we are talking about careers, I wouldn't say it's a bad time to join a company with good products and great operating strategy.

MBA's and really all job applicants are so reactionary and behind the curve in careers unless they are lucky. People gravitate towards whatever is hot and don't really think long term. Yes, we are seeing a tech meltdown with valuations decimated in the public and private sectors. But do we really think the future is going to be powered less by technology? Is software, AI, block chain, robotics, and general technology enablement not going to further grow in relevance and significance with regard to value creation? I'd argue we are in the first innings of a tech revolution that started with internet use being widely adopted. Going to a tech company now and receiving more equity at a lower valuation is a good long term play. You'll be miles ahead of the curve when people decide that tech is hot again. You, not your counterparts in consulting or banking, could have equity worth multiple millions by then. Even if valuations take 5 years to climb, you'll have at least built a highly relevant and sought after skillset well beyond what you'd accumulate in consulting or banking as it pertains to tech. This is even more true if you navigated a company through a recession. 
 

Consider this fact, Amazon, eBay, and Google all were started within 2-6 years prior to the dotcom bust and they started thriving again not long after the bubble collapsed. 

  • Associate 2 in IB-M&A
Jun 13, 2022 - 7:00pm

I mean - is your role a product manager? Is it at all technical? The reality is that the vast majority of MBAs exiting to tech are going into strategy and marketing, mostly the latter frankly. You're not building a development skillset, you're doing the exact same thing as those going into consulting (or consumer products like PepsiCo honestly) - working out placement and strategy for a specific product. Except you're hyperfocused on one specific type of product while the consulting guys see a lot more markets.

"good company with good operating strategy" - this is precisely what I'm saying most tech firms do not have. Their operations are a mess and they've been able to get by with very low ROI among most projects because they have a number of grand slams. They threw cheap money at things, and this is over. You can "move fast and break things" when shareholders are giving you an insanely high multiple to cushion missed earnings, doesn't work so well when breaking something might cost you a quarter and your board is agitating for operations to tighten up. 

As far as "many millions" - I mean, I honestly don't agree. If a consultant (leave bankers out of this bc their salaries are 1.5 - 2x tech) wanted the same exposure, he could just buy the shares you're granted, no? Sure, I'm sure you've got a slightly lower strike with it being comp but given your time horizon, I'm not too sure it's that much different. Obviously this is different if you're going to a private unicorn but I think it's fairly easy to get high-upside tech exposure if you really want it. 

Looking at Amazon Ebay Google is survivorship bias. Thousands of public firms, with similar operating strategies, failed post dotcom. They also built strong moats when no real competitors existed. They're no longer the smartest or biggest guys in the room. The industry is far more mature and will begin to look more like industrials - commoditizing engineering work and thinking in terms of ROI - than it has in the past. 

Now, if you're saying you're going to a firm with repeat founders in the midst of raising Series A? Yes, I believe you - fantastic upside with the best learning opportunities around. If you're going to Amazon? Lol cmon man. 

  • Associate 1 in IB - Cov
Jun 14, 2022 - 5:34pm

I like to think about an IB bonus as a option collar:

- bad year/performance: limited downside from high salary

- average year: loosely pre-defined bonus range

- great year: do a little better but upside is capped

Is it better to have long term equity in something or routinely hit singles & doubles for a career? Its truly in the eye of the beholder. Tech has just been funny in that the certainty of equity payouts has been artificially high and now it is more reflective of a normal risk/reward trade-off where having that unlimited upside exposure experiences a more normal realized volatility. 

TL;DR: bankers sell upside for some certainty, tech bois wont see equity vest nearly as often now 

  • Intern in IB - Cov
Jun 14, 2022 - 6:28pm

Great point!

Jun 15, 2022 - 9:23am
rabbit, what's your opinion? Comment below:

Totally. Am now past hedging for the downside and want to shoot for a homer. Have enough in the bank to take that risk. Enough that I prefer to go small tech, help build a business and take a shot on the equity. Big tech was never for me. If I wanted to be a small cog in a big machine, I'd stay in banking.

Jun 14, 2022 - 9:44pm
ib-healthcare-guy, what's your opinion? Comment below:

What attracted me to IB as an MBA student were a couple things:
 

  1. Working on billion dollar financial transactions was incredibly appealing to me.
  2. I've always loved the financial markets, businesses, etc. and banking was the one job that stimulated me the most.
  3. Top MBA students generally prefer easier lives post-MBA and aren't recruiting for banking which (1) makes recruiting easier, (2) makes career progression easier (add in the fact so many associates burn out, making it less difficult to make it to VP and above), (3) limits the talent pool for the career / makes your skills more in demand. 
  4. If I did want to exit almost every company typically hires bankers for some role. Buyside might be a long shot but anything is possible. I've seen a lot of post-MBA bankers, and most don't care about financial markets / aren't that special. A lot of kids do it for the money, which I would urge against since you'll probably burn out in 1.5 years and collect one bonus taxed at 50%.
Jun 14, 2022 - 11:03pm
W1234M, what's your opinion? Comment below:

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Jun 15, 2022 - 1:23am
ConfusedGuru, what's your opinion? Comment below:

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