Getting into PE after MBA?

why does everyone want to go into PE and HF? Isn't banking good enough?

without previous PE experience, and directly from school: HBS, Wharton, Stanford, in that order, and talking about buyout only, not VC. In europe INSEAD, possibly a couple from LBS.

after that I'd say from other schools almost none, at least to established funds.

no, banking is not good enough, when PE/HF pays 2-3x more.

Unfortunately, that's right. At other top schools the people who get PE jobs are all former bankers with great credentials. Career switching into PE is virtually impossible, and it's not helped by the fact that it seems like 80% of b-schoolers want to go there. Too much demand, not enough supply.

i thought most PE jobs recruited directly from the banks themselves not from B school? Isn't a better idea to land a banking job from School and then jump to PE?

ehhhhh... none? why are you going MBA and not CFA route? I don't think any of these schools have a high likelihood of getting you into PE or VC... maybe "equity analysis" at a small / no name firm

alas!?

None of those schools is sufficient for PE or any front office role at a good firm, in all honesty.

I would further add that PE (at a legitimate, respectable firm with industry-standard compensation) is virtually out of reach even to graduates at top 10 MBA programs without pre-MBA PE experience (which itself likely followed a stint in IBD or consulting).

that leads to an interesting question, which is particularly relevant to my current situation: what do small to mid cap PE firms pay their Associates?

Understand it's tough to enter the field with these schools(but since MBA is often required to change fields)

Since these are the only options I have, Can you guys rank the above schools in terms of * likely hood of entering into Invesment Analysis field(initially may be at a smaller firm..) * better MBA program recognized by recruiters in IM

Thanks for your advice

1. Pitt
2. MSU

putting Pitt first because i think it has a better technical reputation... compare that to rankings though, and do a deep dive to see if either actually have any networks in your desired field, that's the key, since neither has real prestige or brand value in finance. honestly, if you're going to go this route i would highly suggest you augment your degree with some CFA progress - getting through level 2 is a big plus and will be very helpful as you try to secure a role upon graduation.

unfortunately i don't think the other schools will help you at all... interesting that you're limiting yourself to these schools already, especially since all decisions have been made for fall 2012 and apps aren't yet even due for fall 2013.... don't rule out part time mba at a better brand name school, this may be your best MBA option

When I talked to some alumni, current students:PITT and MSU pretty much no one in the class is entering this field.But Uconn around 5 students in each class get interns or enter investment field due it's location in connecticut,very close to New york,Boston.Also uconn grads have higher starting salaries than pitt, msu...(uconn also has a fund which students manage)

Based on the above details does it makes sense to have uconn to have your top pick compard to all others...

note: i finished all my application process and the above are the only schools i got admit

gotcha - maybe go UConn then... in terms of prestige, it may be lower, but you're needs are more specific than that. either way take CFA level 1 this december

Thank you. Just want to validate if my reasoning to go to uconn is correct and that uconn is better than the remaining schools i mentioned for my goals.

Thought in terms of pretige uconn is comparable to pitt, msu.......then baruch,santa clara are out of question..

MBACal, it sounds like Spalding may have a better formed opinion on this than I do, but if I were to weigh in I would say you might want to hesitate before ruling out Baruch. In my career, I honestly can't recall meeting anyone in a front office position at a big firm from any of these schools. However, I will say that those I have met from "lesser-known" schools have generally come from schools in the NYC metro area and took advantage of networking opportunities.

Spalding, to the question of comp, a reputable middle market firm will generally pay at least $200K all-in for a first year associate in my general experience/observation. Someone with IBD experience moving over to PE should probably expect this or at least close to this.

re - thanks. the firm i'm talking to is not a reputable middle market - they have like 250M AUM... any idea what the comp is like on that scale?

There's not really a "standard for not paying street standard." If a firm is not paying in line with street, then they are probably going to try to offer you a little better than what you are currently making, which is why they might be willing to be flexible on candidate background.

If they think you're desperate enough to get into the industry, they might even make an offer at a discount to your current comp and tell you it's being made up for in experience. As a rule, this is generally false. A firm that says this is either not sufficiently profitable to pay you--in which case, what can you expect from the experience?--or stingy and not willing to invest resources in talent--in which case, what can you really expect from the experience?

great points. My incentive is not as much short term $ but building my resume prior to MBA so that i can exit into a buy side role with a reputable firm. Any thoughts on opportunities to lateral up and out of smaller PE shops?

Apologies, first, to the OP for hijacking the thread. A pretty focused thread comparing some MBA programs has turned into a larger discussion on PE comp.

Anyway, Spalding, I don't quite remember your background but if I recall correctly it's more accounting or operational consulting than finance or strategy consulting. Assuming you get an offer from a smallish PE fund and below market pay, you really have three options: take the job, turn down the job and wait for a better PE offer, or turn down the job and wait to get your MBA from your current role.

Viewed in that framework, I don't think there's too much downside taking the PE job, provided there's not a massive and material hit to your compensation and lifestyle. You'll get experience that's more relevant to the industry you want to be in, and should not impair your MBA options (although I suppose you have to weigh the impact it might have on your recommendations). Will an exit to "reputable PE" be probable after an MBA? Probably not highly likely, but still better than if you hadn't gotten some pre-MBA PE experience. And since it sounds like you want to be in finance anyway, then it will probably at least enhance the types of post-MBA finance jobs you will be competitive for, even if not your top picks.

As for lateraling up and out of the smaller PE shop, I would say you face some big trade-offs. It's unlikely you'll be able to do a "quick flip" and go from non-finance to small PE and then immediately go from small PE to big (or MM) PE. So you'll probably have to wait a couple years. At this point, you're probably getting up to the age where you'll want to get your MBA soon before you are "too senior" coming out of the MBA program. Also, going back to the recommendations issue, if you keep hopping you'll burn bridges and make that process more difficult for yourself.

Apologies belong on this end - i definitely derailed the topic here.

@mbacal12345 - i'm happy to chat about any further questions you have. feel free to post them here or PM me.

@re-ib-ny - thanks for your thoughts, much appreciated. You actually helped me work through a real estate PE case study in the past, and were hugely helpful on that too (let me know if you decide to start charging for advice :) ). In terms of the role i'm interviewing for with the small PE firm - I'll definitely take it if i get the offer and don't have anything else in the works. I'm borderline desperate to get out of consulting and into anything more interesting and investing driven, and think i would really love the role. Having said that, I do have lofty long term goals and don't see myself staying at this firm for the rest of my career - for that reason i'm interested in learning more about the value of working at a big / MM pe fund. I recognize that the management fees go a longer way in terms of base comp, but my concern is that these bigger funds may not do as well in terms of carry, which could be seriously penalizing... is it safe to say that comp (at VP, Principal, MD level) is on average correlated with fund size?

Spalding, my pleasure to help. Generally speaking, at a junior level in private equity you'll get paid a base salary and a bonus. Some firms might throw in phantom carry, but it's not going to make a big difference versus getting a discretionary cash bonus (which itself will also be based on fund performance to a degree). After all, when a firm sizes your carry, they're going to size to some total compensation number, and probably base the estimated value of the carry on the assumption that the fund hits its target return.

I think it's fair to say that at almost all levels, fund size is heavily correlated with compensation. Larger fund size means more management fees and more carried interest. Also, larger funds (which are generally more successful fundraisers) are often able to extract more generous fund terms from LPs than smaller funds. They also tend to be (and can afford to be) more picky on pedigree and compensate accordingly.

Honestly, getting PE gigs is an uphill battle at HSW even with prior PE experience.

Booth, Kellogg, CBS, Sloan

From the 2012 full-time employment reports

% students heading into PE HBS: 15% Stanford GSB: 11% Wharton: 9.6% Booth: 7.1% Sloan: 2.6% (With VC/HF/PE combined...) Columbia: 4.3% Kellogg: 4%

I feel pretty confident in saying that >15% of HBS students have the IB/PE background. And definitely more than 10% at Wharton, Booth, etc. You don't want to be the guy who ends up going back into banking after failing to get a PE job, but it happens, even at top programs. For those looking to get a PE gig without prior experience...good luck?

Chicago is a strong tier 2

What about Top MBA > Bain Consulting > PE route?

A few months back (July?) I got a hold of some slides from the Wharton career office that gives some color around the numbers of students with PE jobs before their MBA and those afterwards. It's all on a bunch of slides at the link below:

http://masteradmissions.com/wp/2013/07/01/exclusive-wharton-student-car…

So here's what I learned about the Wharton class of 2013

PE/VC 28% expressed upfront interest, 12% applied, 11% ended up there IB 6% expressed upfront interest, 11% applied, 15% ended up there IM/HF 11% expressed upfront interest, 17% applied, 5% ended up there

In a nutshell: The charts say that fewer students were interested in investment banking up front: just 6%, but 11% applied and (maybe related to those who returned to their own firms?) 15% ended up in that industry. As for investment management (the only way hedge funds are captured in the stats), 11% expressed interest, 17% applied, but only 5% ended up working there. Does that mean investment management is more competitive than PE?

Not sure if this adds to the conversation, but data is data, after all

Betsy

Everyone here has already made really good points - it's incredibly hard to get into PE without prior experience before b-school. There are simply too many people that have that experience for one without experience to move in front, barring a special situation.

I will add one thing to this: I know a few people at Columbia that have interned during the year at PE/HF/IM shops to get experience. Basically, they networked their ass off, found an opportunity to work for free to get the line item on their resume, and even if they didn't go that place full time, they had a much better chance doing full time recruiting in their second year. Each of the three I know over the past few years ended up in that field (one actually had prior experience, so not sure why she did it, but you get the point).