A PE VP's Take on MBAs for PE
I've looked through this forum for several years now, and rarely do I interact. However, I've developed strong thoughts on MBA programs since completing my own, and wanted to do my part to the community to stop what I view is a massive mistake for most.
The TLDR is, if you want to work in PE, an MBA is likely not for you. There are scenarios which it makes sense, but in most cases it does not. See below for some examples.
First, my background is Non-Target -> BB IB -> MF PE -> H/S/W MBA -> VP at the MM fund I work at now. I am coming at this from the angle of seeing my own journey, as well as classmates from each step along the way.
I will acknowledge that many people want to do MBAs for other reasons. If you want to pivot out of PE, pivot from the military into banking/consulting, find a husband/wife, etc. the MBA can be very useful. I myself met my partner at H/S/W and had a ton of fun, but that is not career related.
I never intended to get one, but when I was at a MF PE fund, pretty much everyone in my class was taking the GMAT and applying to H/S/W so I did the same. Some applied to other M7's, but at least where I was, it was pretty much considered those 3 or bust.
I got in, and frankly my rationale to going was 1) I went to a non-target undergrad so I felt like the ivy-league MBA was needed from a brand / network perspective, 2) I planned to stay in PE for the long-term, and saw that pretty much all partners went to H/S/W MBAs, and 3) I didn't plan to stay at my current fund, so I would have to recruit. While there is some merit to the 1st and 3rd points, the 2nd point just shows that MBA's are different than they used to be. The value has declined in the past 10, even 5 years. Now, you can find many VPs, Principals, MDs, and Partners without MBAs.
There is a belief that if you were a PE associate at a top MBA, you will have an easy time getting a VP job so it makes sense. This isn't the case. Not only did I have difficulty, but I had several classmates with PE experience graduate unemployed, and most people either took jobs they didn't want that were not as good as their pre-MBA fund, or left PE altogether. My fund actually told me that "they hired me despite my MBA, not because of it". MBA career counselors are not helpful either - their job is to get you a job, not to get you the job you want. So for those of you who are PE associates, my advice is to stay at your fund if you can/want to, and if not then recruit laterally.
There is also a HUGE disconnect between who admissions is letting into MBAs and who employers want to hire. I am seeing this as my fund is considering hiring MBA's. H/S/W all admit between 30-40% international students, telling them that this is their ticket to a U.S. job and citizenship, which is far from the truth. Admissions also prioritizes people with 'wow' stories (which in today's DEI-focused society, is a lot of 'poor-me' stories). PE funds don't give a shit about this, we just want people with good experience who will work hard.
Lastly, many people without prior experience in PE go to an MBA to make the pivot. This is incredibly difficult, and very few are successful. Nearly all of my classmates who attempted to do this went back into banking, consulting, or whatever they came from, with some outliers being from those who got internships and then became an Associate (i.e., the position you can get without the MBA).
I don't argue with this (and I'm the rare unicorn who did your last sentence (MBB --> MBA --> Associate Program --> Direct promotions)). I concur that I saw many qualified classmates with pre-MBA experience from MM/MFs struggle to find post-MBA VP roles or trade down substantially in size (e.g., MF --> LMM). More than a handful opted to leave the industry and take tech jobs, hedge funds, etc.
Only spot that I'd quibble, it sounds cliche, but I actually think the business school network is really valuable. I'm one of the only people at my firms with an MBA, and I find that my connections to senior folks at other firms is multi-fold higher than my peers (and even superiors). I have reach across levels and across regions (i.e., not just West coast, etc.) where the rest of my colleagues tend to just know people mostly at local firms. This has paid dividends when it comes to teeing up intros for my colleagues at specific firms, getting connected to specific portcos at another firm, etc. This singly isn't a reason to go, but I certainly think the network is pretty invaluable.
Don’t shoot me for asking, but did you go to H/S or to W? At my fund I have asked 6 VPs this question and all of the H/S ones said it was worth it and the 2 W ones said no 😂
I was H/S; curious to see for OP
😂😂
I think one of the issues with asking people w/ MBA's at PE Funds is the selection bias. Since it worked out for all them (like it did for OP), generally they recommend it, but you don't hear from the people whose career got completely wrecked from B School since they aren't at your PE funds...I think this is why B School is still common despite a lot of people sharing this sentiment.
Agree on the network point, although I feel like a reasonably outgoing, determined person can make up for it by doing their own networking.
My background is Wharton. Does H/S have materially better PE placement than W? From what I've seen, it's been an even mix of the three but probably depends on the firm, and maybe I tend to see more W due to my alum status.
Wharton is closer to CBS than it is to H/S. It really should be H/S. Idk why everyone is trying to make “HSW” a thing — not even close to being in the same tier.
Very fair Q - H/S. I know there are pros/cons to each of the three but I have friends at the other two which share my sentiment. Most don't regret going, but do agree they are overrated. I'm not going to get into a pissing battle between whether H or S is better, because all the graduates seem to think their specific school is the best.
I will echo the point around network, and the main argument I hear is that I won't see much of the benefit until 10+ years later. I'd also like to say that I did learn diverse material that I wouldn't have learned otherwise in PE, and it never hurts to broaden knowledge. Specifically, if I did decide to leave to become an entrepreneur, going to MBA is going to help a lot.
Let me also clarify that I don't regret going - everything worked out for me in the end and I cherish my experience, I just think most people don't know what they are getting into. IMO, all the associates at BX/KKR/TPG shouldn't be rushing to go because their network and brand is already strong, and adding HBS doesn't add anything. Again, this is based on my situation.
H/S are 100% worth it - it's very likely OP went to W.
The value of H / S network, experience, and the external validation it provides is irreplaceable and its value far supercede's any one job or even one industry. With the right compounding of talent, work ethic, experience and H/S - there are few doors that cannot be opened.
bro really just said congrats on wharton
I feel like you are an H/S admissions person lol
"its value far supersedes any one job or even one industry" -> If you think that someone who worked at BX but went to Wharton has less perceived value than someone who worked in any job other than MF PE but goes to H or S, you are just wrong, idk how to put it
Great chart below, which I'm sure most have already seen. Pretty sure 15-20% of the classes didn't choose to be unemployed...
You sound way too salty to be an actual HBS/GSB grad
Holy fucking shit. Brutal chart.
Pretty interesting that the better schools have the highest unemployment rate. Definitely seems to indicate unrealistic expectations or entitlement (‘no I won’t accept an FP&A job - I went to Harvard!’) while the market has moved on and doesn’t value these degrees that much anymore. It has been a pretty obvious trend for those who didn’t do an MBA or never intended to but probably a hard pill to swallow if you dropped $200k on it.
lol OP went to H/S. Also plenty of Wharton come from MF and end up in great MM/UMM/MF funds
The other option is being like one of the hundred unemployed ex PE Associates that have to go back to banking (may not be a bad thing), pivot out of PE or do something then try to get an MBA down the road. PE is a funnel and nothing will guarantee you have a seat at the table
Hear you on this point. What I was trying to say was PE Associates voluntary leaving after two years, versus trying to rise direct to SA/VP. Agree that nothing guarantees you a job in PE
From a strictly professional standpoint, I think so much of it depends on the market conditions when you graduate. Recruiting was awful for MBA students who graduated in 2023 and 2024. I’m sure a lot of people had to settle for roles that were worse than their pre-MBA roles based simply on the year they graduated. Conversely, people graduating into 2020 and 2021 had red hot job markets so they had much better job outcomes (setting aside the fact that COVID really disrupted the MBA experience). Same thing was true back in 2008 / 2009 versus 2006 / 2007.
Unfortunately I think it is tough to make a proper comparison because no one knows what “would have happened” if they hadn’t gone to business school and vice versa. For a 2024 MBA graduate who struggled to find a job, it is easy to say “I should have just stayed at my fund, I’d be a VP by now but instead I’m graduating with no job.” However, it is very possible that same person could have gotten laid off given all the downsizing that occurred over the last 1.5 - 2 years. There are no shortage of PE associates who finished their two years in 2024 and are out there looking for jobs because their firms cut back on the number of internal promotes following bad fundraising results. These PE associates are having to re-do their associate years just to stay in the industry and would be much better off ‘hiding out’ in business school until the market improves.
Given this, I encourage people who actually want the business school experience to go for it. I personally loved my time during my MBA and am really glad that I went through with it, both professionally and personally, and I went to Booth not H/S/W. I graduated in 2015 which was a good time in the market so my classmates pretty much all had strong outcomes. Your mileage may vary…
Great call. I am basing this off of being in the recent graduating classes with poor outcomes, so knowing several classmates who were and are miserable, and now getting emails from recent grads and current students from my alma mater in the same situation.
I do still think the MBA hiring value has decreased, as almost no PE firms require an MBA anymore, versus when I first recruiting into PE and most associate positions specifically said pre-MBA. Let's revisit in 4 years to see if the MBA has regained value
This is a really interesting point, and I think that there's a lot of hindsight bias that's hard to avoid in this line of thinking. We probably have a healthy amount of collective amnesia about COVID, but I distinctly remember penciling out different economic recovery shapes (V shaped, U shaped, flatline, etc.). Nobody knew what would happen; it could have just as easily turned into a two year recession, for all we knew, which would have made the hiring classes between 2020 - 2022 terrible places to be. Conversely, while $4T+ of stimulus between CARES and ARP, in combination with a decade plus of ZIRP, made supply-based inflation worse, we should also remember that the dominant monetary policy question from 2010 - 2020 was, "where is the inflation and why can't we get it to the 2% target?"
I think the reality is that the best way to evaluate the MBA experience is in the most basic possible lens - do you value the two years of being on campus at that point in your life than the two years of incremental earnings and work experience? The career chutes and ladders game is so hard to time (which I am learning the hard way), and not really worth fussing over in comparison to the bigger picture question that's posed by the MBA vs. direct promote / lateral decision.
I graduated from W without a job and I'm still looking...with pretty good banking and PE experience pre-MBA. Am I annoyed and/or stressed? Yes, very. Do I regret going knowing what I know now? Not really. There was nothing in B School that was going to make my PE career prospects better off vs. not going, but having the time to explore, have fun, try new stuff, was invaluable for someone like me who was miserably slaving and decaying away.
It sucks now that I'm trying to get back in it, and my former co-workers (who I helped out a lot) are promoted over me, but life is long and sometimes it takes some turns. Nobody goes from PE to B-School expecting that somehow 2 years of vacation is going to make their PE recruiting options sooo much better, it's obviously not. It's all the other stuff, including personal, that make it an experience that people who can afford it decide to have.
Smart man. All these idiots who chose to continue working instead of going to b-school are just coping. The people who did an MBA will be more successful and fulfilled when it's all said and done.
"There is also a HUGE disconnect between who admissions is letting into MBAs and who employers want to hire. I am seeing this as my fund is considering hiring MBA's. H/S/W all admit between 30-40% international students, telling them that this is their ticket to a U.S. job and citizenship, which is far from the truth."
This is very interesting, thanks OP - Was it a total disaster for internationals recruiting in your year?
I'm a European working in PE in London. I'd give an arm and a leg to move to NYC (most of my best friends are there and I never really liked London), but my firm doesn't have an office there, which is making me consider an MBA.
So far I got very mixed views - some are telling me to stay away from it as the risk of missing out on the H-1B is too high.
Assume you'd agree with this view? Would really appreciate your 2 cents.
IMO, depends on the school you get into and what your expectations are in recruiting. If you have a solid resume (MBB/IB + PE) and go to H/S, I think you’d have a good shot at landing at some PE (maybe not the most competitive ones) in the US. But yeah, staying long term is a dice roll with the lottery. Some funds may not take the risk. But maybe smaller ones might. All idiosyncratic.
Thank you, makes total sense. My profile is what you'd expect (top EU target + BB M&A before), so I'm positive on admission prospects (as much as one can be).
However, being part of the London circle, which is the "best alternative" for people that struck out of the US, also means that best I could do if I get kicked out is coming back here, and the thought of investing time and money just to end up at square one is very unappealing. Not an easy one for sure...
My firm (MM) is looking for VPs in SF. If you are a recent MBA grad with pre-MBA PE experience at a MM/UMM/MF, send me your resume
All mid-levels and seniors in my fund -- and funds that I respect -- have an MBA. >80% from H/S, ~15% from W, 5% from other M7s (mostly Booth and CBS). If you don't have an MBA from HSW, I can't take you seriously as a private equity investor. It tells me a few things: (1) you weren't good enough to get in, (2) you're not serious about your career, or (3) you have very short-term thinking and poor judgment (i.e., don't want to give up pay checks, "opportunity cost", etc.)
An MBA from H/S will ALWAYS pay off (and W in most cases). Sure, you may know someone successful without an MBA, but literally 100% of H/S grads are extremely successful (W less so but still 75%+) personally and professionally. There is no better investment you can make for yourself than an MBA from those 3 schools.
Personally, I will never promote anyone without an MBA even if that person is a rockstar (most MDs feel this way as well). Your upside is severely capped without one, and the $500k tuition + foregone salary really pays for itself in no time. If you disagree, you’re probably just “coping” because you weren’t good enough to get in and/or you chose not to go and are trying to justify your horrible decision.
TLDR to be truly successful you need an MBA — ideally from H/S.
lol nice troll post, go ahead and take a look at the team page of most PE funds, there are plenty of partners without MBA’s.
And you can guarantee 100% of H/S grads are successful professionally AND personally? lol
I said that was the case at my fund and at funds I respect — not those random mid market funds that hire B players. Those guys are jabronis.
Clearly your reading comprehension skills are weak so I’m not surprised you’re salty you got rejected from HSW lol
YMMV but horrible take from my perspective. None of the kids in my UMM associate class who went to b school got senior associate or VP offers. Similar trend in years following in which many of the kids going to business school (all HSW) were generally among the worst quality associates in their class. Was also incredibly underwhelmed with 3-4 VPs I saw come out of HSW (all three schools) post-2020. Glad your MBA worked out for you but know plenty of well-qualified MBA kids struggling to get jobs now and a ton of others who are pretty mediocre. All the top analysts from my banking class who have stayed in PE did not go to business school.
I don’t know how I would have fared with b school admissions but I had a 3.9+ from a target school, worked at a top bank, and got a 99th percentile GMAT score. Great ECs and would have had strong references but didn’t need an MBA to get promoted, don’t come from money, and didn’t need to find a wife.
Pretty elitist and narrow minded of you to have such a view. I don’t think MBAs are all that helpful for PE folks today (especially for people who went to undergrad business school) but I don’t use the degree (or lack thereof) to decide whether I respect someone, would rather base that off their intelligence / character / performance.
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