Breaking into PE from HSW MBA with nontraditional background
I am heading to one of HSW this fall and have nontraditional work experience (but went to a top tier undergrad, for what that's worth). I'm interested in breaking into PE either 1) directly or 2) following an IB summer internship and then re-recruiting in the fall. I know both of these paths are extremely challenging overall. How often does the second path happen? I know, anecdotally, of a few friends of friends that have done this but not sure how common it is. What can I be doing now to position myself?
Also HSW, also top-tier undergrad. I remember dropping in on the PE recruiting session in the first week of my MBA - largest auditorium filled well beyond capacity. The advice our head of career services gave saved a lot of people a lot of time: if you were in PE pre-MBA, your chances of returning were under 50%. If you were in IBD, your chances of breaking in post MBA are less than 10%. If you were a MBB consultant, your chances are under 5%. For everyone else, it’s 1 in a million.
About 7-8% of MBA graduating classes end up in PE, whereas anywhere from 10-20% of the matriculating class came from PE. (And as a brief aside, the definition of PE can get, uh, creative for some of that 7-8%)
Please, please, take a look at these odds and get really clear with yourself as to why you want to do PE. This is a nearly impossible road you are embarking on.
I hate to say it, but I agree with bleedblue82 here. It is possible. It can be done. I know people who have done it. However, the odds are very stacked against you and you're taking a big risk by foregoing other career paths. Unless you have a very high risk tolerance (aka, comfortable graduating without a job), I'd advise against pursuing PE without a very solid Plan B in the works.
One thing that bleedblue82 mentions which is too often overlooked is the concept of 'what counts as PE?' Because the schools aren't going to report statistics on a super granular level, PE/VC is a pretty encompassing bucket. For example, there are a lot of people on this forum that are focused exclusively on the equity side of PE doing traditional leveraged buyouts. Anybody coming into the school from or graduating to a lender will be counted towards the PE category. I believe fundless sponsors, search funds, and other such funds are all classified this way. So if you're focused exclusively on doing LBOs from the equity side, expect the true placement statistics to be lower than the reported numbers.
Unfortunately getting a job in PE isn't one of those things where if you work hard enough, it will happen. The GMAT is like that -- study hard enough and long enough and you will be able to get a high score. In PE there are a limited number of spots and a huge deal of top notch competition. On top of years of hard work you need to have a degree of luck on your side. For some people that luck never comes.
However, one thing is certain, if you don't try and don't put in the hard work, your odds will be 0.01% (always have to leave room for nepotism). The choice is yours whether it is worth it. Goodluck!
I think there is some differentiation between H/S and W on this though. I recall seeing a stat that more people exited S in PE than entered.
To CompBanker point above - depends on how you define PE... are all those GSB folks in traditional LBO work? My experience suggests not. But hey, I don’t track these things that closely and most importantly I think we can all agree that IB and MBB folks are faaaar more likely to get the nod (and even their chances are not high).
Two follow ups. Are you HS or W? Your odds will be double at H and maybe triple at S. At S the outgoing PE/VC class is ~120-130% of the incoming class every year. (odds still low on an absolute basis regardless).
Secondly, are you URM? If so, you're in a good spot.
Overall, if you're a URM at Stanford, I'd say you have an excellent shot. If you're over-represented at Wharton.... probably not worth trying
Megafunds will fully eliminate the pre-mba work requirement for urms (have numerous examples but each are easily searchable so cannot specify). But firms incl BX, KKR, Bain etc. as well as some large growth funds + the large VCs are pushing in this direction.
Agreed LMM and maybe even the MM space wouldn't be open to someone like this. But any fund with a latest raise of maybe 4bn (UMM+) will have some degree of URM recruiting. This is sourced from family members who are/have attended one or two of HSW and are in PE.
There's been a huge push in recent years from PE firms to recruit more women and more minority candidates into investing roles, driven by LP pressure and desire for LPs to diversify their own investment manager selection.
That said because there are so many more qualified candidates than spots odds are still stacked against you... from what I've seen VC is much more open to non-investing backgrounds than PE and international firms are more open to it than US firms. Your normal blueblood US-based PE firm is going to find all the URM candidates they need out of the pre-MBA PE candidate pool even if they have to go to MM / LMM funds to find it.
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