For context, I will be starting full-time in banking next summer. I am interested in PE but am trying to make a more informed choice on what I want to do in 2-3 years, rather than going with the crowd and jumping into recruiting without much thought.
For those who have worked in both PE and consulting, in which did you feel you learned and developed the most skills that would be pertinent to pursuing entrepreneurship, a strategy role, or just general business acumen?
Alternatively, could those same skills be attained by staying in banking?
For purposes of this discussion, forget about money, hours, preftige, all of it. I'm simply wondering about the long-term value of what you learn in each of these careers.
Not exactly the same, but I worked in VC for a year before starting at MBB, so take what I say with that bias/grain of salt. I'll say "VC" instead of "PE" here but I'm sure you understand that there is a lot of overlap between the two--not that it's the same, but much more overlap than consulting.
For Entrepreneurship, VC was better because of the ecosystem that you're in as well as the way that you're taught to look at companies/opportunites. The things that you hear walking around the VC office are about ideas people have, ways to look at companies, sourcing ideas, etc., but at MBB, you're hearing a lot more about how to structure communication, market information, organizational information, etc.
As far as a strategy role, Consulting >>>>>>>>> VC/PE, not even a question. MBB teaches you how to think and frame and get the right information in the right format to make decisions, something that I didn't find in VC as readily. Also, the caliber of people that you're around is going to be similar, whereas in VC, I honestly didn't feel that. Could be better in PE, but not sure. MBB will teach you so much more about how a company ought to work and how to make it better than PE/VC ever will, simply because the job itself is inherently different: PE/VC is going to be placing bets on companies and perhaps doing some things here and there to improve them (if you have enough influence/control), but in consulting, that's literally the entire job.
As far as business accumen, I'd say the same thing as above, Consulting is going to get you a lot farther.
I'd also strongly caution you against Banking. I know many banker and I know many consultants, and without question, I'd rather have a consultant on my team than a banker, 10 times out of 10. There's an enormous circle-jerk that takes place because of compensation and prestige which inflates the positions and work to something that it's simply not. Banking isn't the way that you learn business--banking is the way that you learn banking and finances. Everyone on this forum will have a bias towards the financial side of things (which is fair, tbh, it's about banking and it's very important), but consultants are just better at business skills. Hard stop.
Hope that's helpful!
Best,
KHC
Edit: feel free to message me if you'd like to get more info. Happy to help.
Edit 2: Wow, LOTS of salty bankers. Looks like the group-think and circle jerk has really gotten into your heads. I'd recommend putting the Kool-aid down and thinking for yourself rather than following the lemmings off the cliff smh
For those of us who didn’t get into MBB is there a way of gaining similar skills and development without having spent time in MBB?
Hey @earthwalker7"!
I'm 100% sure that there is, but I know that the path there is much, much, much more variable and not laid out. For example, I knew a guy who made a startup, scaled it until the product was sold in Costco and places like that, sold it, then joined the M&A team of the company that he sold it to--that guy was 10x the businessman that I'll ever be, but you can't just say, "Yeah, go be a successful entrepreneur." Even ones that have hit it big can be dogdy, i.e. I would trust Tony Hsieh but never Adam Neumann, even though both are wildly successful. and even if you get the experience, if you're doing it as a stepping stone, it's just hard to explain how what you did is worth as much or more than MBB.
My biggest advice (and then one that I'm following myself now, as I move from MBB to PE) is the same that Martin Luther King Jr. gave:
"Whatever your life’s work is, do it well... If it falls to your lot to be a street sweeper, sweep streets like Michelangelo painted pictures, like Shakespeare wrote poetry, like Beethoven composed music; sweep streets so well that all the host of Heaven and earth will have to pause and say, ‘Here lived a great street sweeper, who swept his job well."
Or in a more punchy but less eloquent way:
“What-E’er Thou Art, Act Well Thy Part.”
Best,
KHC
Thanks for the detailed response. From your experience in VC, do you think you learned things that would be instrumental in starting your own company that would otherwise be unattainable in either buyout PE or consulting? VC sounds exciting to me, as it does with just about everyone, but after spending nearly 3 years with an angel group, I've become somewhat disillusioned with startup investing from seeing dozens of frivolous companies backed by founders with meaningless credentials like being accepted into some accelerator that accepts anyone with a pulse, Forbes 30 under 30, or some similar BS. Also, I'm wondering if VC associate work would be primarily around sourcing, and if the analysis (if any) would be highly subjective and meaningless in the big picture.
Hey fuzzy_stocks,
Two big things that I learned:
1) Team is so, so, so, so much more important than the DD process suggests. When you build a team, you're creating a stacked bar chart of the company's total value. You multiply that value against the value of the idea/company, but let's be clear: good ideas area a dime a dozen: good teams are worth 10x their weight in gold. I'm bothered by the fact that we spend so much time looking at market, trends, idea, etc. when DD is taking place for VC: If I was running my shop, 80% of the memo would be breakdown of why we think the team will succeed (based on our interactions with them, not stupid glamour shots like Forbes lists), and 20% everything else. If I started my venture, I would bet that my roommate probably isn't the next Zuckerberg and I'd look for someone more qualified, make a juicy options pool with hard targets to vest, and be ruthless about who I bring on and let go, because that's the engine, and you don't win a race with an engine firing on 2 cylinders.
2) The above being said, a rising tide raises all ships. Sometimes the market is right for something, and everyone that is in it will be killing it, even if they're an idiot. Be ready to jump on an idea that you think is going to explode upwards, because there's only so many explosions during a lifetime.
“I’m a career consultant, here’s why consulting is better than banking”
I'm literally switching from consulting to PE right now. Appreciate the comment, but you probably oughta learn to hold your tongue when you don't have all the facts. It'll do you well as you progress in your career.
Best,
KHC
More "skills" in PE (e.g., how to model this or that)
More "development" in consulting (e.g., how to think about things better, how to structure problems, etc.)
PE is more of a commodity skill like coding or or plumbing. Not too much higher order thought, just lots of organization and processing.
Cue MS.
Thanks for the response. I'm guessing you went from consulting to PE? Please correct me if that's wrong.
Like I mentioned in the OP, I am starting out in banking. Just based on the educational component, do you think moving to MBB would be worth the experience cuts in (1) starting fresh in MBB as a first-year, and (2) being a couple of years behind peers if I were to recruit for PE after consulting?
I think you're actually pretty spot on here too be honest. From what I understand, the ones that rise to the top in PE (and make MD) are the ones that do the "plumbing" and then are able to stand back and chat about the big picture, and tell us what else there is to consider outside of the water flow, but at the end of the day, yes, you can do very well in PE with just modeling skills.
By “very well” hope you mean as an associate
Would love some additional data points from people who spent time in MBB and buyout PE
wdy want to know
Based on the knowledge you gained from each, do you think moving to MBB after a couple of years in banking would be worth the experience cuts in starting fresh as a first-year, and being a couple of years behind peers if I were to recruit for PE after consulting?
Alternatively, do MBB hire people from PE for post-MBA roles without actually having done an MBA?
Again, this all relates to the goal of eventually pursuing entrepreneurship or a strategy role.
I'll add a perspective. I started at MBB and am now in PE.
When you talk to people who went MBB -> PE like I did I think there's going to be a natural bias for them to say they learned more in consulting, but I don't know if that's necessarily a function of the specific job itself. I think what's more true is you learn more in your first high-caliber job than you do in most subsequent jobs (at least tangible learnings you can point to) because you're essentially a blank slate. At MBB I learned how to structure my thinking, how to write a coherent email, how to communicate effectively in meetings, why color coding in excel matters, how to make small talk with someone 2x my age in a professional setting, and whole host of other things that I would classify as "How to be a high-functioning business professional." Those things aren't unique to MBB though - my peers who started in banking learned them and I'm sure Analysts who went direct to PE learned them too.
If you strip all those things out and focus on core learning from the job specifically, I think I could make a strong argument I'm learning more in PE. In Consulting a lot of my project experience was narrow (i.e. Helping a manufacturing company improve X process, helping an account sales team determine which accounts to prioritize, etc.) so I felt like sometimes I wasn't being exposed to the whole picture. I don't think I could tell you what core strategic issues kept the CEO up at night for any of my clients. In PE, I'm focused precisely on those core issue. I both get super broad in terms of thinking about how market dynamics will play out 5-10 years down the road, but also super granular in understanding why a specific product offering is preferred by a particular subset of customers vs. a competitor. To me this work is far more interesting and I feel like I'm learning more and becoming a better thinker/analyzer of businesses as a result.
Thanks for the great response. Out of curiosity, what size/type of fund are you at?
The last couple of sentences of your response describe exactly the kind of experience I'm looking for, and I'm wondering what types of funds are conducive to that experience as an associate.
I would look at firms that hire former consultants (even if you're not one), as they tend to have their Associates do that kind of thinking in addition to just being a model monkey. Some good firms to look into would be H&F, Bain Capital, Berkshire Partners, Golden Gate Capital, New Mountain Capital, etc.
If you want to get into entrepreneurship then dive in. It's the easiest it's ever been historically to raise a juicy seed round. Nothing will really prepare you for it.
You think so? I feel like consulting you can learn if you're tackling a good market, PE you can learn how to not get got by investors, venture you can learn what some common pitfalls of startups are, etc.
Having hired ex-PE/IB/consultants etc.. absolutely. Building your own business is very different from focusing on a specific part of a business with established infrastructure. It's completely different.
I’m going to show my bias here as someone who came from an alternative background and ended up in operationally-intensive PE (ie LMM where our management teams are typically pretty lean and have litte-to-no intermediate infrastructure).
I think this thread dramatically underestimates what you can learn at PE shops that actually work hands-on with PortCos. I’ve learned a ton about how to dissect data to find underlying root causes, how to build out a business plan to respond to problems, how to evaluate people and determine their strengths and weaknesses, how to pitch a recommendation to get a team on board with our strategy so that they actually believe in it and execute well, etc.
There’s a reason some shops target consultants - there can be a ton of skill overlap, and for some PE firms you actually get involved in execution as well. I won’t deny that we do plenty of rote process management as well, but the universe of PE is a lot broader than that
PE and it’s not close. Your skill set is incredibly broad business, finance, operations, legal, communication etc etc
95% of PE guys don't know their ass from their elbow when it comes to operations
Aren't you the guy that has built a presence on this forum bitching about your new PE job while aggressively lauding your old consulting job? At first you were somewhat convincing, now it's just obnoxious.
Any resources you would recommend to maximize one's chances of being in the 5%? Aside from actually undertaking an operations-focused role. Thanks.
I've been running my VC-backed startup for the past 4 yrs, prior to that: JPM/MS, HBS, MBB. No PE experience, but will chime in as you also asked about banking as a comparison.
From a learning perspective for general entrepreneurship and business acumen, consulting was where I learnt the most. That said, I mostly worked in a frontier market where cases were broad and hands-on in remit, working directly with CEOs etc. (HBS was surprisingly helpful too - the longer I'm out, the more I realize this. MBA certainly not necessary for starting out, good for the bigger perspective.)
IBD I actually really enjoyed as a start prior to that - smart people, fast paced, solid work ethic etc - but the learnings for me would be have been dispensable from an entrepreneurship and general mgmt perspective. It was all pretty specific to, well, banking (can't blame 'em for that). I can well imagine that PE creates more relevant learnings here.
Hope that helps, good luck!
I had the chance to work in Banking, then in Consulting, Banking again and finally PE.
I respect everyone´s experiences, but it also depends on your personality.
During my time in Consulting, I missed my time in Banking badly.
If your goal is to end in PE or similar, Consulting can be helpful, but Banking does a fine job for training.
I believe you learn by doing. In my opinion, Consulting provides a perfect training to work in a large corporation.
Taking into account PE is a financial sponsor, Banking provides more valuable skills and a smoother transition.
Having said that, sometimes you cannot choose the opportunities.
Why did you choose to enter consulting from IB? Why did you miss your time in IB once you were in consulting?
Well, the GFC in 2007 "forced" me to join Strategy Consulting. At that time I was an intern who successfully integrated with the team, but all the full time positions in my country (aka "graduate training programme", which all interns like me worked hard to be there) were removed (nearly at the same time as the CEO - hint: Swiss bank).
Other banks did the same. Since I was curious and there were no options in banking, decided to continue learning a different set of skills.
I did learn tons of office politics, pitching, process design (BPM), supply chain, got a very deep exposure to Telecom and Banking from a consultant perspective. I changed project every 3 months and dealt directly with C-suite, which was very intimidating at the beginning.
Became an expert in Powerpoint and in drafting business plans in Word.
But my background, personality and vocation made me understand that I badly missed my time in Banking.
The reasons were the following:
- Exposure to Financial markets and excel modelling
- Office dynamics and personalities
For some reason, I had the impression there were more camaderie compared to Consulting, which seemed to me more individualistic.
The projects were too diverse, and if you extrapolate this into the future, you will end like master of everything with expertise in nothing.
Also, the partners sold projects with unrealistic expectations, and most of the times, clients were not happy.
I have worked in both management consulting at a top tier strategy consulting firm and in mid-market PE.
I thought I had learned a ton at the consulting firm as I got to see so many different industries and important business problems the companies brought us in to solve. On top of that the professional development was great. This provides a nice set up to go into a strategy role in a corporate. From what I have seen other ex-consultants who have followed this path, the strategy role is often an interim role to get a line role with P&L responsibility.
When I joined mid-market PE firm, I was pleasantly surprised by how many facets of owning and indirectly running a business I had to learn. It is definitely a more rounded experience set vs consulting. Beyond the deal doing part, the portfolio management aspect of the role teaches a lot. The mid-market PE firm I worked at was pretty hands on so we would get fairly involved in our portfolio companies. However, the professional development is more through an apprenticeship model and much of what you learn is by doing. If you have ambitions of owning and operating a company then this type of experience is likely to be more relevant. This role would be better for business acumen or commercial judgement as well.
Haven't been an MBB consultant, but have worked with many and done some F500 strategy work, so I'll give my 2cents. I think the learning is different from both, no neither is necessarily better, but depending on what you want to do, each can prepare you for different things. PE is much more hands on and tactical, especially in the MM. If you work at a MM PE fund, you're likely getting exposed to at least some portion of the business operations if not a large amount depending on how your fund operates. You're also often times overseeing various business decisions and having to deal with those choices for the duration of the investment. In my opinion, a MM PE experience would make you a much more well rounded exec at a small to medium sized business.
MBB is more narrow in focus and although it deals with a lot of high-level strategy work, the implementation piece is relatively light. You're ultimately paid on the suggestion you put forward and there is less importance on the outcome. This is obviously a generalization, but it's rare that McKinsey bears the brunt of a bad business decision at a F500, even if they're brought in to advise on it. I can tell you that even as an investment profession in MM PE, I bear responsibility for how the business is doing. Back to the F500 example, it's ultimately up to the leaders of that business of specific business line to pull the trigger. With that being said, there is an art and a skillset that is formed by working in these types of larger business decision making environments. It can be political, there's a series of checks and balances to go through, and I don't think folks in PE would fare as well in a larger corporate strategy/decision making environment as someone who has been in MBB for a number of years.
So in sum, it kind of depends on what you want to do. If you aspired to buying/running your own business, or taking the helm of a ~$50M manufacturing business that yu need to grow over 5-10 years while improving EBITDA margins, PE would likely be a more holistic training ground to improve that type of business. You need to do a little bit of everything, are likely a little more resource constrained, and have to be scrappier, even in a PE type of environment. If you wanted to one day run a bigger business or be a GM of a large corporation, I think the PE style fo doing things would likely not be the best fit. PE funds don't usually work with organizations that are too large and for the Megafunds that do work with these types of organizations, it's rare that any of the investment team folks are really gaining any sort of hands on experience at those businesses. If I had to drop someone in to affect change or to be a VP of Ops, I'd rather take the McKinsey Partner who has spent 10 years in that type of decision making environment.
Facilis qui perferendis quos omnis tenetur assumenda. Eligendi omnis sint esse illo magni. Est voluptates hic qui ab optio.
Sapiente molestiae quam perferendis. Et corporis quo numquam corrupti expedita. Adipisci qui labore eos aut quis eveniet.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Quam libero culpa non et eos. Laborum occaecati voluptas aliquam cumque quidem. Molestias nihil ea sed labore. Error qui ratione et exercitationem eum nihil. Voluptatem optio rerum ex mollitia delectus veniam. Fugit sapiente hic vel quibusdam dolores sapiente.
Qui error impedit numquam quibusdam quia quibusdam. Et reprehenderit explicabo possimus. Corrupti aut commodi rerum molestiae autem corporis minima. Ut optio voluptas quos maxime voluptatum autem. Est animi impedit unde labore. Aut vero enim deleniti non exercitationem perspiciatis est. Ab deserunt aut quis voluptatum et iusto.
Non numquam facere reprehenderit quia deserunt. Sit sit tempora sunt natus repellendus perspiciatis earum. In deserunt ullam iste nisi.