Investment banking vs consulting for exit to PE

What is the advantage of doing investment banking over consulting if you are planning to exit to PE anyway? Yes, the pay is in investment banking is significantly more, but both pale in comparison to PE exits after 2 years. So why take the hard way and the WLB hit? 

Asking as somebody who is close to 1 year in at a MBB consulting firm, and wondering if there are any advantages to switching to investment banking at this point (my biggest career motivation is money)

Comments (26)

  • Associate 1 in IB - Cov
Aug 4, 2022 - 3:35pm

Still not sure what you are talking is borderline irrelevant to PE so I guess you have to switch to banking. Your statement about pay and exits is still vague and weird. 

  • Intern in IB - Gen
Aug 3, 2022 - 9:16pm

The biggest advantage (and only reason) for moving to IB from MBB would be if you want to go to a PE fund that only hires bankers (e.g. Blackstone) rather than more operationally focused funds that hire consultants (Bain Cap, Sycamore, Berkshire, etc).

Aug 5, 2022 - 11:08pm
tigercub69, what's your opinion? Comment below:

Another example is that bankers join KKR's flagship PE fund whereas ex-consultants join their in-house operations team, KKR Capstone.

Aug 3, 2022 - 9:26pm
kindheartedconsultant, what's your opinion? Comment below:

If you're a top performer, then you'll have no issue going to a top PE shop. Your options, however, are limited because some hire bankers only, but it's not such a detriment that you aren't going to go to amazing places where you'll end up super wealthy.

If you're at Bain go into PEG, BCG go into PIPE (or whatever it's called), and McKinsey.... go to whatever their private equity practice is, idk, and then do well there, get your resume prepped, etc. and then reach out to Headhunters and let them know that you're looking for UMM/MF opportunities.

I have friends from my class, like half of them it feels like that have gone to these top funds, and it wasn't impossible or hard to achieve, you can 100% do it!

No need to switch. All you need to do is get the ball rolling.

Remember, always be kind-hearted.
  • 5
Aug 4, 2022 - 2:49am
vicepo3065, what's your opinion? Comment below:

Interesting. If that's the case, I wonder why people do investment banking? Like, why put yourself through hell for 2 years if the destination is the same anyway (or you decide finance isn't for you, and you switch to industry / elsewhere, anyway)

I could not work 80+ hours a week knowing that

Most Helpful
Aug 4, 2022 - 10:20am
kindheartedconsultant, what's your opinion? Comment below:

As an ex-consultant that now works with bankers, I do have to give them credit where credit is due. They can run circles around me in their modeling skills, and they are much more aware of the finance ecosystem and how to leverage it (e.g. how the lawyers, calls with other bankers, public comps, etc. works). Also, the compensation is a big piece, because right now that starting base at MBB is ~$100K in the US but the bonuses are smaller, think 15-20K last time I checked (could be bigger by now) where I've heard in banking the bonuses are much larger.

But outside of that, I do tend to agree with you. I'd much, MUCH rather hire an ex-consultant for an operations or strategy role than an ex-banker, because the consultant toolbox is designed for it--much more client collaboration, many more reps seeing different industries, and a bigger focus on soft skills over hard skills. I'll go out on a limb and say that consultants generally understand how to present information in a better way than bankers as well--in my fund, it's almost become a meme at this point that the ex-consultants build the deck and the bankers do the modeling, and when we'd receive banking decks in consulting, we'd pick them apart and rebuild for clarity for our clients.

But yes, pick your poison. My current VP is an ex banker and that dude is the sharpest, humblest guy I've ever worked for. You're not going to go wrong with either way to start your career!

Remember, always be kind-hearted.
  • 8
Aug 4, 2022 - 9:40am
GermanIntern, what's your opinion? Comment below:

One one side, there seem to be much more companies in IB from where you can go to PE. However, if you are aiming for the MF, UMM PEs you should have been at a BB or EB. This are roughly 20 companies each hiring classes of 5 to 20 people I.e. there are around 400 new bankers per year. Transitioning to PE from Consulting, is only possible from MBB, I would assume. But how many people are hired at these companies? I believe that this are at least 100 people per company. So even though it seems harder to get into consulting, I would say it is not necessarily from a number's perspective. From my own experience, I am recruiting for a consulting Internship at MBB after doing an IB internship and it is just harder to ace the interviews. In banking, you can just remember everything for the interview from eg Rosenbaum and Pearl's book. In Consulting Interviews however, it is much harder, because there is no framework that fits everything. So I would conclude, making it to consulting is much harder to plan than making it into ib.

Aug 4, 2022 - 10:25am
kindheartedconsultant, what's your opinion? Comment below:

But how many people are hired at these companies?

If you are asking "How many people are hired by MBB each year," then in the US, that number is MUCH larger than 100. Hell, my starting class in just one of Bain's offices was 50 ACs. If you assume a smaller class and that each office only hires even 20 AC/BA/As each, and you're looking at like 25 offices for McKinsey, like 20 for BCG, and like 10 or so for Bain, you're coming in at ~1K new MBB hires each year. Math is directional of course, but that number can't be 100.

But would 100% agree that consulting interviews/breaking in is much harder than banking.

Remember, always be kind-hearted.
  • 3
Aug 4, 2022 - 10:29am
GermanIntern, what's your opinion? Comment below:

Meant 100 per company, but was only assuming this number. However, I think your number is more likely but this makes my point even stronger: From a number's perspective, it is easier to get into consulting compared to banking. From a practical point of view, it is much harder to plan to get to MBB than IB, because you can prepare yourself better for banking interviews than consulting interviews.

  • Works at Apollo Global Management
Aug 5, 2022 - 9:06am

Financial modelling is probably the only advantage. Some PE firms will rarely recruit consultants because they tend to be modelling heavy and it may be challenging to get consultants up to speed. With that said, I think consultants have a way better understanding of a business operationally and are able to offer more portco advice 

  • Associate 1 in IB - Cov
Aug 5, 2022 - 1:50pm

Wait, but the college students above said consulting exits the same as IB into PE? You must be wrong! 

  • Analyst 1 in PE - Growth
Aug 5, 2022 - 2:52pm

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