MBB to PE transition
Current MBB consultant thinking about recruiting for MF/UMM at some of the consultant friendly shops when on cycle comes around.
I know barely enough basic finance to get past the interview (but I can do a paper LBO and I’ve spoken to enough people to know that I know enough to get by at the consultant friendly firm interviews since they don’t require models). I’m worried about what happens on the job though.
Can a consultant who has made the transition before explain what the training at consultant friendly PE firms looks like and how you get caught up to the bankers with modeling, accounting, etc? How much of this is structured vs. on your own time?
Ex-MBB here, only recruited for MF/UMM that were at least 30% consultant classes. Was only asked to make a 1 hr LBO once (template that too). Got one MF offer and one UMM
All other were paper LBO only with 0 finance technicals. Was mainly asked business brainteasers + commercial DD type case questions (market, customer comp. Dynamics)
Basically be able to talk about the cDDs you worked on in a lot of detail and summarize the deal succinctly and you’ll be good
DM me— happy to chat more over phone if you need help with the process
Makes sense and thanks for the reply! Was wondering more about the transition once you started the job as well — how did you get to speed on finance, accounting, and modeling compared to the bankers? Did the firm provide the training or was it up to you to figure out? Happy to send you a DM too if you want to go off anon!
Good question— also keeping it public so it can help others too
This is one of the reasons I opted for a fund that takes about a 1/2 of the class from consulting. I’d be more worried if I went to a firm like Apollo where they don’t know how to leverage or coach a consultant background
A) consultant skill set is appreciated— especially if you’ve done a lot of diligence cases, the skill set is quite transferable
B) 2-3 week formal training + resources and peers to help with the transition. It’s not hard stuff to learn, just need reps!
How important were performance reviews in the process? Are the doors shut if you are middle bucket or 2nd highest bucket (i.e. not top bucket)?
No idea but I was top bucket, prob fine at upper mid too, unsure about mid and below
Hey, I'm a recent hire at MBB and also interested in PE. Would love if it you could DM me so we could talk more
Sure DM me
In a similar boat as OP (year 2 @ MBB), but aiming for off-cycle roles at MM and/or GE-focused funds! Would love to DM you but can't as you're anonymous. Lmk if you woud be willing to chat!
Bump - interested in actually transitioning / skills after you move
I’m at a MF and we rarely hire from MBB… and only into Value Creation side (value-add) and never deals teams. MBB technicals are just not there and no, due diligence isn’t part of the financial modeling/accounting and investing. MBB generally don’t get the nuances around debt tranches, or markets that fund deals and advise boards/CFOs on budgeting.
Nuances around debt tranches. Lol, talk about overstating. Also most large funds have capital markets teams
The core skill of investing is still commercial, financial DD and valuations. Bankers are good at valuations. Consultants are good at commercial. Neither are good at FDD
Plenty of successful funds with c.50/50 consultants/bankers (eg H&F)
Could be different elsewhere but the Value Creation teams here are often bottlenecked by the Deals teams because at the end of the day, the ex-ibanking Deals people own the portcos.
Yes, there’s a whole Cap Markets dept but that’s entirely different… each team there has their own PnL benchmarked differently, absolute return strats etc. They’re not helping Deals teams on how they structure their deals on buyside lol… it’s not like DCM of sellside. That’s why deals teams need to know modeling in and out but also legal jargon, debt types etc to fund their leverage and how financially healthy the company is. Consultants generally haven’t done reps of modeling to be at deals team level unless you’re coming in as an analyst.
Also had MBB background and went through recruiting last year - the consulting friendly funds generally go easier on MBB backgrounds. Less finance, less expectations on modeling. That being said, transition (at least for me) has been harder than my IBD peers.
I was a consultant before I was in private equity. I got fleeced on the job (was a great experience and I learned a lot, but it was two years of pain) as I went to pretty much banker only shop with zero training. I would recommend going to one of the consultant friendly places that can teach you what you need to know about finance.
You are generally set on commercial, and you can pick up what you need to know on valuations. The tricky thing about valuations is that it is informed by commercial, in that you are trying to understand the commercial quality of the asset and the degree to which you can pay above or below market based on expectations of the quality and nature of the firm at a liquidity event. I would get good at DCF modeling not necessarily because you will need to make DCFs, but because the fundamentals are important insofar as understanding capital structure, return thresholds, etc.
With regards to FDD, that was brutal. It's just accounting trivia all the way home. Find someone at the Big4 FDD provider that your future PE firm uses - someone about your level - and have them on speed dial. Work them to the bone any time you have a question. Don't get caught flat footed. Use ChatGPT to ask questions about accounting. I wish I had ChatGPT when I was an associate. Man. Life would have been so much better.
I would pick up an accounting textbook as well just so you can reference anything you need. Better safe than sorry.............
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