To all Consultants considering PE
WSO has been a tremendous help to me throughout the years and so now that I’ve had a fair bit of early career “success” it feels like the right time to give back.
A bit about me: I went to a semi-target where I did well and was able to secure a spot at MBB. After two years at MBB I left for a UMM PE firm where I have been an Associate for the last two years. About 6 weeks ago I was offered the opportunity to stay on as a Senior Associate, with a very clear one-year path to VP and beyond. After a lot of thought I’ve decided to turn it down and head back to my MBB. Here’s why:
1. PE is incredibly stressful.
In Consulting you’re staffed on one project with one team and one main goal. Your Manager has complete visibility into everything on your plate and can lay out a workplan with reasonable expectations. In PE its very different. In PE you’re staffed on maybe three separate deals, you have a PortCo you own, and you may also have to spend time sourcing if your firm requires it.
Frequently I was asked to build a detailed model for one deal, update the monthly financial reporting pack for my PortCo, and do some early stage outside-in research for another deal – all due EOD tomorrow. Each deal wants 50% of your time, and then somehow you have to find time for the PortCo and sourcing as well. The result is a feeling where you’re constantly treading water, juggling many balls at once just trying to get things done in time. Over time the stress of that really takes it toll.
2. Your weekends are not yours.
In Consulting you can essentially unplug from 6pm on Friday to 8am on Monday no problem. You’re not going to get any emails unless it’s a REAL emergency, which only happened to me once in my two years at MBB. In PE, weekends are treated more as quasi-work days. I would regularly have meetings with my VP at 4pm on a Friday where they’d outline 10 hours of work and say, “If you can get this to me by Saturday night so I can review Sunday morning, that would be great.”
All of a sudden your Friday night / Saturday plans are shot. And if that didn’t happen you’d still have to be monitoring your email in case your VP woke up Saturday morning and felt like giving you work to turn by Monday. As a result, you could never really unplug during the weekend, which means you go into the following week already on edge. These weekend dynamics also made it hard to plan with friends / family / SO, which was tough.
3. The concept of 80/20 doesn’t exist.
In consulting there were a lot of times where “good enough” truly is good enough because you just need a directional answer and it’s not worth the time investment to get to “perfect”. In PE this concept doesn’t exist. When you’re writing $500M checks the thinking is you have to be damn sure about every assumption you’re making, and as a result you spend a TON of time building incredibly detailed models that spit out the same answer as your 4-hour LBO.
It’s true building out all the bells and whistles is helpful in thinking through the levers of a business, but I found the level of detail in this aspect of the job to be incredibly tedious and unnecessary, especially because the only thing you can guarantee about your model is that it’s wrong.
4. The culture is a lot less collegial / fun.
When you sum up points 1-3 you have a bunch of overworked, stressed junior and mid-level folks running down every detail trying to cram as much work in as possible Monday – Friday so they have some semblance of a weekend to look forward to. As a result, people don’t really waste time on shooting the shit. I liked this at first because I felt more efficient at work, but then I realized after 2 years I barely knew some of my colleagues. The demand of the job requires your work relationships to be much more transactional in nature, and that left me feeling uninspired a lot during my second year.
5. It doesn’t get better for a LONG time.
It’s true if you’re an MD sitting on the investment committee reviewing polished materials and collecting your fat carry checks PE is a pretty incredible place to be, but it is a GRIND to get there. All my VPs and Principals regularly worked close midnight and then a fair amount on the weekends. I’d say their jobs are even more stressful than mine because ultimately they own the investment decision and if our diligence is wrong it’s on their shoulders (and mine too but most Associates won’t be around to see a deal they worked on turn south). When you’re writing $500M checks I imagine that stress is insane.
Conclusion
All that said, I don’t think PE is all bad. You get paid incredibly well to do fairly interesting work with brilliant people who for my money were the “best of the best” of their respective Consulting / IB classes.
However, if you’re a Consultant considering PE I just wanted to lay out the reasons it’s materially more difficult than Consulting. If you’re willing to make the trade of hours / stress for money then the financial upside can be tremendous – but I just am not willing to make that trade and I would have appreciated someone candidly laying out all of the above to me before I took the plunge.
So I’m giving up the “golden path” coveted by so many on this site. Instead, I’m going back to MBB where my weekends are protected, the work is less stressful and honestly more interesting, and the culture promotes fun / WLB. I won’t be buying a yacht or a 3rd home, but I have a pretty good shot at Partner where I’ll clear $1M a year which is way more than enough for me and I won’t have to trade off everything else in my life that matters to me to get there.
Also for any bankers reading this, for what it’s worth my Associate class was a mix of former consultants and former bankers; those that were former consultants all found it really difficult whereas the former bankers actually thought it was a bit better than banking. In general I think that just speaks to how good consulting is / how shitty finance is, which is what I’ve come to realize over the past two years and why I’m heading back to consulting.
There’s a lot more I could say but I’ll cut it off there for now. Happy to answer any questions in the comments!
Also consultant to UMM PE here. Great write-up. It takes a lot of honesty with oneself to go back to MBB. Thanks for sharing.
I posted a few months ago asking people whether they learned more in PE or consulting. To sum it up: in which did you feel you learned and developed the most skills that would be pertinent to pursuing entrepreneurship, strategy, or general business acumen? Very interested in your opinion/experience
Given the SBs I'll try to go deep on this response.
At a high level, Consulting will do a better job of teaching you communication, teamwork, and "getting alignment" skills. In Consulting I learned a lot about how to build a compelling narrative, how to work hand-in-hand with clients who may have different goals, and how to get everyone on board in order to keep the project progressing forward. One of the most important things I learned in that regard was the B+ answer that your client understands and can execute against is better than the A+ answer that's too complex to understand or implement.
On the flip side, I think PE actually did a better job at teaching me business strategy because we spend all our time thinking about the different levers you can pull in a business to create value. Being an investor has made me much quicker / better at identifying the key business levers that matter and thinking through how to optimize them (because that's ultimately what drives returns, which is my whole job).
Applied to your question, I think PE is on the margin better experience for becoming an entrepreneur just because as an owner / board observer you have purview into the entire business whereas in Consulting you might do one project focused on supply chain efficiency while never once thinking about the broader business strategy. In PE you're also juggling many things at once more often, which is better training for starting a business. However, if you want to one day be in the C-Suite of a F500 Consulting is a much better path. The "getting alignment", communication, and leadership skills consulting teaches over PE will have much more value in larger organizations.
TLDR: Each prepare you to work for the size companies you work with. In Consulting that's F500, in PE that's usually smaller companies.
I'm currently a VP at a MM PE fund. I was formerly a consultant, worked as an associate in MM PE, went to bschool, then went to PE at a different MM fund.
The differences between consulting and PE are numerous. A lot of the posts above focus on working hours (higher in PE), compensation (higher in PE), and stress (usually higher in PE, but depends on the person and situation). In my opinion, those are just three considerations among many for determining what kind of job you want. I'd add that considerations like enjoyment and how interesting the work is could also go either way. I found consulting fairly repetitive and didn't particularly like generating reports that were often not implemented. In contrast, I like how I'm one of a handful of people determining how hundreds of millions of capital will be deployed on a deal or which strategy a company will actually pursue. I'm fairly independent-minded, and I like that in PE my opinion matters. I thought I'd outline a few differences when considering consulting vs. PE.
First, PE is highly autonomous relative to consulting, especially the more senior you get. In consulting, slides get reviewed up the chain, directives come down the chain. In PE, you have to know how to do things on your own. This is one reason why PE can be difficult for consultants at the associate level; VPs and principals want associates to have the ability to put together a model, quickly understand a business model based on a CIM, think through whether the opportunity is worth pursuing, etc. Associates with banking backgrounds have a leg up in this area since many have been doing this or something closely related the past 2 years.
Second, from an interpersonal standpoint, people who work in PE are on average older, less collegial, and more professional. I don't think this makes PE firms less fun than consulting firms, but I do think it means PE appeals to a different type of person. I think the point on PE firms on average being older isn't controversial since consulting hires so much direct from undergrad and bschool. Regarding the other two points, in my opinion this tends to be because PE employees more often have families to go home to and because MBB firms have large social budgets geared towards events for young professionals.
Third, PE teaches you to think a totally different way from consulting. Consulting firms think of themselves as hired brainpower, and much of what they do is completed over a short period of time without 1. A deep understanding of the business, or 2. Skin in the game regarding the outcome. I think of consulting as great for getting a lot of reps understanding business problems and strategic thinking. PE, in contrast, involves understanding a business and its economic model and creating a financial model to express the attractiveness of an investment - all of which are skills needed for good associates. The more senior folks spend a lot of time thinking about the levers to add value and the PE firm's edge in an auction. There's a strong interpersonal angle regarding the approach to talent as well. PE investors are very concerned about being wrong since there are big consequences to a losing investment, one of which is 5+ years of working with a company that you advocated an investment in yet which is performing poorly (and maybe making others resent your investment recommendation). My experience in consulting was the opposite - I worked on a team that recommended a company make a big expansion of its focus on oil & gas in 2013. The client paid the same whether we were right or wrong.
A couple final points regarding a few comments above... On compensation, see the 2021 comp survey from Heidrick and Struggles regarding compensation. PE is higher than consulting, especially at senior levels. However, I don't work in PE just because of the money, and whether you're a partner at a PE firm or a consulting firm, you'll be doing very well for yourself and your family. On career trajectory, going from consulting to PE can be risky. When I started recruiting, there were only handful or so firms that had a track record of hiring consultants (Bain, Golden Gate, Audax, Lee Equity, Advent, HIG, maybe more). Today, lots will hire consultants, but many will have the same expectations in modeling from their consultants as they do from their bankers. I'd think this would be especially true of firms that recently started hiring consultants. Just something to be aware of when thinking about career risk and your potential to outperform the rest of the pack.