Is an MBA worth it?

Currently a second year PE associate at a MM fund ($1bn+). A lot of friends/acquaintances from undergrad are now starting at business school. I never thought that an MBA was worth it (no MBA requirement at firm, didn't think it would add value for me, not sure I want to take 2 years off my career progression) but now I am re-thinking it when a lot of these smart people I know are doing it. 

I think I want to stay in private equity and don't think a career pivot is in the books for me (not sure I'd want to do consulting or strategy/growth - whatever that means, feel like every job is strategy/growth nowadays) but hoping to hear from anybody in similar shoes who went through this decision recently. Thanks in advance.

Comments (31)

Aug 24, 2021 - 5:57pm
hq_life, what's your opinion? Comment below:

I am studying for my GMAT now and will be applying for an MBA program next year. I have been researching for the past 2 years and have talked to TONS of alumnis, friends. 

I see an MBA as a path to do something which I wouldn't otherwise be able to do. For example: changing an industry, and/or switching functions, and/or locations. If any of these apply to you, an MBA will be worth it. If none of these apply to you, an MBA is not worth it - UNLESS the company is forcing you to do so (which per your post, it isn't). People talk about doing it for the sole reason of network. I personally do not think the opportunity of network for 2 years is worth the bill of letting go your job(salary) and incurring the expenses. Some people also see it as a "vacation" - but that's a VERY expensive vacay. 

Good Luck!

Aug 26, 2021 - 8:19pm
jarstar1, what's your opinion? Comment below:

Having gotten an MBA for your first reason (switching industry and location), I agree with all of this wholeheartedly. I remember talking to another RE student and they were complaining how the Intro to Real Estate Finance was so boring and useless, to which I replied, well it's instrumental to me who literally knew none of this before school. I asked them why they were even in school if they didn't want to transition (they were already working in real estate...) and they said it makes it easier to fundraise with an MBA (I question that) and for the networking. Dude could have saved $200k and two years of his life just buying a membership to ULI and NAIOP and going to events. 

Aug 24, 2021 - 7:36pm
ib-healthcare-guy, what's your opinion? Comment below:

An MBA being valuable is entirely dependent on your situation and what you want from it. If you want to stay in PE and like your firm maybe an MBA isn't for you, but say you want to go to a PE shop that requires an MBA to get a leg up it's not a bad idea. 

I would suggest doing it while you're younger before you have any serious responsibilities in life. A 2 year MBA program is a ton of fun, I've met a ton of life long incredibly smart friends, have traveled a lot, learned a lot and increased my total compensation to help me get to my long-term goal. But again, it's entirely dependent on your situation and what you want in life. And it's an excuse to have a peaceful and fun two years. 

Feel free to reach out if you have any questions. 

Most Helpful
Aug 25, 2021 - 3:50pm
Lima Papa, what's your opinion? Comment below:

Decent reasons to get an MBA:

  1. Switching careers (consulting to finance, teaching to consulting, military to anything in the business world, etc.)
  2. Your firm makes you and you want to stay there
  3. You want two years off from the working world and don't mind taking on the debt and lost wages or have somebody else who will pay for it (parents, rich uncle, scholarships, whatever)
  4. You feel like you need the network
  5. You're not American and want to work in the U.S. and see the student visa as a pathway to getting a work visa

Bad reasons to get an MBA:

  1. "A lot of friends/acquaintances from undergrad are now starting at business school."
  • Associate 2 in PE - LBOs
Aug 26, 2021 - 10:18pm

Otisfield - fair point on all of those. The answers to most of those are a resounding no, except for perhaps 3/4. I went to a good undergrad so I think I have a decent network (albeit mostly in finance, a little in consulting/startups).

The two years off does sound amazing, but I almost wonder if I'd be rusty coming back to the workforce (assuming I go back to PE) and maybe would lose a bit of steam in my career progression (vs. someone who just stays the 2 years). 

I know its a stupid mentality to have, but it is difficult to see intelligent friends/acquaintances from MF/UMMs go to b-school and not get FOMO or FOFB (fear of falling behind) but guess I need to get into the mindset that everyone's situation and needs are different and need to make the best choice for me - though I would wager a fair amount that I'm not the only person who thinks like this and probably is a large driver of the folks who do 2+2+2

Aug 30, 2021 - 8:12am
Winnfield, what's your opinion? Comment below:

There are probably other bad reasons to get an MBA (usually unrealistic career-switch expectations, like TFA to PE), but this is a good post.  

Just to point out to the OP that I can assure you that from 2009-2014, "Growth Strategy" was not a "thing".  You're going to eventually work through a heavy recession at some point in your career.  Things look really different.  This leads into another bad reason: tunnel vision / thinking the next 5 years will be the same as the last 5. 

Two good friends of mine from b-school (Top 5) had the same scholarship I did, but they were both PE guys (HYP --> IB --> PE) while I was the odd one out.  One went straight back into his pre-MBA PE firm, and is doing extremely well (ie. Partner/MD).  The other went a much more independent path.  The former is definitely lukewarm on the whole MBA thing, while the latter is very engaged with the network etc.

My $0.02: if you're sure you're staying in PE, you better check points 2, 3 and 4 in the previous response and see if they apply to you. 

The truth is you're the weak. And I'm the tyranny of evil men. But I'm tryin', Ringo. I'm tryin' real hard to be the shepherd.
  • 4
Aug 26, 2021 - 8:59am
breezy443, what's your opinion? Comment below:

Looking back on my experience, the MBA was worth it. I came from the Big 4 and decided on Top 15 or bust MBA for a guaranteed shot at consulting or IB, and I successfully made the transition. It was worth it due to the following factors:

1) opportunity to switch careers and earn a higher long term ROI / do more interesting work.

2) the network. I came from a relatively shitty undergrad so the opportunity to network with smart, ambitious peers was great. I expect the network to pay dividends in the future as well.

3) the experience. It felt like a second go-round at college, with slightly more maturity, more money, and more travel. This was diluted because of COVID, but the experience overall was fun and would have been more fun in other circumstances.

You should think hard about the above 3 points and assess how much you need/value them. For me, all of them provided huge benefits, but if you like where you are career-wise and have a solid undergrad network, the experience alone may not be worth it. Also, given your experiences I'd suggest top 15 or nothing. Hope this helps

  • Associate 2 in PE - LBOs
Aug 26, 2021 - 10:13pm

Breezy - awesome response. Really appreciate it. 

Given that I'm in PE, I'm not sure there are better careers out there in terms of long-term ROI (startup is one that comes to mind). This point does make sense for some who came from industry or accounting and makes the switch to banking as a post-MBA associate

Was lucky enough to attend a top-10 undergrad. My network is decent, albeit mostly in finance and a little bit in consulting/startups, but of course would be much much better if i went to business school

The experience point does intrigue me, are people just traveling to Asia/Europe during longer term breaks and doing short trips during school? I can definitely see how school would be a lot more fun with more money/maturity. I am in a long-term relationship and so perhaps this part excites me a little less? What are you doing during the MBA that makes the experience so much better than undergrad?

Aug 27, 2021 - 8:35am
breezy443, what's your opinion? Comment below:

Of course. Given your background and experiences, my gut says the MBA is not worth it for you, unless maybe you get into Harvard/Stanford/Wharton.

If you don't need the MBA to get to the next step in your career, and you like the trajectory you're on now, I don't see how the MBA helps you career/ROI wise. I don't know a lot about the PE track but I've heard of instances where people are pushed/required to get an MBA to keep moving up, is that the case with you?

There's definitely diminishing returns if you went to a top 10 UG. A network from another elite school can never hurt, though.

Regarding the experience, there are several long breaks throughout the school year where people travel to cool places. Unfortunately because of COVID I got screwed, but I did take a 14 day trip to Africa before shit hit the fan and it was the best trip I've ever taken. I was also set to do a 6 week exchange program in Asia. I was broke in college, and in Bschool you can use the money you saved up to take some more extravagant trips (some of my friends went on a ski trip to Europe, Mykonos, etc).

Keep in mind an MBA is $200k, not even including opportunity cost - is a great experience alone enough to justify that? I'm a firm believer in experiences > money, but you could always take 6 months off work down the line and go on trips with your family.

I'd apply to the upper half of the M7 and see what happens.

Aug 28, 2021 - 10:07am
medialogic, what's your opinion? Comment below:

This year there are quite a few (>20) MF PE/UMM folks (KKR, Carlyle, etc., there are like 6-8 Carlyle alone) at Wharton. I think H/S are trying to cut down on their PE intake, so there's a trickle down effect. Though this year was just hyper competitive so who knows.

  • Analyst 1 in IB-M&A
Dec 24, 2021 - 11:25pm

The actual names may be a few more or few less but overall the the principle makes sense. The value of an MBA diminishes unless you have the three or four points mentioned in the thread by a few posters (namely, changing geography / roles / industries). Therefore, the brand name better be powerful enough to wake a comatose person. Sure, if you are not coming from a reasonably well-known IB / PE / Consulting track record (i.e., generalist roles post college) you may be more inclined to consider the MBA route. Even then, I gradually expect more and more companies to only start hiring people whose post-MBA intended roles are close to their pre-MBA experiences. This is because a lot of companies can simply hire out of college now. So going from secondary school teacher to IB may be harder in 10 or so years. Going from ER etc. et to IB will likely be OK.

In my opinion it doesn't quite apply if you are already coming from M&A / PE / MBB / Top 5 consulting or whatever. As long as your intended career switch is realistic, you should be able to pull it off with a few months of LinkedIn premium membership and committed networking. Because (surprise!) people are actually quite happy to talk and help other people. Especially when they see someone from a good track record / school coming to them to set up informationals or coffee chats - lot of people may not realise, but people love to talk! They love to talk about their experiences and love the attention they get when others express interest in their lives.

I will give a slightly vague / somewhat anon account of one of my friend's below:

- Prior exp: IB/PE (~3-4 years)

- Move: wanted to see the possibility of moving to consulting (top 5 ish) or to industry (FAANG PM / strategy roles, media / broadcasting strategy roles). To be clear, they were not looking to move to finance roles within the industry companies and had not covered these companies specifically in their IB/PE stint, so were basically going to be going in fresh (i.e., no actual relevant work exp)

- Method: subscribed to LinkedIn premium, set up coffee chats with around 30 people in each industry (not company!) in which they had interests. Admittedly they did a lot of reading on the side (usual consulting books and industry research etc.)

- Result: got referrals at the BCG / LEK / OW / Kearney / Parthenon sort of shops. Got offers for referrals at Google, Netflix, 20th Century Fox. Last update I had was they were on final rounds with one of the roles in industry having chosen to forego consulting to settle down. Prior experience was quizzed in interviews but no more than normal - more quizzed on what they felt they brought to the table and how they could grow in the roles

- Duration: these chats and follow-ups happened over 6 months or so just bear in mind it won't be overnight but it will also not take 2 years (like an MBA)

Disclaimer: I was not as lucky so am currently given huge sums (charity?) to an MBA school (slightly annoyed at how easy it was for them). Also, the difference is that they were flexible and happy to move a step down or similar (i.e., they were not lobbying to get in at the exact same position where someone with 4 years exp. in that particular industry may stand). I think this is a key difference - MBA normally lands you at an established level of seniority. With the networking route, you save time and money but may start a year or so junior to where you can be. This can be made up for by working hard / smart and the upside is that unlike MBA you are still getting paid and also learning by doing rather than learning by case studies - so up to you if you would rather want to do this via a 200k classroom demo or by actually doing it.

In simple terms, the trade off I see is if you would be OK to lateral / pivot at a slightly junior position and get paid to climb the ladder in an industry of your choice or would rather come in at a more senior level but with no actual relevant real experience and debt for the 200k MBA (actual debt will depend on your circumstances of course).

Aug 26, 2021 - 8:41pm
TheGrind, what's your opinion? Comment below:

I did it to re-brand since I attended a bottom-tier undergrad.  I also wanted the opportunity to recruit nationally.  Done and done. Just wanted to add those two reasons to the mix. 

I didn't even switch careers and am now earning quadruple my Pre-MBA salary with this upcoming job switch (offered to me in part because of the MBA).  I guarantee I most certainly would NOT be seeing these opportunities otherwise.  I can't count the number of resumes I'd sent nationwide prior to applying to b-school. 

That said there are many people who don't need the MBA.   If you do decide to take the plunge, just make sure that your plans A through D make sense.  Otherwise it's a waste of time and money.  

  • 4
  • Associate 2 in PE - LBOs
Aug 26, 2021 - 10:06pm

Thanks TheGrind! Curious as to what you do for a living where the MBA made such a huge difference, if you don't mind disclosing? I'm in PE and I'm not sure that doing an MBA would give me a leg up on someone who just stayed the two years - we'd likely end up in the same position. 

On the brand part, I was lucky enough to attend a top-10 undergrad so I have a decent network (albeit mostly in finance, and have a few in consulting/tech). 

Aug 26, 2021 - 10:21pm
TheGrind, what's your opinion? Comment below:

Not at all.  I stayed in Corp Fin, and am currently Director level.  Prior to that I'd slaved away for 6 years and never went past "Analyst" or "Senior Analyst".  So easy call.  

In your case - Top 10 UG, billion $ PE fund - you'd quickly run across diminishing returns.  Especially if you already love the job and are well-regarded at the firm.  I'd only do it in your case if your employer required it/pushed you out the door to get it w/ a solid promotion waiting upon your return.   

  • 1
  • Intern in IB-M&A
Aug 27, 2021 - 2:24am

Hi OP,

I also always wondered why people at MF would go to business school if it was not required. 

I wondered if it was the brand-name that later in your career would help with fundraising if you launch your own fund? But it seems silly that an MBA would still be valued after working 10+ years in PE.. 

Can anybody think of tangible benefits of an MBA in this situation? 

Even in Europe, you see people from top undergrad (Oxford, etc) leaving after 2 years associate to HBS/SGSB only to come back to the same MF after it (and I know for sure that MBA is not a requirement here). 

  • Associate 2 in PE - LBOs
Aug 28, 2021 - 5:23pm

As a current MF associate I think a lot of the appeal is the ability to have a 2 year break without losing career momentum. If you got into MF PE you've been grinding hard since starting to work full time and the path doesn't really get much easier so I think a chance to relax a bit for 2 years would be appealing.

For career related reasons, the main argument is the "network" assuming that you aren't at a firm where an MBA is required. This applies to 1) knowing people at the different advisors you'll use (bankers, consultants, etc) 2) other PE people who will be potential buyers for your portfolio companies (or sellers to you)  and 3) people who go off to work as asset allocators and may potentially be your LPs down the line. Whether this is truly worth $200k and not something you could build on your own through just continuing to grind it out in PE, I'm not so sure, but I can definitely say living a student lifestyle for 2 years sounds appealing when you're grinding out another model at 1 AM for some deal that has a low probability of closing 

Sep 19, 2021 - 9:01am
CompBanker, what's your opinion? Comment below:

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Sep 21, 2021 - 5:21pm
arb432, what's your opinion? Comment below:

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