Next Step for PE Associate
How are you guys thinking about the value of an MBA right now? I know this is a topic that’s been beaten to death on this platform but currently facing the decision on my end and struggling to rationalize the true value of business school in today’s day and age.
For context, I’m a 2nd year associate at a UMM firm in NYC. We historically place well into H/S/W and given my deal experience + relationships with senior folk at the firm, I’m fairly confident I could get into at least one of these schools if I put in the work.
In terms my career goals, god knows. PE can be fun but it’s obviously not the industry we grew up reading about anymore. The top is crowded and alpha has been competed away. I could probably commit to the grind to Partner but honestly looking at what that road ahead entails, not really excited by it. My dream would be to start my own fund one day (as I’m assuming literally everyone else does on here). Main motivation is really just being my own boss and having agency over what I do. Plus, investing is a fun job. Why wouldn’t I want to make a career out of it.
That all said, I struggle to find a good reason to step out of the workforce for 2 years, pay $200-300k, and miss out on a ~$1mm opportunity cost in terms of earnings over that year. That too, all during some of the prime years of my youth.
Is there some real value to a top MBA that I’m just not getting? What am I missing here? Why are people still opting in?
If your goal is to start a search fund with 1/2 partners and grow into LMM and then MM. MBA would be beneficial to help fundraise/find your partners.
Sure there is the $1M opportunity cost of lost of earnings, but 1 successful initial investment/good Fund I returns of your own shop will outpace comp of staying at your UMM firm.
Question to ask yourself is, within your current network of PE friends + Alma Mater contacts, how realistic is it for you to start your own fund in the next 5 years?
Was in your exact situation last year and am currently enrolled at one of the schools that you mentioned. You definitely don't "need" an MBA to start your own fund. What the MBA does offer you, though, is great access to a network of like-minded individuals who are going to go back into the high finance industry. From that sense, you pay $200-300k to spend 2 years drilling into thoughts about what you really want to do, tapping into a talented group of ~500-1000 students, and just having a bunch of fun/freedom while doing it.
But so much of it depends on you. Are you single? Do you have a large group of friends/network already? Did you go to a non-target or non-super target undergrad? If you answered no to any/all of those questions, the value of the MBA goes up. You get the opportunity to find a partner and find really great long term friends and you definitely get some branding uplift (though people can debate the last point back and forth).
Candidly, I'm in the boat where I am at my MBA but not seeing the full value of it. The market backdrop for recruiting back into PE is pretty tough, classmates are interesting and some are very talented but I have a strong network back home so the increase in value isn't as strong, I didn't come into it seeking a partner, and I came from a decent target school. On the flip side, many of my peers who have the inverse background and are having an absolute blast and I totally see the value for them.
So the value, in my opinion, is largely personal. Personal in the sense that is unique but also personal in the sense that it can be a great option to fill-in current voids you have in personal life (friends, partner, how you feel about your background).
Also, probably worth flagging that the MBA program has felt largely NOT entrepreneurial - the resources seem to be there for those who want to pursue but you'd be in the minority if you SERIOUSLY want to do something entrepreneurial. The classic MBA entrepreneur is more so someone who has an idea, talks about it for a week, and then recruits for MBB.
Lmk if you have any questions. I'll try to respond here in this thread!
I'm in the MBA for all of the above. Am interested in Search/Independent Sponsor, but I do need 2 - 3yrs of IB/PE to repay back my student loans which is likely what the "MBA MMB Entrepreneur" is doing at your school, presuming that they don't have an MBB/IB/PE pre-MBA background.
There's a benefit from career/school networks. You de-risk your career from a skillset basis and repay student loans. Pouring on business debt on student loan debt doesn't come across as sound.
Also there's a difference in how you make your money. $1m as employee is different than $1m as an investor entrepreneur. Investing leads to scale down the line especially as you layer in management teams and your employees to delegate. How do you scale your earnings as an employee outside of do more?
Few questions:
Do you have an IB/PE background and want to go search but need to go back to be financially safe? Wouldn’t it make sense to just jump into search and skip the MBA?
How does the MBA de-risk / add to your skill set?
"How are you guys thinking about the value of an MBA right now?"
If you want to stay in a revenue-generating finance role, a "normal" MBA is not worth it. Keep working your way through, and if it becomes worthwhile to get an MBA, you can get an executive MBA.
Was in these shoes and made the decision to forgo the MBA. I mean we’re living in one of the most radical periods of tech transformation, one that’s arguably a headwind for the PE/high finance industry in terms of seat count. So in two years, you enter an industry that’s declining not expanding, you lack investing/operating experience directly relevant to the biggest trend of our lifetimes, and you don’t get a premium for having done the MBA as recruiters now strongly prefer direct from associate candidates/ firms prefer to promote individually.
Chicago Booth's Professional MBA allows you to work and get an MBA at the same time. Both can be done.
Booth is irrelevant presumably for OP.
I feel like it's only the partners from an older generation that care about MBA. Literally times have changed so much, that I don't know if it's needed anymore unless you care about branding. It is great for networking and having resources if you want to start a business/switch into consulting - that is about it. Esp since you learn so much more on the job in IB/PE.
I did business undergrad too, so no offense to anyone who did MBA - it's just that the curriculum itself felt so useless from a pure learning perspective compared to my other STEM degree. From a pure learning perspective, many MBA programs are a bit outdated and trying to adapt to the times by incorporating more analytics or quantitative elements, but I find the curriculum too generic/fluffy and theoretical (case study method). I felt dumber with each class that I took in bschool.
Isn’t the point of 2+2+2 to be for those getting pushed out / want to do something different? If you can stay at the firm and enjoy investing, I don’t see the upside to leaving and (likely) trying to re-recruit into a very difficult market.
But if your goal is to run a fund, I would look for roles that offer more exposure to the admin / raising / sourcing process as that will be a majority your time in this new role. That may be going down market but at a higher role with an emerging partner group.
Your MBA classmates will pay dividends as you all rise the ranks, but those benefits are negligible in the beginning when you need to raise from decision makers 20+ years older than you.
The search fund / ETA model is incredibly saturated these days as well. I’m sure you know but to succeed in a raise, you need a unique thesis. Spend time working on that now & building up your network in whichever niche you chose. Deals take years to happen in search funds, this can be something done on the side as well to build out the infrastructure and network until you find something worthwhile.
Also as a follow-up, the successes i’ve seen from search fund founders tend to be when they take the skills and expertise they’ve accumulated back to their home town and find a local biz.
Del
Are you implying MBAs are for the risk-averse?
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