PE isn’t the best way to get into b-school

Have some associates in my cohort wrapping up their app cycles and wanted to address this, especially with regards to H/S (where our firm has had decent success historically). A lot of bankers think once they land a PE gig with a ton of alumni from those schools, the next five years of their lives are set. For various reasons, among the overrepresented industries, even if you’re at an MF, PE doesn’t stand out at the top per-capita compared to consulting or even tech products. There’s a decent argument you’d even rather be a standout in one of the leadership management programs at a reputed F500 than be “just another” MM / MF associate if the goal is purely MBA admissions. I’d still recommend taking the PE job for general optionality, signaling, technical experience better post-MBA options, better non-MBA options, etc. but let’s get some things straight.

1. H/S classes stay real steady at 950 / 400 ish every year. The % of this cohort that comes from PE / VC / general buy-side also stays relatively constant in the 16-18% range. However, in a booming economy like we had pre-covid and like we’re starting to enter now, bigger and bigger funds to accommodate more and more deal-flow naturally means bigger and bigger class sizes. That means more applicants industry-wide for the same number of seats every year. PE also tends to be one of those industries that’s not as susceptible to cyclicality i.e. the kids who were going to apply will likely still apply instead of foregoing and recruiting for a lateral in a boom cycle, partly because they can always afford the “vacation” (and want it) and just recruit afterward.

2. Schools are really focusing on diversity these days, and the PE pool tends to be white / ORM / male. To the extent that even the number of seats stays the same, this is a headwind for most “typical” PE applicants, again, fighting for fewer slots.

3. The PE thesis for going to b-school is...fine. Like yeah, you did some models, interacted with management a little bit, realized there’s so much more about the business beyond finance you want to learn before you step back into the field and actually sit on Boards as a VP, work collaboratively with management, hold their hands month-to-month, blah blah blah. Not a terrible play. The issue is most cultures at PE shops, especially big bad buyout companies, are not one of the associates doing jack shit operationally. Yeah, you can lie and say you had some great product mix idea that you said in the corner of a management meeting to the CFO that ended up being the catalyst for more growth but...come on, no. At best your Partner or operating team suggested that, and you’re out here modeling. Even internally, you can talk all you want about how many weighty thoughts consumed you while making IC decks (hell, you may have even spoken once), but the issue there is that most shops that actually give you discretion on go/no-go decisions or actual strategic and structuring matters are the type of places that are grooming you to be a direct promote. The overall oomph for why you need an MBA just isn’t there compared to the more “real” operational problems consulting and tech people face (though trust me, I don’t think they’re doing big-brain management stuff either). Your handling the legal or consulting “workstream” (sending out calendar invites and dial-ins) doesn’t stack up. Your analogs at those other industries also get nominal promotes in their 3rd year while you’re a 1st-year associate, which means they often get to, you know, actually manage people by the time they’re applying to a management program.

4. The “soft stuff” at most PE firms is ass. I’ll just compare with consulting to illustrate. MBB gives out superlative awards (including “quick” promotes) like candy, whereas being a good PE associate means you might get a nice rec letter and deal-flow. When it comes to nonprofit work, MBB definitely has a more centralized system of getting junior folks involved (including with work projects), whereas big bad PE firms tend to be a lot more decentralized (rich guys contributing to good causes with their own money on their own time). Again, your like helping plant a garden at a community center once at a firm event doesn’t compare to the consultant who can take on real work with a struggling local opera house or even the government for some noble cause. The same thing when it comes to firm-building / diversity; the bigger consultancies and tech firms have myriad affinity groups and diversity initiatives that juniors can serve on and help out with, whereas the nature of on-cycle recruiting is that PE associates are “lucky” to even be one of 12 interviews a banker is going through to get hired. Good luck building a tangible record with that little exposure.

5. ECs / post-work. My sense is most PE VPs want to do a good job writing letters for their associates so they can get into their alma maters, but they seem to be kind of passive about the overall application process. Consultancies, on the other hand, seem to love their feeder status and will hook up their juniors with nonprofit (usually BS fundraising roles, but sometimes better stuff) roles and connections outside of work. Also, the secondment model means consultants can spend a year actually doing operational work while PE associates claim they have “insight” into it while modeling, and usually, MBB will support a move to the next job (really common to see government, social capital, startup, nonprofit work, even going home and starting your failed startup) for a year or two pre-app that’s just plain more interesting than the average 2+2 IB to PE guy. My feeling is the schools are looking for more interesting profiles and vulnerability or whatever in the overrepresented camps, and having that “alternative” experience really helps build out the story in a way big bad PE really doesn’t.

A caveat to all the above: the pipeline is still going to be fine in toto, the industry is going to send a ton of people to school every year, and honestly at most non-H/S/W schools, just going to a good bank and good shop with good stats is going to be fine. I’m just trying to calibrate expectations as to why, especially for non-diverse applicants, coming from “the path” is no gimme for HBS or GSB admissions like it’s sometimes portrayed to be, or you might think it is when every mid-level to a senior person at your firm seems to be an alum.