Did you learn more in PE or consulting?

For context, I will be starting full-time in banking next summer. I am interested in PE but am trying to make a more informed choice on what I want to do in 2-3 years, rather than going with the crowd and jumping into recruiting without much thought.

For those who have worked in both PE and consulting, in which did you feel you learned and developed the most skills that would be pertinent to pursuing entrepreneurship, a strategy role, or just general business acumen?

Alternatively, could those same skills be attained by staying in banking?

For purposes of this discussion, forget about money, hours, preftige, all of it. I'm simply wondering about the long-term value of what you learn in each of these careers.

Private Equity Interview Course

  • 2,447 questions - 203 PE funds. Crowdsourced from 750k+ members
  • 9 Detailed LBO Modeling Tests and 15+ hours of video solutions.
  • Trusted by over 1,000 aspiring private equity professionals just like you.

Comments (38)

Controversial
Dec 8, 2020 - 11:28am

Not exactly the same, but I worked in VC for a year before starting at MBB, so take what I say with that bias/grain of salt. I'll say "VC" instead of "PE" here but I'm sure you understand that there is a lot of overlap between the two--not that it's the same, but much more overlap than consulting.

For Entrepreneurship, VC was better because of the ecosystem that you're in as well as the way that you're taught to look at companies/opportunites. The things that you hear walking around the VC office are about ideas people have, ways to look at companies, sourcing ideas, etc., but at MBB, you're hearing a lot more about how to structure communication, market information, organizational information, etc.

As far as a strategy role, Consulting >>>>>>>>> VC/PE, not even a question. MBB teaches you how to think and frame and get the right information in the right format to make decisions, something that I didn't find in VC as readily. Also, the caliber of people that you're around is going to be similar, whereas in VC, I honestly didn't feel that. Could be better in PE, but not sure. MBB will teach you so much more about how a company ought to work and how to make it better than PE/VC ever will, simply because the job itself is inherently different: PE/VC is going to be placing bets on companies and perhaps doing some things here and there to improve them (if you have enough influence/control), but in consulting, that's literally the entire job.

As far as business accumen, I'd say the same thing as above, Consulting is going to get you a lot farther.

I'd also strongly caution you against Banking. I know many banker and I know many consultants, and without question, I'd rather have a consultant on my team than a banker, 10 times out of 10. There's an enormous circle-jerk that takes place because of compensation and prestige which inflates the positions and work to something that it's simply not. Banking isn't the way that you learn business--banking is the way that you learn banking and finances. Everyone on this forum will have a bias towards the financial side of things (which is fair, tbh, it's about banking and it's very important), but consultants are just better at business skills. Hard stop.

Hope that's helpful!

Best,

KHC

Edit: feel free to message me if you'd like to get more info. Happy to help.

Edit 2: Wow, LOTS of salty bankers. Looks like the group-think and circle jerk has really gotten into your heads. I'd recommend putting the Kool-aid down and thinking for yourself rather than following the lemmings off the cliff smh

Remember, always be kind-hearted.
  • 27
  • 18
Dec 8, 2020 - 5:45pm

Hey earthwalker7!

I'm 100% sure that there is, but I know that the path there is much, much, much more variable and not laid out. For example, I knew a guy who made a startup, scaled it until the product was sold in Costco and places like that, sold it, then joined the M&A team of the company that he sold it to--that guy was 10x the businessman that I'll ever be, but you can't just say, "Yeah, go be a successful entrepreneur." Even ones that have hit it big can be dogdy, i.e. I would trust Tony Hsieh but never Adam Neumann, even though both are wildly successful. and even if you get the experience, if you're doing it as a stepping stone, it's just hard to explain how what you did is worth as much or more than MBB.

My biggest advice (and then one that I'm following myself now, as I move from MBB to PE) is the same that Martin Luther King Jr. gave:

"Whatever your life's work is, do it well... If it falls to your lot to be a street sweeper, sweep streets like Michelangelo painted pictures, like Shakespeare wrote poetry, like Beethoven composed music; sweep streets so well that all the host of Heaven and earth will have to pause and say, 'Here lived a great street sweeper, who swept his job well."

Or in a more punchy but less eloquent way:

"What-E'er Thou Art, Act Well Thy Part."

Best,

KHC

Remember, always be kind-hearted.
  • 6
Dec 8, 2020 - 3:50pm

Thanks for the detailed response. From your experience in VC, do you think you learned things that would be instrumental in starting your own company that would otherwise be unattainable in either buyout PE or consulting? VC sounds exciting to me, as it does with just about everyone, but after spending nearly 3 years with an angel group, I've become somewhat disillusioned with startup investing from seeing dozens of frivolous companies backed by founders with meaningless credentials like being accepted into some accelerator that accepts anyone with a pulse, Forbes 30 under 30, or some similar BS. Also, I'm wondering if VC associate work would be primarily around sourcing, and if the analysis (if any) would be highly subjective and meaningless in the big picture.

Learn More

300+ video lessons across 6 modeling courses taught by elite practitioners at the top investment banks and private equity funds -- Excel Modeling -- Financial Statement Modeling -- M&A Modeling -- LBO Modeling -- DCF and Valuation Modeling -- ALL INCLUDED + 2 Huge Bonuses.

Learn more
Dec 8, 2020 - 5:57pm

Hey fuzzy_stocks,

From your experience in VC, do you think you learned things that would be instrumental in starting your own company that would otherwise be unattainable in either buyout PE or consulting?

Two big things that I learned:

1) Team is so, so, so, so much more important than the DD process suggests.  When you build a team, you're creating a stacked bar chart of the company's total value. You multiply that value against the value of the idea/company, but let's be clear: good ideas area a dime a dozen: good teams are worth 10x their weight in gold. I'm bothered by the fact that we spend so much time looking at market, trends, idea, etc. when DD is taking place for VC: If I was running my shop, 80% of the memo would be breakdown of why we think the team will succeed (based on our interactions with them, not stupid glamour shots like Forbes lists), and 20% everything else. If I started my venture, I would bet that my roommate probably isn't the next Zuckerberg and I'd look for someone more qualified, make a juicy options pool with hard targets to vest, and be ruthless about who I bring on and let go, because that's the engine, and you don't win a race with an engine firing on 2 cylinders.

2) The above being said, a rising tide raises all ships. Sometimes the market is right for something, and everyone that is in it will be killing it, even if they're an idiot. Be ready to jump on an idea that you think is going to explode upwards, because there's only so many explosions during a lifetime.

Remember, always be kind-hearted.
  • 8
Funniest
Dec 9, 2020 - 1:36pm

"I'm a career consultant, here's why consulting is better than banking"

Life is more than dollars
  • 5
  • 2
Dec 9, 2020 - 1:47pm

I'm literally switching from consulting to PE right now. Appreciate the comment, but you probably oughta learn to hold your tongue when you don't have all the facts. It'll do you well as you progress in your career.

Best,

KHC

Remember, always be kind-hearted.
  • 1
  • 6
  • Associate 1 in PE - LBOs
Dec 8, 2020 - 1:05pm

More "skills" in PE (e.g., how to model this or that)

More "development" in consulting (e.g., how to think about things better, how to structure problems, etc.)

PE is more of a commodity skill like coding or or plumbing. Not too much higher order thought, just lots of organization and processing. 

Cue MS.

Dec 8, 2020 - 4:00pm

Thanks for the response. I'm guessing you went from consulting to PE? Please correct me if that's wrong.

Like I mentioned in the OP, I am starting out in banking. Just based on the educational component, do you think moving to MBB would be worth the experience cuts in (1) starting fresh in MBB as a first-year, and (2) being a couple of years behind peers if I were to recruit for PE after consulting?

Dec 8, 2020 - 5:48pm

I think you're actually pretty spot on here too be honest. From what I understand, the ones that rise to the top in PE (and make MD) are the ones that do the "plumbing" and then are able to stand back and chat about the big picture, and tell us what else there is to consider outside of the water flow, but at the end of the day, yes, you can do very well in PE with just modeling skills.

Remember, always be kind-hearted.
  • 1
Dec 9, 2020 - 1:02pm

Based on the knowledge you gained from each, do you think moving to MBB after a couple of years in banking would be worth the experience cuts in starting fresh as a first-year, and being a couple of years behind peers if I were to recruit for PE after consulting?

Alternatively, do MBB hire people from PE for post-MBA roles without actually having done an MBA?

Again, this all relates to the goal of eventually pursuing entrepreneurship or a strategy role.

Most Helpful
Dec 9, 2020 - 1:07pm

I'll add a perspective. I started at MBB and am now in PE

When you talk to people who went MBB -> PE like I did I think there's going to be a natural bias for them to say they learned more in consulting, but I don't know if that's necessarily a function of the specific job itself. I think what's more true is you learn more in your first high-caliber job than you do in most subsequent jobs (at least tangible learnings you can point to) because you're essentially a blank slate. At MBB I learned how to structure my thinking, how to write a coherent email, how to communicate effectively in meetings, why color coding in excel matters, how to make small talk with someone 2x my age in a professional setting, and whole host of other things that I would classify as "How to be a high-functioning business professional." Those things aren't unique to MBB though - my peers who started in banking learned them and I'm sure Analysts who went direct to PE learned them too.

If you strip all those things out and focus on core learning from the job specifically, I think I could make a strong argument I'm learning more in PE. In Consulting a lot of my project experience was narrow (i.e. Helping a manufacturing company improve X process, helping an account sales team determine which accounts to prioritize, etc.) so I felt like sometimes I wasn't being exposed to the whole picture. I don't think I could tell you what core strategic issues kept the CEO up at night for any of my clients. In PE, I'm focused precisely on those core issue. I both get super broad in terms of thinking about how market dynamics will play out 5-10 years down the road, but also super granular in understanding why a specific product offering is preferred by a particular subset of customers vs. a competitor. To me this work is far more interesting and I feel like I'm learning more and becoming a better thinker/analyzer of businesses as a result.

Array
  • 17
Dec 9, 2020 - 1:17pm

Thanks for the great response. Out of curiosity, what size/type of fund are you at?

The last couple of sentences of your response describe exactly the kind of experience I'm looking for, and I'm wondering what types of funds are conducive to that experience as an associate.

Dec 9, 2020 - 1:18pm

If you want to get into entrepreneurship then dive in. It's the easiest it's ever been historically to raise a juicy seed round. Nothing will really prepare you for it.

  • 1
  • Associate 1 in PE - LBOs
Dec 9, 2020 - 1:31pm

You think so? I feel like consulting you can learn if you're tackling a good market, PE you can learn how to not get got by investors, venture you can learn what some common pitfalls of startups are, etc.

Dec 9, 2020 - 2:33pm

Having hired ex-PE/IB/consultants etc.. absolutely. Building your own business is very different from focusing on a specific part of a business with established infrastructure. It's completely different. 

  • Associate 2 in PE - LBOs
Dec 9, 2020 - 1:40pm

I'm going to show my bias here as someone who came from an alternative background and ended up in operationally-intensive PE (ie LMM where our management teams are typically pretty lean and have litte-to-no intermediate infrastructure). 
 

I think this thread dramatically underestimates what you can learn at PE shops that actually work hands-on with PortCos. I've learned a ton about how to dissect data to find underlying root causes, how to build out a business plan to respond to problems, how to evaluate people and determine their strengths and weaknesses, how to pitch a recommendation to get a team on board with our strategy so that they actually believe in it and execute well, etc.

There's a reason some shops target consultants - there can be a ton of skill overlap, and for some PE firms you actually get involved in execution as well. I won't deny that we do plenty of rote process management as well, but the universe of PE is a lot broader than that

  • Associate 1 in PE - LBOs
Dec 10, 2020 - 1:51am

operations

95% of PE guys don't know their ass from their elbow when it comes to operations 

  • Analyst 1 in IB - Gen
Dec 10, 2020 - 5:51pm

Aren't you the guy that has built a presence on this forum bitching about your new PE job while aggressively lauding your old consulting job? At first you were somewhat convincing, now it's just obnoxious. 

  • Intern in PE - Growth
Dec 11, 2020 - 1:49am

Any resources you would recommend to maximize one's chances of being in the 5%? Aside from actually undertaking an operations-focused role. Thanks.

Dec 15, 2020 - 12:35pm

I've been running my VC-backed startup for the past 4 yrs, prior to that: JPM/MS, HBS, MBB. No PE experience, but will chime in as you also asked about banking as a comparison. 

From a learning perspective for general entrepreneurship and business acumen, consulting was where I learnt the most. That said, I mostly worked in a frontier market where cases were broad and hands-on in remit, working directly with CEOs etc. (HBS was surprisingly helpful too - the longer I'm out, the more I realize this. MBA certainly not necessary for starting out, good for the bigger perspective.)

IBD I actually really enjoyed as a start prior to that - smart people, fast paced, solid work ethic etc - but the learnings for me would be have been dispensable from an entrepreneurship and general mgmt perspective. It was all pretty specific to, well, banking (can't blame 'em for that). I can well imagine that PE creates more relevant learnings here. 

Hope that helps, good luck! 

Dec 27, 2020 - 6:01pm

I had the chance to work in Banking, then in Consulting, Banking again and finally PE.

I respect everyone´s experiences, but it also depends on your personality.

During my time in Consulting, I missed my time in Banking badly. 

If your goal is to end in PE or similar, Consulting can be helpful, but Banking does a fine job for training.

I believe you learn by doing. In my opinion, Consulting provides a perfect training to work in a large corporation.

Taking into account PE is a financial sponsor, Banking provides more valuable skills and a smoother transition.

Having said that, sometimes you cannot choose the opportunities.

-- Alpha Seeker --
  • 4
Dec 27, 2020 - 7:17pm

Well, the GFC in 2007 "forced" me to join Strategy Consulting.  At that time I was an intern who successfully integrated with the team, but all the full time positions in my country (aka "graduate training programme", which all interns like me worked hard to be there) were removed (nearly at the same time as the CEO - hint: Swiss bank).

Other banks did the same. Since I was curious and there were no options in banking, decided to continue learning a different set of skills.

I did learn tons of office politics, pitching, process design (BPM), supply chain, got a very deep exposure to Telecom and Banking from a consultant perspective. I changed project every 3 months and dealt directly with C-suite, which was very intimidating at the beginning.

Became an expert in Powerpoint and in drafting business plans in Word. 

But my background, personality and vocation made me understand that I badly missed my time in Banking.

The reasons were the following:

- Exposure to Financial markets and excel modelling

- Office dynamics and personalities

For some reason, I had the impression there were more camaderie compared to Consulting, which seemed to me more individualistic.

The projects were too diverse, and if you extrapolate this into the future, you will end like master of everything with expertise in nothing.

Also, the partners sold projects with unrealistic expectations, and most of the times, clients were not happy.

-- Alpha Seeker --
  • 5
Dec 28, 2020 - 11:40pm

Laudantium et hic soluta facere debitis. Corrupti voluptatibus culpa ea. Ut molestiae ex impedit voluptatem laudantium maiores. Ipsum quibusdam dolor veniam quae inventore dignissimos. Et quo rerum corrupti eaque aperiam expedita ratione.

Facilis et consequatur odit magni iste voluptas amet. Hic et blanditiis sunt. Impedit quasi animi nostrum porro nesciunt harum.

Sit non facilis est excepturi. Reiciendis totam officia sit perspiciatis omnis. Est ab odio quia nihil qui doloremque. Quam et molestiae sint repellendus ipsum est. Possimus voluptates consequatur rerum ex. Tempora et voluptatibus vero vel et. Ab ratione quia sunt eos vel.

Architecto explicabo et earum officia voluptatem odio. Modi rem fuga cumque placeat. Non et iusto quisquam.

Jan 1, 2021 - 1:08pm

Facere dignissimos impedit animi veniam. Ut quibusdam modi doloribus quia perspiciatis veniam magni. Dolorem assumenda veniam quisquam sequi. Quidem laborum eos tempore animi sit suscipit.

Velit quia numquam quibusdam sit consequatur quo praesentium ut. Maxime aliquam reprehenderit aliquam qui soluta facere sapiente. Enim maxime aut enim omnis eligendi. Aut vitae enim esse numquam accusamus eius laudantium.

Animi ut asperiores minima saepe recusandae facilis. Rerum sint veniam amet hic ut repellat et. Molestias ipsum et non id debitis dicta. Est ea aut occaecati numquam. Est eligendi in quasi animi ipsa sunt molestiae.

A est est et laudantium eligendi unde. Rerum voluptatem omnis laboriosam doloribus aliquid.

Start Discussion

Total Avg Compensation

October 2021 Private Equity

  • Principal (7) $694
  • Director/MD (18) $575
  • Vice President (68) $367
  • 3rd+ Year Associate (69) $270
  • 2nd Year Associate (141) $254
  • 1st Year Associate (287) $220
  • 3rd+ Year Analyst (26) $159
  • 2nd Year Analyst (62) $136
  • 1st Year Analyst (185) $118
  • Intern/Summer Associate (20) $67
  • Intern/Summer Analyst (222) $59