Is Consulting Tier 2 better for PE?
Hi,
I've heard that going to a Tier 2 consulting firm (in London) is actually often better than McKinsey or BCG (well perhaps not Bain) if you want to exit to PE because
- MBB dominates the best strategy work and is the vast majority of a consultant's work at MBB, as a result T2 firms like OW OC&C, LEK etc. need to diversify revenue and so do a lot more due diligence work for PE firms which is more relevant for moving to PE. Also T2 is cheaper to hire for PE than MBB so it makes sense that they would hire them.
Now I understand that Mega Fund exits are out of the question but I wanted to get some second opinion on this and see what people thought
Would UMM be reasonably possible or is LMM the only option?
Bearing in mind I am London-based and that the consulting scene is different than the USA but was told for example that LEK's London PE practice is quite substantially larger than McKinsey's in London
Thanks in advance!
In London Strategy& Deals places a very large number of people into PE (a very large chunk of their exits)
Do they have an advantage over MBB - certainly not (by the way for megafunds you will struggle even with MBB on your CV - consulting is just not the most obvious PE feed)
Are they cheaper than MBB - no- salaries are not that different in London
Are they at a disadvantage compared to MBB - potentially, but extremely minimal
I would rate LEK and OC&C below S&, OW on par. For PE of course S& deals takes the cake
That said, across MBB and Tier 2 - differences in exit opps are actually not that vast
Don't know if Parthenon has presence in London but they place decently well in the US in pe just bc they do a solid amount of pe due diligence workh as well
Thanks! I meant cheaper in terms of engagement cost to the firm rather than salary difference but interesting to know.
Yeah I understand MF is probably out of the question
Not really, prices are not vastly different. It often comes down to individual relationships and previous credentials of the firm
I went from a 2nd tier consulting firm to a "reasonably large" PE firm (leaving it broad for anonymity)
It was hard, but possible. I also had interviews at MFs, so I think that would be possible, too. I got fairly deep into processes with Carlyle, EQT, and CVC. European MFs tend to be more open to non-MBB consultants.
If you are London based, I recommend working with Guy at Walker Hamill. He is good to work with.
Thanks! Out of interest, was your route tier 2 Consulting > PE > VC?
Do you mind if I ask broad timeframe of when you exited from Consulting to PE? 0-3 Years, 3-6 years, 6+
Did you feel the PE experience was critical in moving to VC, could tech/start-up in S&O be a substitute for later moving to VC?
0-3
Tech could be a substitute if you are in the Series A - C range, earlier you join and more successful company becomes the better
Hey! I am also at a Tier 2 shop in London (S&/OW/LEK), was wondering as to how you prepared for the process? Did you have, for example, LBO interviews nailed down before contacting recruiters?
From what I have gathered through Linkedin and looking at different funds' team pages, MBB are much more represented than other Tier 2 (although you see the odd exit here and there). But to answer your question, no, if you want to do PE you have substantial edge over other consultants at MBB (provided you get into their PE practice), and I'd wager this is the case even for MM/LMM.
I am not aware of the actual shares for CDDs but the way to think about it is that MBB focus on much larger deals while T2 players focus much more on MM and LMM deals. Fees are very different. So even though T2s may capture more on a volume basis, I’d expect the value basis (fees) to be similar.
I still do think MBBs will have an advantage in recruit regardless of fund size, except maybe LMM and super small shops.
My point was more from, what I was told that McKinsey and BCG just don't do as much PE work big or small, period.
They just take all the best strategy clients and the most lucrative strategy contracts.
Feel free to disagree
I don't think so...
No not true, just look at the team pages of a few funds and you'll quite easily see the opposite
Is this for MF in London? What are your thoughts on the previous replies, most of which seem to mildly agree that T2 isn't that disadvantaged?
Most well known names, including mid market. Not impossible but much more improbable. Again, just simply go to team pages of funds you'd consider and you'll get a good sense. Analyst 1 below is pretty spot on and agree banking is better if you're set on PE
From your posts it seems you are intent on seeking responses that will validate your hypothesis. Again, be it for MFs through to MM PE funds, if you collect the data or simply spend a minimal amount of time looking at team pages, you will see that MBB are represented at much, much higher rates than other Tier 2's. If you are deadset on PE, you should:
1) Go into banking
2) If you still want to do consulting, you should aim for MBB
That is not to say T2's are not fantastic places to start your career or that you don't have shot, but the hill you will have to climb is that much steeper, and you will be at a disadvantage.
Thanks but you have slightly misunderstood. I'm testing an opinion I was told, I was slightly sceptical of it myself at first. I'm not dead set on PE. Of course one aims for MBB but there are only 3 firms in that so interesting to understand what follows
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