Lateral or B-School?
Hi all,
I'm currently an associate going into his 3rd year at a MF in NY. I'm starting to think of next steps and am curious to hear the thought process of those who were on a "partner" track role who decided to go to B-School instead. What pros and cons did you weigh in making the decision? Did you have an end goal in mind going in? Additionally, did you consider lateraling to another fund instead to move up the ladder faster?
Being presented with a good shot at HSW coming from the MF name vs. lateralling to a lessor known MMPE shop in a lower COL city (slightly higher pay, sr. associate title, almost half of the COL as NYC, and lower tax). Hate to throw away a shot at HSW but also recognize that really great opportunities are hard to come by sometimes.
One major factor in your decision should be the type of place you hope to end up in the long run. Do you want to be a General Partner, or are you comfortable being a partner but not part of the GP entity?
If the former, you're going to be prominently featured in all marketing materials and involved in the fundraising and investor relations process. That isn't to say you're going to be traveling 250 days a year like Rubenstein was for almost the last decade of his career, but you'll be interacting with the biggest LPs in your fund(s).
If the latter, you're a deal guy and almost exclusively so. You source, diligence, and manage companies in the portfolio. You interface with internal staff, deal counterparts, service providers, and portfolio company executives.
For the former, the MBA does add value. There's an entire swath of the universe that thinks paper from Harvard or Stanford says so much about you that they can lean heavily on it when assessing you as opposed to taking the time to assess you on your own merits. Classic signaling effect.
It also is helpful in the fact that most rooms you're walking into will have someone first or second-degree from you through the business school grapevine. Meeting OMERS for your firm's Fund VII raise? They're already in Fund V and VI so it isn't a cold meeting, but you shoot a classmate an email and he decides to sit in on the meeting. Now you have a friendly involved in all the ensuing internal conversations after the meeting. Trying to expand the geographical base of your LPs and searching for a meeting with Temasek? You probably have a classmate there, and if not a classmate, a couple weeks of phone calls and emails across your class yields you a second-degree intro.
For the latter, the value is probably lower. You'll meet a ton of great people and those people will offer you similar value as described above, but it isn't core to your day-to-day job function.
For people coming from and returning to 'high finance' trajectories, this is by and large the whole point of business school. Developing a network that will:
Let's make an example.
If you're planning on making a career of it at Apollo, an MBA isn't going to deliver top-notch value because you aren't going to be in a position where it benefits your daily life:
If you're planning on making a career of it at a Madison Dearborn or FFL or similar type place, an MBA does move the needle for you because it does benefit your daily life:
Overall this is not an ironclad rule, but I hope it's a helpful framework for you to think about.
Lastly, I'd point out that while this current opportunity you're weighing may indeed be great, you shouldn't operate from a scarcity mindset. If you're worth this seat, you're worth another like it or better, and it'll probably manifest itself for you.
I made another comment to similar effect in a different thread:
I can't give you a directional answer on this because I don't know your end goal. Put some effort into defining that end goal and your decision will become easier.Do this by talking to as many different people as you can in the two respective types of places I outlined. People love to talk about themselves. You can legitimately cold email partners at shops all across the country to ask about this: why or why didn't they get an MBA, and how did it color their experience.
(Note that you'll want to get people who graduated this millennium. Business school was a relative joke all the way through the 80s. I'm not dogging anyone with this; I was surprised to find that everyone who graduated from the schools everyone worships today [HSW, for instance] spoke unanimously about how easy it was to get in and while they were there. Then I looked up the admission statistics and laughed; it was north of 40% for awhile. People were applying with no work experience and no standardized test and getting into Harvard off the strength of a recommendation letter (social status) and caliber of undergrad. A lot of guys I've spoken to in their 70s or 80s are open about the fact that they couldn't get in today if they applied with the young guys they're currently writing rec letters for.)
One indirect upside is you'll develop a lot of relationships you wouldn't have otherwise had. The direct benefit is that you'll get a lot of clarity on how different people have chosen their career path.
Good luck either way.
God damn this is a good post.
I am in a similar position, though coming from an NYC MM which changes the complexion here. The new lateral market that opened up 5-10 years ago has really changed this answer significantly. My senior VPs are amazed that people can now forego business school and just lateral instead - it used to be a necessity to move up in PE. This is something to keep in mind for your conversations.
It goes without saying that as always APAE has hit the nail on the head.
My current thinking (from reading WSO religiously, taking in comp/market trends, and conversations with fellow professionals) is that:
-MF professionals basically always nail H/S. They can go, and should usually go
-Solid MM professionals are CRAZY to pay full sticker at a lesser MBA business schools">M7, but should definitely go to H/S. Wharton is a solid maybe.
-Weaker LMM professionals, it probably makes sense to go to MBA business schools">M7
I'm applying for MBAs now and would go to H or S, would maybe go to W, and would not go anywhere else without major $$. I'm running at other opportunities (in PE & elsewhere) simultaneously for myself in case it doesn't work out -- the answer should be obvious if I get into H, S, or nowhere - if Wharton is the only school I get into, the answer will be less obvious. I think APAE has written previously about the growing divide between H/S and Wharton.
Less relevant to this thread, but I think a full-ride at an outsider top 10 would be really interesting for someone who has saved up a lot and wants to leave PE. You can still land $200k / year positions that are far closer to 9-5 out of an Anderson, Cornell, etc. I think a lot about early retirement and if you can keep your $300-$400k savings, take a scholarship, get a (weak) credential, and exit to that type of easier job -- you'd be well on your way. Less relevant to this thread specifically given you seem to like PE.
Lateral and dodge an MBA (Originally Posted: 09/08/2016)
Had some downtime and was just curious about the chances. Quick context: got to my position non traditionally with no MBA. It's one of, if not the most, prominent shops in town, albeit small. I'm loving it and have no intentions of leaving soon. I'm doing very well here as well, or so I've been told. The problem is I don't enjoy the city I live in. I would really like to move elsewhere in a few years to settle down, preferably a larger city. I really don't want to go to B school if I don't need to. I feel like I'm learning loads here already, and earning money is also better than being stuck back in school. A bigger city may offer bigger firms and bigger paychecks, thus bigger competition. While that's not the incentive for wanting to move, I enjoy this industry and would like to stay in it without having to go back to school. What are the chances of being able to lateral to larger firms without getting another degree in your opinions?
Duplicate -- looking to delete
Nice work.
I am less familiar with the lateral path, but anecdotally I've seen some guys from strong groups (e.g. Blackstone M&A or the new PJT, Evercore, and similar) do two years at a Berkshire, Kelso, GTCR type place and then move to another shop of similar size and bracket to begin the fifth year of their career rather than starting business school.
Your schema is pretty much on point.
Start networking and it should happen eventually, especially if you have relevant industry experience ... although not necessarily at a "larger" or "better" shop, which should not be an issue based on your post, right?
What would you like different out of a city?
Right, I like the size and all, so something similar. I'd prefer to be in a larger city, however. Preferably a warmer one near a beach. Maybe all just wishful thinking.
I recently ran a Cap IQ screen on PEGs in south florida. I will PM the list. Do with it as you will.
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