LMM PE to MBB Post-MBA

Anyone make this switch after an MBA? Have seen a couple of LinkedIn profiles with this change. Some reasons I am considering this is: 

  • Not as steep of a pay drop from LMM PE Senior Associate Salary (300-350k) to post MBA MBB associate (200-250K)
  • Lower stress/hours at MBB
  • More variety of work/industries, decreasing interest in finance only
  • More international travel (most LMM shops are US/Canada only)
  • MBB recruiting process (especially from PE) a breeze compared to the competition of getting a Post MBA PE position
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Comments (23)

  • Associate 1 in PE - LBOs
Oct 15, 2020 - 7:38pm

Used to work in consulting

  • Lower stress/hours at MBB

Different type of stress, M-Th travel wears down on relationships in a different kind of way. Some people's partners prefer them working all hours but getting in bed with them at night, some are fine with getting plenty of attention F-Sun but being gone during the week. Food for thought. 

  • More international travel (most LMM shops are US/Canada only)

This is generally a downside unless what you're attracted to is the prospect of doing business in countries other than your own in which case there are probably better ways to achieve this. The travel is generally not fun and the sexy patina of hotel points and miles wears off quickly.

  • MBB recruiting process (especially from PE) a breeze compared to the competition of getting a Post MBA PE position

So true, god the MBA associates I worked for back in the day were actually retarded 

  • More variety of work/industries, decreasing interest in finance only

True unless you get hired into a group which is less common at MBB but not impossible. If this is interesting to you, consider Bain (you don't specialize until 3+ years post MBA and can often specialize in two industries). 

  • Not as steep of a pay drop from LMM PE Senior Associate Salary (300-350k) to post MBA MBB associate (200-250K)

This is one of my contrarian opinions but I think the equivalency point of where MBB partners make more than PE partners would be surprising to people (in terms of say, AUM vs. "your average partner" - to tell the truth I've tried many times but making a detailed comparison is useless). I knew plenty of partners growing into management making $5m/year (I did grunt work for the partnership group so got to see some sausage making).

I've made this opinion elsewhere and I'm sure it's going to get shit on here too (unsurprisingly, making the comment that consulting is more intellectually stimulating than PE, in a PE forum, is frowned upon) but I think consulting is more intellectually stimulating than PE (cue the monkeys saying "well I heard"... that's great, that's probably true for the data point you heard).

Honestly, not a bad idea based on the line of reasoning you've laid out. You've clearly given it some thought and it seems like the right move for you.

  • Analyst 1 in IB - Gen
Oct 16, 2020 - 10:28am

I've posted this a number of times and for some reason nobody ever responds with anything coherent-- can you please explain what makes consulting "interesting" or "intellectually stimulating?"

I hear this all the time, and ask people to clarify what they mean, and I have yet to receive a response. People tend to say this and then give nothing to support that belief...

  • Associate 1 in PE - LBOs
Oct 16, 2020 - 10:38am

I think you asked in another thread and I thought you were just stirring the pot and so did not respond. Sorry. Here is a real answer:

  • Problem structuring much more cerebral
  • More varied work functions
  • Focus on "high level" (e.g., competitive strategy, no getting in the weeds on finances, who cares, that's their problem)
  • No focus on ownership or implementation (breezy work experience)
  • Better overall culture of consulting firms seeps into day to day work
  • Development of speculative theses and subsequent primary research is somewhat more academic / cerebral (e.g., different than spinning up with a couple GLG calls, this ties into problem structuring)

I could go on if this doesn't clarify, but I think this should be enough to crystalize why for some people it's more intellectually stimulating.

  • Analyst 1 in IB - Gen
Oct 16, 2020 - 12:33pm

Ok, thanks for responding and beginning the dialogue. Unless if I'm misunderstanding, I feel like points 1, 2, 3, and 6 speak more to the tangible work product / skillset whereas the other points speak more to general culture. I think the culture of consulting is unquestionably more attractive than that of banking. I will get into why I make this distinction at the end of this post.

This is an outline of an MBB diligence deck on a sponsor buyside process that I worked on (intl consumer brands company):

  • Market overview (here they cite Internal Experts and Research as proprietary capabilities)
  • Product risk and opportunities (discusses things like disintermediation, revenue concentration, price point analyses, etc.)
    • They frame slides in terms of Q&A. E.g. "How do purchasers/customers view X's brands and its competitors' respective value propositions/capabilities? Which competitors are viewed as most innovative? How has that impacted ability to capture share and growth?" Then they show their conclusions
  • Macro trends (things like rise of eComm, consumer preferences, etc.)
  • Key buying factors (KBFs) / consumer buying behavior -- main thrust of the report
    • This was pretty interesting for me to read, personally; seems to be based on survey data
    • Granular analysis of product strength for Company X relative to competitors,
    • Benchmark against CPI, general economic benchmarks, industry sales
    • Lots of survey data
    • The iconic word cloud from survey data
    • Purchase channel analysis, brand overlap comparison, brand perception analysis

I can see how this type of work can be interesting. You dive deep into breaking down an industry and pinpointing consumer behavior. It's like writing a college thesis where you have a question and do the requisite research to find the answer. I was a liberal arts major with a strong interest in consulting as an undergrad. But where exactly is the thrust of the "skillset?" The report that I outlined above surveyed customers and leveraged "Internal Experts and Research" and summarized the findings. I guess one could argue that a consultant learns about the various types of methods that can be used to understand a company's products and position. But I'm guessing the analyst never actually conducted that research. I'm guessing the MBB's "Internal Experts and Research" has that research on hand. Moreover, I'm guessing that there's a presentation that was used before that is exactly like this presentation and that the analyst merely leveraged that presentation to create this one. That's a lot of guessing, but please tell me if I'm wrong!

To be clear, I do not think one learns more in banking. I think banking has an unquestionably tougher culture, tougher personalities, and trust me, we use precedents to create the same types of materials too. But just like in consulting, every so often, a new pitch comes up, and I find myself creating a new type of analysis where we model out cash flow / liquidity / the capital structure in a new way to advise the client on how to make a difficult deal happen. In banking, I believe our skillset is defined in the sense that we come out with a strong understanding of concepts that are rather opaque to our clients, such as valuation, accounting, modeling, deal analysis & execution. CFOs don't necessarily have a deep understanding of the state of the capital markets / how to best structure an acquisition. Of course, my perspective is biased. Would you say that consultants have a better understanding of an industry / product than their client does? Honest question-- sincerely.

Ultimately, my belief is that consulting is appealing because of points 4 and 5 in your post. Unlike banking, consulting sells the narrative of an "intellectually curious" ethos because in consulting, it's ok for them to do that. After all, the goal to execute in consulting is less of an imperative than in banking. I think people like consulting because it makes them feel good, but not because there's a better defined skillset or anything more tangibly valuable. I'm not in love with banking and am even considering consulting as a potential next step because, as you might be able to tell by the length of this post, I, too, like loquacious analyses about nothing. But I just want to understand what I can truly get from consulting.

  • Associate 1 in PE - LBOs
Oct 16, 2020 - 1:10pm

This is an outline of an MBB diligence deck

I really liked diligence work because of some of the points you mentioned. I got to do some branding work. I got to do some pricing analyses. I got to do market research (talking to people actually doing the thing, whatever that is) and survey people to find out whatever I wanted. It was a lot nicer too when my analyst programmed the surveys that I wrote, so I was just doing the thinking. 

But where exactly is the thrust of the "skillset?"

The thrust of the skillset is developing your ability to think, ask good questions, and frame problems in a way that drives value for your clients. Many times they do know more about a corner of an industry in which they are operating, but because you work with all of their competitors and adjacent / semi-adjacent industries, you have a better birds eye view. Think of it like when you go down a rabbit hole in your model and lose sight of the big picture and your VP has to pull you out to reframe things.

  • It is much different than in banking where you are learning a hard skillset of understanding finance. To be honest, the main thing I learned was asking good questions and being able to structure things in a clear and concise way. It is a bit hard to explain unless you do it, but that point also ties into it being more cerebral. You still have to grind out analyses, but it's not based on rules, like accounting. You make up structures to solve the problems at hand.

surveyed customers and leveraged "Internal Experts and Research" and summarized the findings

Unless we are at a disconnect, the analyst does do the research. They do the expert calls, customer calls, competitor calls, surveying. When I was doing one project, they actually flew me across the country to go to a physical place (it would have been nearly impossible to survey) and interview 100 people by stopping them on the street and explaining my business! I took that information and synthesized it into key trends and then talked to the other partners at my firm about their experiences. It helped develop a really interesting narrative about how practitioners perceive the world vs. how the world actually is. This was back when I was a junior analyst, so this was just one part of the case. 

Moreover, I'm guessing that there's a presentation that was used before that is exactly like this presentation and that the analyst merely leveraged that presentation to create this one

This is generally frowned upon because a client is paying for a unique work product. I admittedly did do this once or twice, but the nature of a consulting engagement at an MBB level is meant to be so bespoke that everything is done from scratch. What you know may inform your approach, but you are still going to create a methodology that is specific to the company at hand - whether that be unique market structuring, unique datasets, unique company blah blah blah and so on. 

Would you say that consultants have a better understanding of an industry / product than their client does?

I covered this above. They have a different angle which is valued. It's a more birds eye angle based on having deep relationships with numerous firm leadership personnel, whereas a CEO doesn't exactly chum around talking about truly inside baseball with other CEOs.

  the goal to execute in consulting is less of an imperative than in banking. I think people like consulting because it makes them feel good, but not because there's a better defined skillset or anything more tangibly valuable

Oh come on. I think you can imply my answer from what I've already written above. Consulting partners still have to sell work. My partner sold a project because 5 years prior, another firm came in with a recommendation for doubling growth in 5 years. The client followed the plan religiously and it didn't work. This is an oversimplified example to illustrate this specific point, but suffice to say they did not seek the advice of that advisor again, and my partners were able to swoop in and win some work. 

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  • Analyst 1 in IB - Gen
Oct 16, 2020 - 2:14pm

Thanks, that's helpful. How much of the analyst role is dedicated to surveying (particularly the gathering of data)? Do you think that this is a particularly valuable skill? I'm not trying to imply that this is a mindless exercise, but that would seem to be one of the biggest value-adds that consulting firms add given your post. Want to understand this part more.

  • Associate 1 in PE - LBOs
Oct 16, 2020 - 3:09pm

Surveying is a component skill of primary research.

  • First you learn how to code surveys that someone else has written. This is a mindless, menial task. It's about as tedious as spreading comps.
  • Then, you learn how to write surveys. You are not coding, you are thinking of the questions that you want to find out. This is pretty intellectually stimulating because you are basically given an unlimited budget (within reason) to figure out how you need to get the answers to what you want to know, and what you want to know is a mix of 1) your personal thread pulling intentions, and 2) getting the information that someone else has essentially - either directly or implicitly - set up as required for solving the problem
  • Eventually, at the manager level, you get above writing surveys. I was just doing a bit of this before I left consulting. You are reviewing surveys and making sure that they fit in as part of the overall case approach. You will be doing multiple things at this point like structuring your modeling methodology based on the product / service / industry / company dynamics at hand. Surveying is a constituent component of getting that done. There are also things on competitive positioning, pricing analyses, etc. that you want to chase down. You have to think about all of these holistically to uncover - to paint the ultimate story of what you want to say - the backbone of the deliverable.
  • Then, at the director or execution partner level, your goal is the story. The overall message you want to craft to the client. You then delegate the actual specifics - to varying degrees - to the manager, who then gets the frameworks in place - who then delegates to the associate who runs with executing on those frameworks - to the analyst who then does the actual grunt work.
  • Analyst 1 in IB - Ind
Oct 16, 2020 - 3:57pm

Very interesting- thank you. How much would you say the average MBB partner makes? What is the "equivalency point" as you mentioned? 

  • Analyst 1 in IB - Gen
Oct 18, 2020 - 1:01pm

This is a great post. Just curious - were you able to find some sort of generalized AUM cut-off when it came to PE partner vs. MBB partner comp? I've come to the same conclusion as well and was surprised to see someone else share this opinion as well. I do feel like, unless you're at a great UMM / MF, there's a good chance an MBB partner / BB MD would make more 

  • Associate 1 in PE - LBOs
Oct 18, 2020 - 3:22pm

The cutoff depends... you would have to model it out on a case by case basis. Let's say you are a high performing MBB partner but not a managing partner and you are making $3m/year. That translates to $15m / 5 years. 

Let's say you are at a $500m fund that has a ~20% IRR and returns $1200m (roughly). Of the $700 gain, your firm keeps 20%, or $140. You have 10% of carry, so you get $14m over 5 years.

Funny enough, I came up with those numbers on the fly, but you can see my thinking. I am really not interested in a conversation of %s, fund returns, earnings as a partner, etc. That's my point - it's nebulous, just plug in your own numbers and roll with it.

  • Analyst 1 in IB - Restr
Oct 15, 2020 - 8:36pm

When I inevitably get pushed out of PE this is my plan haha

Oct 16, 2020 - 5:13am

Literally hundreds of my MBA classmates went into consulting, many of them at MBB. I won't comment on every point because it was already covered above, but I don't know a single MBB consultant who didn't put in pretty brutal hours for a few years post-MBA. I'm talking about team dinners that rolled into post-dinner working sessions that ultimately turned into 1am nights on a regular basis. Maybe my MBB friends are just overachievers, but this is far, far worse than anything I've seen in LMM PE.

CompBanker

Oct 16, 2020 - 8:30am

Agree here. I just came from MBB - definitely less stressful than PE overall but hours aren't that different

Array
  • Incoming Analyst in IB-M&A
Oct 16, 2020 - 6:12pm

Did most of your mba cohort that had pre mba experience go back to pe, or did many go to different industries like consulting?

Oct 17, 2020 - 6:05am

I can't think of anyone that transitioned from PE to consulting. I know that most of the people who did PE before school and wanted to do it after school got back into the industry.

CompBanker

  • 1
Oct 18, 2020 - 5:22pm

There are a number of people that have done this. PE isn't the end-all-be-all it's painted out to be. There are many individuals who are much better suited and frankly will likely have a better career at an MBB than they would at any PE firm.

As a illustrative example, you can think of dozens if not hundreds of CEOs / Presidents / Leaders across all functions of government / business (e.g. Mayor Pete) that are MBB alums (disproportionately McKinsey for what it's worth). The number is truly shocking if you do a bit of digging to see how many have at one point in time touched McKinsey. Outside of a niche world of finance, I don't think most educated people can name a single person who's a run of the mill MF / UMM PE partner aside from founding partners maybe (e.g., Schwarzman, Leon Black, etc.) 

Another way to look at it is a money vs. power vs. impact 3-D chart. I would say for an individual singularly focused on monetary wealth, PE is likely the best path on average. For a highly talented individual with a high IQ *and* EQ, McKinsey -> C-level role -> Government arguably has higher true 'influence' potential in the sense you can be in the driver seat of Fortune 100 companies that truly impact the lives of hundreds of thousands of employees and millions of consumers.    

Most Helpful
Oct 19, 2020 - 2:08pm

Interesting thread. Been in PE now for a bit and spent a couple years before this at MBB. Definitely not a common path for folks to be PE -> MBB, but I have met two people who have done this going from MBB -> PE -> MBB again. 1 of them wanted to have his b-school paid for by MBB and the other just hated PE and wanted to work with clients again solving their problems. Definitely different reasons, but all I'm saying is that it happens. 

On how it's different - they are truly two different beasts. The pace of MBB is a lot faster. What I mean by this is that the pace M-Th is breakneck. No downtime. Didn't even have time to go to the bathroom or eat lunch for more than 15 mins a lot of the time. You're preparing slides and analyses for a client meeting that happens every 2 days (twice per week mid-level client meetings) and then 1 big readout to the senior clients every 2-4 weeks. You are iterating on pages and analyses for problem solving sessions with partners that happen every day. This means you come out of a client meeting, work on the next analysis, make a bunch of pages, get them ready within 4-5 hours to run through with the partner, then iterate on it in the evening, send it out to India to get the slides prettied up, and then send back to the team for review. Then you talk to the client through these things that next day. There's literally no stopping from this pace for 6-12 weeks of your project. Then it happens all over again with a new project. 

PE on the other hand has huge peaks and valleys. When you're getting to LOI, you're cutting the dataroom like crazy and building the model, etc. But when you're just doing the day-to-day, you have a lot more control over your time and hours. Nobody is checking in with you every 3-4 hours to get your "latest analysis on XYZ" when you haven't even put in an IOI yet. There's also just a lot of waiting around for deals to come across your desk or for deals to heat up. No such waiting around in MBB - beach time rarely happens. 

The thing that PE has over MBB is that you have to really care about your analysis much more. In consulting, you're working on the 80/20 rule - the answer needs to make sense, be backed by data, but you don't need to live with the consequences of those recommendations. That means sometimes you simplify the problem, or you don't answer a question that's just too hard to answer, but you get the answer 80% right. Well, in PE, getting the answer 80% right leaves you with a 20% chance that your investment is going to be crap - so that doesn't really fly. The diligence needs to be as airtight as possible, and you'll push to make sure the analysis goes as far as you can take it - if it were MBB, you might've just stopped after you went 2 layers deep. You also get to be engaged at the board level with several companies at once and you ultimately have control over what the company does. Yes, this might happen if you're a senior partner at MBB (but that'll take a lot of blood sweat and tears to get to), and even then, you're just an advisor, not THE person who is running the show at the board level. 

I think they are two really different beasts. If you want to get more projects, see more variety of clients/industries/business problems, MBB is the way to go. You stay higher level, but it also means you get to touch and learn a lot more things every 12 months. PE, you might dig deep into 2-3 deals in a year (like really deep) vs. 6-8 projects per year at MBB

Comp wise, they're kind of equivalent. Associate pay at MBB is 175-250 with tenure, manager is going to be 250-350 with tenure, junior partner is 350-450 with tenure/some profit share, and then early tenure partners at MBB are around the 750K mark. Then 5-7 years later once you're senior partner, that's when you can comfortably make $2mm per year, with some upside for $5mm+ if you're a big moneymaker. It only takes 6-8 years to make partner at MBB, so the progression is a lot faster than the 9-12 years in PE it takes (e.g., 3 VP, 3 SVP, 3 Principal). On a salary/cash comp perspective, MBB is pretty freaking good. If you think about PE comp at most shops, without carry, VP is probably about 300-450 (depending on shop), principal is 500-750K, and partners are anywhere between 750-2mm per year depending on shop size/comp structure. Obviously carry + the ability to co-invest and double your money every 5-7 years is pretty incredible, but from a straight cash comp/salary perspective, MBB holds its own. 

The other thing that is important to note is that MBB is not a walk in the park. Making partner is hard work. Making senior partner is even harder. Developing an area of expertise and becoming a trusted advisor to clients is not easy - you'll also need to impress the partners and senior partners you work with every time. There's also a decent amount of luck involved, in terms of working with a client who has the money to constantly pay for your work vs. aligning yourself with a client that suddenly cuts back on discretionary spending (imagine Boeing or cruise lines today). 

This is a super long post, but just thought I'd share my two cents on this. Both careers are good, no doubt, just very different. both will pay you well. One is advising role, the other is an investing role. Different skillsets and different beasts to master. 

  • Analyst 1 in IB - Gen
Oct 19, 2020 - 4:24pm

Very helpful. Kind of curious to see what the general thoughts are for an IB career as well compared to these two.

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