MBA at GSB/HBS vs Career Track PE

Private equity professional currently working in New York for a European fund. I am currently on a career track and was recently early promoted to VP / Senior Associate (our titles are a bit strange). My fund does not expect, or want me to, pursue an MBA but it is something that I have considered for a long time. I know it is a financial suicide when thinking about the direct costs of the program, opportunity cost, and missed years of carry, but I feel like an MBA from Stanford or HBS can open doors that otherwise would not be available to me (particularly if I want to pursue entrepreneurship or open my own fund some day). My current fund would take me back after an MBA but likely not give me a lot of credit for it (maybe 1 year), but I am not even sure I want to do PE long term.

Finally, I don't have a lot of friends in New York (I studied in Europe) and think that an MBA would allow me to expand my social circle significantly.

What do you guys think? Terrible idea?

Obviously need to get into either of the 2 schools above first...

Best,

Eurodancer

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Comments (18)

  • Intern in IB-M&A
Sep 23, 2021 - 9:43pm

Take this with a grain of salt since I'm only a Junior in college, but I personally want to get an MBA and think it's a great opportunity, but most people on this forum are anti-MBA, especially if you're able to progress within a firm without it.

The biggest reason I've seen as to why people think an MBA isn't worth anymore is ofc the direct cost and opportunity cost (i.e. lost wages and career progression). I feel that this is a very short-sighted point of view. We are in some of the highest paying careers in the world, and although shelling out 200k is a lot of money, it's not like you're going to be poor afterwards. It gets to a certain point where the marginal benefit of more money doesn't have the same steepness as it would when you're a junior employee.

Also, the networking, experiences, and brand gained from an MBA are things I feel like are not quantifiable and invaluable.

Sep 28, 2021 - 11:41am

As someone a bit older than you, I would say you have to consider other things for people. 

Business school occurs similarly to when people want to get married. Most of my friends at business school are generally 26-30 and a lot of my other friends at a similar age there are married (they didn't pursue MBAs). Two friends of mine at business school are pushing their wedding back 3 years due to loans lost wages. Consider this: Since this is a banking forum, first year analysts probably only save ~$40k / year. Obviously this number increases the further up you go, but recall that you prob only saved $100k / $150k by the time you go to business school, meaning you're blowing ur life savings + taking on loans to go. Imagine having hardly any money (you spend a lot of $ in business school going out and traveling) and being 30 years old. Not going to deny that compensation certainly goes up post-MBA, but you have to remember that your comp will go up from 2 years of working as well. The only big difference here is if you make a huge career switch where those 2 years are small compared to what you make post MBA. A lot of people I know who didn't pursue B school are nearly millionaires by the time they're in their early 30s compared to having 0 money.

From what I hear from my friend's at business school, the whole concept of going for the "prestige" is pure bs. Fuck that shit. If you're already working at a great fund, not sure you'd want to leave that. I appreciate the comment above mine, but I think experience speaks a bit different than hypotheticals, although he has many great points above.

The only exception that I personally see an MBA adding more value for you would be making more connections within the US. With that said, remember applying to HBS/GSB is no easy task doesn't matter if you worked at the greatest funds in the world, that's a huge commitment. People live their lives differently, but spending 3 years (1 year of prepping for apps) for more school (when you can learn more by experience in business) seems a bit foolhardy. 

Array

  • 2
  • Associate 2 in ER
Sep 26, 2021 - 10:42am

MBA is totally worth it for overwhelming majority of finance professionals. If you have a long career in an FO role, $250k lost in earnings will mean nothing. 

Sep 28, 2021 - 2:28pm

Appreciate the responses! I submitted my applications to HBS and GSB in round 1 and leaning towards going if I manage to get in (particularly to GSB).

I agree with the point above that you could be very well-off before 30 by continuing to work in PE, but I still feel like the cost/opportunity cost is still rather small in the grand scheme of things versus what could be an opportunity of a lifetime.

I am also very lucky to have a relatively wealthy relative who have offered to pay for my tuition fees if I would get in

  • Analyst 2 in PE - Growth
Sep 28, 2021 - 5:11pm

Awesome potential opportunity for you if you got into either school. But, hold up a second. What are we even debating? At first you mention, it'd be "financial suicide," and then go on to say you have a relative that's offered to pay for the entire thing??? I think most people on here would give their left nut to not only get into Stanford GSB but have it entirely paid for by a rich relative. If you get in and want to go, go. If you don't get in or don't want to leave your job, don't.

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Sep 28, 2021 - 7:33pm

Haha! Fair point - although arguably the tuition itself is only part of the financial suicide I was referring to (i.e. opportunity cost / lost carry / bonuses etc.). But I agree with the rest of your comment :)

  • Associate 1 in IB - Cov
Oct 7, 2021 - 1:03am

A lot of dumb answers here from admitted undergrads that romanticize MBAs.  The only possible reason I could see an MBA adding value to your situation OP is if you had a non-target undergrad brand and wanted to improve it for some reason.  Any other reason is stupid and a waste of money.  MBAs are not what they once were and would only recommend for career switchers (which you aren't).  
 

Source: M7 MBA

Most Helpful
Oct 17, 2021 - 3:37pm

If you haven't already, go search for CompBanker's post about getting an MBA. I think he outlines most of the reasons why one would pursue an MBA, despite that fact that you're in a post-MBA seat.

The only thing I'd add on top of that is, before I pursued my MBA, I had always heard these quotes about post-MBA PE and they go something like "if you're in a good post-MBA PE role it's career suicide to leave it for an MBA, it makes no sense, there's no guarantee you'll ever get back into PE, etc". What I've found is that if you have strong PE experience prior to business school and you go to to a top business school program, you can 100% end up back in PE if you want to.

Will you end up in a Post MBA Megafund role? That's a different story; however, if you would be ok with a solid MM/UMM shop and have some geographic flexibility, you can for sure find a VP role again. Although the seats are limited, there are also not that many good VPs out there and if you've proven yourself at and UMM shop and made it to the VP level, you can take comfort that you can make it back into the industry if you want.

Now with that being said, I'm an advocate for B-School, especially if you have the money and time to pursue it. It's a once in a lifetime opportunity to do some professional exploration. The trips are amazing, the classes are generally ok, people are usually great, and it's just nice to have some headspace after what has likely been ~5 or so years of hard work. It's for sure a luxury and I completely understand why PE/Banking folks think it's a waste of time as it doesn't have as much of a direct path to increased comp or promotion as it does for career changers, but in my personal experience, I was at a point in my life where it made sense for me to take the break. I've gained a great network, made lifelong friends, and had an experience that I will never be able to replicate.

With all that being said, make sure you have some sort of reason for B-School. Perhaps you want to try earlier stage investing, start your own company, gain some ops experience, etc. I've found that the folks who were using B-School as more of a break rather than for a really specific reason (ie going from NGO work to consulting) were the happiest when they had something they were trying to get out of school besides partying as much as they could. That gets old pretty quickly. 

For reference, I was similar to you, I was in a post-MBA role at my shop and still left for non H/S B-School. It has been 100% worth it.

Oct 17, 2021 - 6:09pm

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