M/B/B intern looking to move into finance

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hey guys,

i have a bit of a situation here. i interned with mbb over the summer and got an offer. i loved the experience, but i eventually want to do PE. from reading these forums, it seems IBD is the way to get into PE. i've applied to some BBs for FT (gs, ms, leh, ml, and jpm) and i've also applied to a few PE firms that recruit at the school (top IVY), incl. blackstone.

i am a theoretical math major with a good gpa and a couple of econ/finance classes under the belt. i have a higher gpa within the major. i have a few leadership positions on campus and have extensive research experience in math and some in econ. i don't really have any "connections" on the street, didn't really get a chance to network with finance professionals during my internship. did meet some top execs of a f100 though (our client) and did part of a PE due diligence. don't think that counts for much.

i know i am a semi-competitive applicant and mbb isn't a bad post-college gig. mostly gunning for gs and ms here. but how do i explain my lack of finance experience to my interviewers? why the "sudden change in heart"? i had an offer at the only bb firm that i applied to, which is one of the ones i want to go to... argh. others were consulting internship offers (not to many either). but i know the FT process is more competitive and i tried reaching out to HR at that BB who told me to apply regular FT. what do i do?

is it worth going to a lower-ranked BB over MBB just for better odds at PE? how much better odds?

i know consulting and finance are quite different, so i guess you could put me in the "confused out of college" pile like a lot of my friends. haha.

Comments (23)

Sep 22, 2007

PMed

Sep 22, 2007

You should definitely take the MBB offer. There are some PE firms that hire nearly exclusively MBB consultants. Your stats are already incredibly impressive which will further your cause when you decide to switch over. Your B-School prospects will also be improved greatly from the consulting experience.

Note: This is coming from a banker who loves his job.

Sep 23, 2007

I can speak from limited experience - I had offers at a top botique ibank, bulge (though not gs / ms), and MBB...i went MBB after extensive, extensive research...I found exit opps to PE are just as good from MBB as an ibank - and, you're competing with a far smaller class of people who want to even do PE (a lot of people from MBB will goto b-school, non-profit work, strategy units at corporations, or just stay with consulting). In banking, it feels like you're competing for a very limited number of spots in the top PE shops and everybody and their mother is an "ibanker." Also, exit opps to B-school are amazing out of MBB.

Another thing to consider are the skill sets learned. You will learn a lot about "finance" in an ib gig. You will learn how to bulid one killer model. But, how much are you really going to learn about strategy, how to make a company more profitable, etc. I know those may seem like "more abstract" concepts now, but think about this: the near unlimited amts of money era is coming to an end. It is much more important for a PE associate to be able to understand / contribute to the theses of how to make a portfolio company more profitable than build a nice LBO model - you do one or two, you've done them all.

To be honest, I only saw one downside of MBB in the first 2 years - money. You will make less at MBB. But, you will always work less hours (though if you're doing work for PE clients, the hours approach that of banking). If making that extra money is important to you in the first 2 years, then go banking. If being around really really bright people and getting a better view of business fundamentals and strategy are more important, go MBB. It's a trade off.

Sep 23, 2007

I can speak from limited experience - I had offers at a top botique ibank, bulge (though not gs / ms), and MBB...i went MBB after extensive, extensive research...I found exit opps to PE are just as good from MBB as an ibank - and, you're competing with a far smaller class of people who want to even do PE (a lot of people from MBB will goto b-school, non-profit work, strategy units at corporations, or just stay with consulting). In banking, it feels like you're competing for a very limited number of spots in the top PE shops and everybody and their mother is an "ibanker." Also, exit opps to B-school are amazing out of MBB.

Another thing to consider are the skill sets learned. You will learn a lot about "finance" in an ib gig. You will learn how to bulid one killer model. But, how much are you really going to learn about strategy, how to make a company more profitable, etc. I know those may seem like "more abstract" concepts now, but think about this: the near unlimited amts of money era is coming to an end. It is much more important for a PE associate to be able to understand / contribute to the theses of how to make a portfolio company more profitable than build a nice LBO model - you do one or two, you've done them all.

To be honest, I only saw one downside of MBB in the first 2 years - money. You will make less at MBB. But, you will always work less hours (though if you're doing work for PE clients, the hours approach that of banking). If making that extra money is important to you in the first 2 years, then go banking. If being around really really bright people and getting a better view of business fundamentals and strategy are more important, go MBB. It's a trade off.

  • movetofinance
  •  Sep 23, 2007
sage123:

I can speak from limited experience - I had offers at a top botique ibank, bulge (though not gs / ms), and MBB...i went MBB after extensive, extensive research...I found exit opps to PE are just as good from MBB as an ibank - and, you're competing with a far smaller class of people who want to even do PE (a lot of people from MBB will goto b-school, non-profit work, strategy units at corporations, or just stay with consulting). In banking, it feels like you're competing for a very limited number of spots in the top PE shops and everybody and their mother is an "ibanker." Also, exit opps to B-school are amazing out of MBB.

Another thing to consider are the skill sets learned. You will learn a lot about "finance" in an ib gig. You will learn how to bulid one killer model. But, how much are you really going to learn about strategy, how to make a company more profitable, etc. I know those may seem like "more abstract" concepts now, but think about this: the near unlimited amts of money era is coming to an end. It is much more important for a PE associate to be able to understand / contribute to the theses of how to make a portfolio company more profitable than build a nice LBO model - you do one or two, you've done them all.

To be honest, I only saw one downside of MBB in the first 2 years - money. You will make less at MBB. But, you will always work less hours (though if you're doing work for PE clients, the hours approach that of banking). If making that extra money is important to you in the first 2 years, then go banking. If being around really really bright people and getting a better view of business fundamentals and strategy are more important, go MBB. It's a trade off.

i know, i did part of a due diligence and it was insane. they told me the hours we were working were worse than bankers...!

i am talking to a first year later this week, so i'll ask him about PE placement...

Sep 23, 2007

If you wanted to do PE, your bschool would be subsidized by MBB, albeit after a committment to the firm. You can either get into PE 2 years out (not guaranteed) or 6, weigh the costs and benefits.

  • movetofinance
  •  Sep 24, 2007
bnkrtrdr:

If you wanted to do PE, your bschool would be subsidized by MBB, albeit after a committment to the firm. You can either get into PE 2 years out (not guaranteed) or 6, weigh the costs and benefits.

i thought there are some MBB analysts who go on to PE after their 2 years? or do most go after B-school? i def. met at least one dude who was leaving for PE after his 2 years. didn't know what firm.

Sep 23, 2007

what is "M/B/B" and "FT"?

Sep 23, 2007

McKinsey/Bain/BCG

Full-time (so not an internship)

Sep 24, 2007

bnktrdr doesn't know what he's talking about...you're absolutely right movetofinance, a lot of people who do mbb for 2 years will move into private equity...and to the big funds or prestigous "smaller funds" (think goldengate, hf, berkshire)

there is some general concensus among young ibanking analysts (who think they are big shot ibankers, instead of number crunching analysts) that you must do ibanking to get into the buy side and that the consulting world is subpar to "banking"...first of all, if you're not at one of the top firms (goldman, ms, lazarad, greenhill), you are going to have a hard time getting one of those coveted positions at a top PE shop...there are tons of middle market pe shops that take only ibanking analysts though (maybe this is where the notion comes from?)

long story short, MBB competes with the top banking companies in placing into the buy side...recognize though that the competition for a PE position, while stiff, is not as many in numbers, b/c a lot of consultants at these places have a varied set of aspirations - think b-school, non-profit work, working for strategy at a coporation

i really see the only downside to MBB is the money in the first 2 years...however, your lifestyle tends to marginally be better and most importantly, you learn a skill set beyond crunching numbers on excel...just my 2 cents

Sep 24, 2007

What were your initial reasons for choosing to intern at M/B/B over whatever ib offer you had?

  • movetofinance
  •  Sep 24, 2007

i was always interested in consulting, especially the firm i worked at. i knew quite a few alums who had worked there and they spoke very highly of their experience. being a naive college student, i thought consulting and finance were pretty much the same. haha.
plus, i got a bad impression of that bank during the pre-interview session. one of their senior VPs came in totally unkempt, no tie, un-ironed suit, the top few buttons of his shirt were open. kinda tacky. also, the i wasn't a fan of the kids they took. i've seen them in my econ classes and they didn't seem to bright. whatever, depends on the interview right? small things, but it left a big impression. i thought i could always switch into banking later or something if i didn't like it.

Sep 24, 2007

I am at M/B/B and the comments about it taking 6 years for consultants to go to PE are untrue.

I was in the same position as you and I took M/B/B over a couple of banking offers. No regrets so far.

BTW, which firm?

  • movetofinance
  •  Oct 1, 2007

consultant: want to keep that confidential. sorry. :)

update:

i decided not to do it. all my banker friends are now e-mailing me for case interview prep. hehe. they didn't like their experience.

i'll see if i want PE in the future.

thanks for your help guys!

Oct 2, 2007

There seems to be a fair amount of i-banking bashing going on in this thread.

Number crunching on excel is suddenly not desirable in PE? These PE guys are usually not looking to expand the EBITDA multiples of the businesses they buy with creative plans - they'd rather buy a company with sure-as-hell cash flows (First Data) or one they believe is undervalued by the market (Hertz). They want to make 20%+ IRRs with as little risk as possible. When you deal with intangibles (i.e. consulting strategies) you are essentially taking on more risk.

You definitely have a better shot at PE through banking. In fact, during interviews, they will ask people with 2 years of banking experience to construct an LBO model from scratch. Is that not telling of the skill-set they are looking for? Just take a look at Blackstone's website for starters (their 'Team'). Practically everyone in their PE group is a former I-banker; granted, they are only listing Principals and up.

Furthermore, you will still be working near or equal to i-banking hours at a firm like Blackstone or KKR. If I was hiring at Blackstone who would I rather have: somebody who has successfully done the 80-100 hour work weeks for 2 years or someone who hasn't?

And this is not to bash consulting - if you enjoy it more then fine. But consulting is not finance; PE is finance; I-banking is finance.

Your opinion may be that consulting is more interesting than i-banking. It's true that most people in i-banking do not enjoy their jobs (specifically analysts and associates). However, for any high-paying job (6 figures first year out of college) you're going to get a large pool of applicants who don't care about its enjoyability.

Oct 2, 2007

I don't mean to say that being an IBanking analyst is not a desirable, or even great career, for that matter. What I do mean to say is that given the option of working at MBB vs. almost any investment bank, I would recommend (though there are respective pros and cons) accepting the MBB offer.

I am not saying being able to build an Excel model is a bad thing; in fact, it's a great thing! But, it is much much easier to learn to build an LBO model from scratch before an interview than to gain the experience that a MBB consultant gains analyzing a diverse range of business issues from a strategic perspective. In fact, if your goal is PE after 2-3 years, you would be on the same footing as any banker going to MBB - they do A LOT of case work dealing directly with the private equity firms and essentially answering the question - is this a good buy?

In reference to most people in PE being ex-ibankers, that is true. However, it is also true that the absolute number of ibanking analysts applying to PE shops far far exceeds the absolute number of MBB guys applying to PE shops - yet, they are almost equally represented in the interview stages. What does this tell you about competition and the perception of people from MBB? I don't have to lay that one out...

In reference to the long hours, you're right; I would probably want someone I know is both smart and hard-working. What I love about MBB is that since they do such close work with the PE shops, you often have your managers and other senior professionals vouch for you during the interview process; I also think the sheer selectivity of MBB ensures a PE shop that they are getting some of the brightest and most motivated people around.

Again, you're right; consulting is not true finance. Big deal? Unless you have a preoccupation with saying that "I strictly work in pure finance."

I personally know individuals who have given up offers at Goldman and Morgan and I have personally given up two ibanking offers (though not at those two places) for a position at MBB. I'm not saying it's for everyone; nor am I saying it's more "enjoyable" - to each his own, of course. However, to the original poster, if you're concerned about exit opps to PE, don't be. MBB will get you there in 2-3 years. The sacrifice may be a few dollars in the beginning, but STRICTLY in my opinion, the nature of the work, the people you're around, and better exit opps to b-school make MBB a way better choice.

Oct 2, 2007

I interviewed at a ton of PE firms before finally getting a job, and I ran into very few consultants in the final rounds. They were all bankers. If getting an associate position at a PE firm is your goal, go to banking. The PE funds want to use you for two years to crank out models and do other grunt work that is very similar to banking.

That being said, there are definitely consultants in private equity. Although some of them did start at the associate level, most of them I met switched further down the road. A good number actually had a M/B/B -> MBA -> M/B/B -> industry -> PE type track. I don't think this is set in stone, but it makes sense. A consultant certainly has skills that are useful to PE funds. However, they don't really need their associates to have these skills. The strategy part of PE occurs at a more senior level, and this is what consultant brings to the table.

Consulting is definitely a better job for some people than banking, but not for others. Bottom line, go to the career where you will impress more people and meet people who will advocate for you. For me, that is definitely banking. For others, it's consulting.

Oct 2, 2007

What sized shops did you interview at? I've heard the middle market shops tend to focus a lot on ibanking analysts. But, the big shops hire from either. Examples of both kinds of places that hire almost only consultants are bain cap and golden gate...

Oct 2, 2007
sage123:

What sized shops did you interview at? I've heard the middle market shops tend to focus a lot on ibanking analysts. But, the big shops hire from either. Examples of both kinds of places that hire almost only consultants are bain cap and golden gate...

I interviewed at 2 or 3 of the big ones, went the distance with one of them, but than I told the headhunters not to send my resume to any more $15bn+ firms. After toying with the idea, I decided I would prefer to work at some place a bit smaller. I am not alone here.

Certainly Bain (I don't know about Golden Gate) hires consultants, but I think that is more of an exception and not the rule. Most PE firms really don't have the patience to teach someone who does not model. Especially at the big shops, an associate's thoughts on the investment thesis are basically ignored. The joke goes that they finally ask the associate at the closing dinner if s/he thought it was a good deal.

The problem here is that even if some funds (and sure, Bain is clearly awesome and props to anyone who gets a job there) do consider consultants, a lot don't. It removes a whole slew of options. What if you are a consultant and want to work at the "mid-market" (In quotes, because this often includes funds around $5bn to ones with less than $1bn, and these are extremely different from one another). I can't really speak to the difficulty of moving to PE from consulting as I am not a consultant, but what I can tell you is that I had the pleasure of speaking to 20+ firms (it was hell, I hate recruiting) and I don't even remember meeting a candidate who was in consulting in final rounds or firm cocktail events. I certainly met a few employees who were from that background, but they were more senior than associates and generally moved into PE post-MBA.

If you are at a BB and a fairly good analyst, in my year getting a job in PE was not difficult. I suspect next year's class will have a tougher time, but it should eventually correct itself as their will soon be less banking analysts competing for less jobs. The job is simply much closer to what an associate in PE actually does, which is not really high level.

That being said, I think consulting is a great job, but pretty different from banking. My recommendation to anyone considering the two is to not even look at you chances of getting into PE afterwards. If you can't decide where your passion lies between consulting and banking, how the hell do you know you want to work in PE afterwards?

Oct 2, 2007

There is an incredible amount of cross over... every single person in my analyst class had at least one offer from a BB, no exaggeration. A lot had ibanking internships (both MM and BB)as well. I'm sure there are BBs with people who worked in consulting previously or had consulting offers.

Bottom line is I think the pre-selection is probably the most important aspect of PE recruiting.

Oct 2, 2007

Look at the baincap website, it looks like they hire almost exclusively from Bain (consulting). Seriously I clicked 10, and 9 out of 10 were ex bainies.

Not saying you are wrong about the others though, but baincap atleast is extremely consultant friendly.

Oct 2, 2007
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Oct 3, 2007