Q&A: MBB to MM PE

Hi everyone, hope you are all doing well in this coronavirus season. Wanted to contribute to the community during this time with a Q&A. I imagine many of you consultants or college students are at home chilling, so thought this could be an interesting use of time.

Open to answering all sorts of questions about life in MM PE, my time at MBB, transitioning from MBB to PE, college to MBB, etc. I hope this is a helpful discussion on this forum.

For some brief background - target university, 2 years at MBB, and now towards the end of my first year as an associate at a MM PE firm in the US. Pretty standard background I guess, but willing to be a resource for people considering a path in consulting, PE, or elsewhere!

Comments (48)

 
May 2, 2020 - 9:34pm

Great question. And I gotta say, great to see questions popping up on this AMA! Will go through these one at a time, but apologize for delays in responding.

I'm at a firm where almost all the associates come from consulting backgrounds, so from this perspective, we handle everything - modeling, due diligence, expert calls, putting together materials for IC, etc. I can't speak to other firms where the associate classes are mixed between ex-bankers and ex-consultants, but I've heard that the work in the first year can be split a bit more on deals. However, at many firms with a mixed background associate class, staffing is one associate to a deal, so you'll be expected to do everything anyways.

 
  • Associate 1 in PE - Growth
Apr 30, 2020 - 5:32pm

What are your thoughts on business school - is this something you plan on pursuing? Any specific prep you did / resources that were helpful during PE recruiting? Did you recruit for PE in the same city that you did MBB? If not, how did that impact the process? How did you decide the firm, is it "you take what you get" or were you able to target in a specific firm? Whats the right mindset on that (firm selection: go for specific industry or specific firm in an industry)? Sorry for throwing a lot out there - thank you!

 
May 2, 2020 - 9:56pm

Big questions! Let me try to answer these.

  1. Thoughts on B school. I'm thinking about applying, but don't need to make that final decision for another couple months. I think B school gets a lot of heat on WSO from people who talk about near-term trade-offs (e.g., bschool is expensive and you don't make money for two years). I personally think this is a somewhat short-term thinking. I think there is a lot of value, especially in the long-term with b-school.

For one, it's an opportunity to make a lot of new friends, especially when your college circles start to shrink (friends drift off, it happens to everyone). Second, the connections and friendships you make can have immeasurable value. I've seen partners source deals from their b-school friends/connections and partners mention in IC all the time, "let me check with my friend about this company, he's an expert in this industry". That network can work wonders 20 years later when it's your job to source and diligence deals (and bring real value to the firm). And three, the opportunity to travel, see the world, create lasting memories that will make you a more interesting person is really valuable.

  1. Prep for PE recruiting - I did a couple case interviews, as this is the most common type of interview for PE firms that hire consultants. Also thought about standard questions like "tell me about yourself" and learned to explain the work I had done at MBB (especially things like operational improvements or strategic designs). That work experience is valuable and PE funds want to know if you've actually learned anything from the work you've done.

  2. Recruited for a different city. Really doesn't change much at all. You do a couple rounds of phone calls with people and then if they like you, they'll fly you up on a Friday for a longer meeting. You'll not be at client sites on Fridays anyways (chilling at home office), so it works out pretty well.

  3. How did I decide the firm?

I talked to associates and friends at a lot of different PE funds and you figure out pretty quickly that funds have a wide range of cultures. Some friends are dying in PE and others are able to manage a pretty good lifestyle with managers/partners/people at work who are caring individuals. I found a firm that had the latter and I thought that that was a pretty rare find. So I took the offer and I think it's been a great time so far.

Secondly, I think it's pretty important to work at a fund with really good returns. The whole point of being an associate in my opinion is to learn how to be a good investor. Obviously this is something that takes years if not decades, but I wanted to spend 2-3 years as an associate at a fund learning from partners who really know what they're doing. Didn't want to join a fund with 1.8x-2.0x returns. Wanted to join a fund with 2.5-3.0x returns consistently.

Thirdly, wanted to be a generalist. Think it's way too early to specialize and frankly didn't know what industry I would want to spend time in anyways. So that was pretty important too.

Really no right answer on firm selection. A lot of it will also just be where you end up getting an offer (that's true for MBB too, for example). But with PE recruiting, you can at least stretch out your own recruiting, if you really want to make sure you don't take an offer at a fund where you think you'll hate your life a couple years from now.

 
May 3, 2020 - 11:43am

Every firm interviews candidates differently. This is true for bankers and consultants. Some firms will be focused on figuring out whether they like you as a person and think you will be the right fit for their firm. Others will care about your ability to case interview. Others will test your financial acumen and your modeling abilities. It all depends by firm. Having gone through a handful of interviews, there wasn't really a standard recipe for what PE interviews look like. So it can definitely be difficult to feel like you're really "prepped".

For me, interview prep was focused on a couple things:
1. Know your resume inside and out - be able to talk about your projects knowledgeably. Important to understand how your clients make money, what the problem was, how your project helped improve their business. This could be from operational improvements, to organizational redesign, to strategic rethink of the business.
2. Practice a couple case interviews. You're good at these already if you're MBB, so just practice 2-3 cases with some friends to make sure you've still got it. The cases are pretty similar to what you would have faced during MBB interviews, about the same difficulty.
3. Learn a paper LBO. I just searched it up online and learned it myself. Only came up for half the firms that you interview with.
4. Know why you want to do PE. For me, it was being able to apply the skills you've learned in consulting (how to make a company more profitable) and take it to the next level with an ownership/investor mindset.

 
  • Analyst 2 in Consulting
Apr 30, 2020 - 7:48pm

1) Are you at a fund that also hires bankers? If so, would you say you're at an advantage/disadvantage to them? Why / why not?

2) Do you want to stay in PE to the VP level or above? Why / why not?

3) Have you seen PE Associates with an MBB background able to become VPs at shops that don't typically hire consultants? Said differently, does your pre-PE IB vs. MBB experience matter when recruiting for a VP role?

 
Most Helpful
May 3, 2020 - 11:37pm

Very thoughtful questions.
1. Our firm is all ex-consultants for the most part, so can't provide any real commentary on the differences. But at the end of the day, the job is the same, and you are going to need to do the full associate job.

  1. Do I want to stay in PE and become a VP? That's something I'm trying to work through right now. At first glance, I do. I think it can be a rewarding career. Getting carry and really having aligned incentives with the rest of the partnership is something I would look forward to. As an associate, it's often still easy to feel like you are just an employee collecting a salary - you don't personally have millions at stake when you're evaluating each deal that comes through. Being a VP and taking that extra step up in challenge is something that excites me.
    However, at the same time, you realize there's a whole wide range of career opportunities that are opened up after MBB + PE. Joining a startup and growing it into something really successful one day sounds like it could be more rewarding, both personally and financially, and that's something that many of my friends are trying to do. When you're in PE, you talk a lot about backing management teams that you believe in, and I think being an entrepreneur or an exec at a startup can really put that to the test.

  2. I don't think your pre-PE experience matters after you're an associate in PE. Like I mentioned in question 1, once you're a PE associate, you're expected to do the full associate job. Similarly, once you become PE VP, you're gonna need to do that full job, regardless of what your prior experience was.

 
May 3, 2020 - 11:56pm
  1. I'll give a more non-traditional answer that what most would probably write about. The most difficult transition has been adjusting to the varied pace in PE.

My time in MBB was super intense. Project after project, go go go. Working non-stop with no breaks M-F and no "beach time" between projects. PE is a deals-based job and with that comes highs and lows. Sometimes you're super busy, and sometimes you're not busy at all. That modulation can be pretty jarring at first, and its still something that I'm trying to get used. For example, you might have a stretch of 3-4 weeks of intense, interesting work on a deal (initial diligence, simple modeling, management meeting, crank through detailed diligence in the dataroom, expert calls, etc.). Those have been the best weeks for me when I'm feeling like I'm learning the most.

But then you'll also have 3-4 weeks or more of really light stuff. Once a deal dies becuase you're outbid or you find something in diligence that you don't like, it'll take a while before you or your team gets super attached to another deal. You're not chasing every deal that comes through (at least not us), so there can be a lot of downtime between hot deals. Sometimes those days or weeks or months feel much less exciting. Obviously, when you're a banker or a consultant who's been dying for years working, this might sound awesome, but it can actually be a bit frustrating or boring after a while. It's just something that comes with the territory, so it's something I'm still trying to get used to.

  1. There's a lot of new stuff, including the modeling, leverage terms, structuring a transaction, financial due diligence, etc. There's really nothing that a prior job can really prep you for - you just have to come into PE with an open mind towards learning the specifics of this job. Frankly, I don't think modeling is that hard to pick up and it's certainly less of a focus at my firm. We think about deals much more hollistically. You need to know what you're going to do with the company strategically and operationally once you own it to make that freaking good return. The modeling that comes afterwards is really quite stragitforward. Plus, you have a template that already does all the hard work for you anyways - you just need to tailor the model for your deals (which isn't always easy), but it's not rocket science. As someone who worked at MBB, I think you have an advantage in knowing how to think about businesses, how strategy and operational improvements can really drive value, etc.
 
May 5, 2020 - 1:45pm

I was very interested in understanding how a company actually runs and makes money. I thought MBB was going to be the best path to work alongside senior executives at big companies at see how good strategic thinking or operational know-how can meaningfully improve a business' performance.

Had done an internship in banking and felt like an experience at MBB would be more gratifying/rewarding. And I would argue after speaking to all my friends in banking, that it's probably a true statement!

You learn a lot about M&A, valuation, debt and equity in banking, but I felt like there was way more variety of processes/projects to work on at MBB. Growth strategy, turnaround strategy, restructuring implementation, merger integration, ops improvement, organization design, marketing and sales strategy, etc. These were all things I was interested in learning about. In two years, I think you can explore more industries and more variety of business problems than just "assessing M&A transactions" for a client, like in banking. Obviously both are great learning experiences, but the things you learn are just slightly different.

I also felt like MBB was a better place developmentally. Analysts and associates are equivalent roles (at least at M), so you're expected to mature really quickly. A 24 year old analyst is expected to do the same role as a post-MBA 30-year old associate. So this teaches you a lot about how to work with clients, how to present ideas to senior executives, how to talk to people and have them see you credibly despite your age. All important skills that are better to develop early than late.

And lastly, life was just better. No weekend work, $100/day food expense accounts, staying in nice hotels, traveling to different cities in the US that I'd never been before, etc. Some great team events (concerts, sports games) and some killer team dinners. Corporate retreat in the Caribbean all-inclusive, flying first class for the first time in my life, great holiday parties at massive venues. Essentially just threw money around for two years and it was a ton of fun. It's actually easy to miss all the perks!

 
May 5, 2020 - 1:54pm

I feel like I could easily write an essay about this - and I think there are more detailed posts on WSO just about consulting->PE recruiting. But here's my two cents:

PE recruiting has obviously moved up a lot in recent years (now in the fall, 20-22 months before start date). But with Covid-19, this might all get pushed back this year, but who knows. Point is, the on-cycle process starts way in advance, and you need to be prepared for it early on. Or, you can wait until you're a year into MBB and then do it, which means you stay 3 years in consulting (and 3rd year opportunities are cool with international rotations and external secondments/externships).

You reach out to headhunters to set up calls in advance of the process. This gets you on their radar. Once the process starts, you'll just need to fly off to NYC/SF/BOS etc. for interviews in -person, on a couple hours notice. This can obviously be really hard when you're supposed to be at your client site for your project M-Th, so you probably need to tell your team what you're up to.

If you're doing off-cycle recruiting (which is likely easier in MBB given what I've said above), then you just need to fly up on a Friday to wherever you're interviewing in person for final rounds. That's pretty easy, since you won't be with your team on Fridays anyways and it's pretty easy to block off a couple hours on a Friday in consulting anyways.

 
May 5, 2020 - 4:01pm

Yes, this is true. Internships at MBB are harder to come by. This is largely because MBB actually wants to hire a variety of people for their positions. If you think about it, MBB clients are in every industry, so it makes sense that MBB wants to hire analysts from all types of backgrounds. They think having an internship in an actual industry is valuable experience - for example, having an internship at Microsoft is very valuable. You can connect with clients more, understand what they do more, understand their business better, etc. Same could be said for people who intern at the FDA, Gap, Delta Airlines, etc.

At least 50-75% of an analyst class at MBB is going to be senior year FT hiring.

 
May 2, 2020 - 1:36pm

Thanks for this AMA - in a similar boat as you were (current MBB, considering PE). Do you plan on staying in PE (i.e., 2 years associate, 2 years bschool, back to PE as a VP) or do you want to do something else afterward?

Part of the reason why I'm unsure about PE is the lack of stability / path forward after your associate role. It seems pretty hard to land a VP position and options after bschool (besides going back into PE) are less clear. I really do like my MBB and I think there is a compelling argument for taking the bschool sponsorship (no debt), continuing up to manager, and then reevaluating from there. Would love to hear your thoughts on this!

 
May 9, 2020 - 1:06pm

Still figuring it out as well! I think I laid this out a bit more in a previous reply. But I really feel like spending 2 years in PE as an associate opens up a lot more doors than staying in MBB would. A lot of businesses and startups will value the skills and experience you gain in two years in PE. Things like being able to diligence a company, financial acumen, understanding debt markets, modeling, working with management teams on financial reporting / strategic initiatives. List goes on. So I saw going to PE as a worthwhile experience no matter what.

I also considered for a long time the idea of staying in MBB and becoming a manager, but ultimately thought a different experience was needed. You can always do 2 years of PE and go back to MBB or go to b-school and return to MBB afterwards (and still have MBB pay for it).

To your point though, it can be difficult to become a VP in PE, but it's not a wasted two years. The number of doors that are opened post-PE (HF, PE, startups, consulting, big companies, etc.) is a good safety net.

 
  • Analyst 2 in Consulting
May 2, 2020 - 2:09pm

How did you navigate preparing for full-blown 2-3 hour modeling tests? I am using preparation materials, but constantly feel discouraged given I am trying to learn accounting / financial terminology while understanding the modeling, etc. How many hours of preparation do you think you put into this?

When doing the models, are you making assumptions? What do you base these on and how do you prepare to understand the best way to make assumptions?

 
May 9, 2020 - 1:10pm

I never prepped for any long modeling tests. Most firms that actually want to hire ppl with consulting backgrounds are not going to put you through a full-blown modeling test. It's pointless - they know you don't have the same background as a banker. They're not hiring you as a banker, they're hiring you as a consultant.

They're going to care a lot more about your experience working with management teams to improve businesses. Can you think strategically about your client's situation? What were your team's recommendations to improve the business? What analysis did you do? How did you implement your recommendations? How did you dollarize the impact? What lessons did you learn from your client situations? This is what they will care much more about.

Your ability to do business analysis is proven by your work at MBB. A huge part of PE is business diligence - this is very similar to doing a "diagnostic" at MBB for a strategy project or an operations project.

I really just learned a paper LBO - this was mostly what came up. Never did a full modeling test and frankly still have never done one. My thinking was that I wanted to work at a firm that valued mentorship and learning - they will help you develop the skills you don't have yet, but they will also value the skills you have developed in your two years at MBB.

 
May 2, 2020 - 7:41pm

What practice did you work in at MBB? Additionally, how much does office location matter during recruiting?

Array
 
May 11, 2020 - 3:31pm

This is a tricky question. Working in the PE group at MBB will help you gain somewhat of an understanding of PE investing and at least the landscape of deals that PE firms are looking at / what firms exist. The work you do in DD/PEG is mainly commercial due diligence (e.g., what is the market size, trends in the market, competitive landscape, geographic markets, potential sources of upside like new markets or new products, etc.). You might also do some customer surveys or supplier calls to understand how customers and suppliers view the target. These are all important things to understand and learn, but they are not the primary focus of an actual PE associate's job. PE focuses more on business diligence and how to make a good investment. Often times, a DD focuses more on whether the company is a good company (not necessarily if it is a good investment).

Working in the PEG group also helps you determine whether you're really interested in PE, whether you can stand the hours, whether you can stand the pace when you're on a deal for an extended period of time (e.g., 6 months). and it helps you show your interest in the sector. These are all helpful things. However, I would caution againts over-rotating into just doing DDs when you're in consulting. PE firms will want to hire you for your client-service work on strategy or operations or organizational improvements, not commercial due diligence. The skill sets you learn are different and it's important to make sure you get a balanced tool kit.

For what it's worth, I only ever spent 3-4 weeks doing due diligences during my time at MBB.

 
May 9, 2020 - 1:14pm

I was a generalist. I took my two years at MBB to explore a wide range of industries and functional areas. Saw a bit of everything - growth strategy, marketing strategy, operational improvements, org design, procurement, blue-sky thinking, merger integration, PE diligence, etc. Also worked across 6-7 industries across 8-10 clients by the end of my time. I think this wide range of experiences has been really valuable in understanding how different companies work, how different big companies can be, and some best practices from here and there that can be applied elsewhere.

Office location doesn't matter at all. You're going to be traveling M-Th anyways, so everyone's really in the same boat. Pick an office in a city where you want to live in, and PE recruiting will be the same regardless. You could literally be based in SF but be staffed on a project in Texas, when you want to interview for a job in NY. It doesn't make a bit of difference.

 
May 2, 2020 - 10:43pm

Hey, thanks so much for doing this!

Similar to you, I'm a MBB consultant making the move to a MM PE fund. I'll be exiting my firm this summer and looking ahead to the job, would like to know if you have any recommendations on how to prepare for the role? Beyond studying tips for interviews, is there anything I can do to position myself well to hit the ground running on day 1? Should I be looking int accounting / finance classes to increase my LBO modeling skills, researching portfolio companies to have a view on the businesses we own / I may be helping run operationally, networking with junior and senior members of the team to ask for tips / make the transition easier once I enter the office, reading up on legal terms for contract negotiations, learning more about the lender landscape, etc.? I've done ~10 CDDs so feel comfortable on the commercial analysis side of things, but I'm most concerned about the tasks I haven't been exposed to yet.

Anything you did to prep or wish you had done to prep?

 
May 9, 2020 - 1:17pm

Honestly, I think you should enjoy your time off. It's really important to hit the ground running completely refreshed. I felt pretty burnt out by the time I left, so took 2 months off to do some travels with friends and family and just bummed around for a couple weeks. It allowed me to reflect on my time at MBB and understand what I wanted to get out of my next 2 years in PE.

It can be helpful to reach out to the junior members of the team and get to know them and say hello, but nobody is going to expect you to know all that much when you start. There is a huge learning curve when you start in PE and no matter what "prep" you think you're doing, it won't really make a difference. The most important thing is to be ready to learn on day 1 and work hard! And the interpersonal elements of getting to know your team is going to be way more important than trying to learn some obscure legal language that you won't really see as an associate anyways!

I say, enjoy your freedom. Read some books, catch up on some TV, spend time with family and friends as much as you can. Good luck!

 
May 9, 2020 - 4:18pm

have you seen non MBB Consultants such as those from OW, S&, EY-P etc clear PE recruiting? or is this a field that's only realistically accessible to MBB!

Array
 
May 11, 2020 - 3:25pm

Have definitely seen consultants from non-MBB firms get jobs in PE. OW, Parthenon, Deloitte, etc. Obviously it's easier from MBB and many more associates have MBB backgrounds than at other firms, but it's certainly possible. I would just recommend you reach out to headhunters and they'll direct your resume to the appropriate firms. Some firms will be looking for MBB only, and others will be more open. It all really just depends - no fast or hard rule sometimes. Check out the websites for some consultant-friendly PE shops and I think you'll find many of them have hired people from non-MBB firms.

 
  • Consultant in Consulting
Jul 16, 2020 - 11:12pm

Any thoughts on PE portfolio associate roles? Considering a unique role where you get pre-deal dd and post-close portfolio exposure. Was hoping to leverage opportunity to lateral into investment team.

Have you heard of this being feasible? If not, do you think joining UMM PE portfolio team opens more opportunities vs. staying in consulting?

Thanks!

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