why is it rare for post-MBA to get in PE without prior PE experience
I have heard a lot of people saying it is almost impossible for post-MBA to get in PE without prior PE experience. But I assume that a 3 year pre-MBA BB IBD (more ideally M&A team) experience should give you lots of deal experiences and sufficient modeling experience. So I have been wondering what experiences a pre-MBA PE give you that makes such a difference?
any info will be appreciated
I don't know if its really that rare. If you look at the current 2nd year HBS MBA students, there are many who did only consulting or IBD before hand but no PE and will start at megafunds in next year.
That's pretty interesting... I'd love to see some of those profiles / resumes. Do you have a link for this?
As a current HBS student I can supply some facts - Members of the class of 2011 who landed full-time PE gig who never did PE before: 50% Of that 50%, 85% did either banking or consulting
I can't drill down to mega vs. MM PE but offers were high in dollar amount with nearly all students receiving carry and relo.
I will say that many PE firms I have visited are hiring. They seem to emphasize the operational aspect / port co attention that is now needed to differentiate them and yield higher returns vs. historical financial engineering practices. And many prefer technical undergrad degrees (no surprises there in this economy).
I would guess because they can afford to be that selective. Having prior PE experience is just one more checked box. All factors being equal, would you take the guy with 2 years IB experience, or 2 years IB and 2 years PE?
I would also assume that it depends on the location that you want to work at. If you want to go to NY or London it will probably be more helpful. If you want to work in Paris or Frankfurt or in Asia I would assume that it would be helpful but not required.
It's not that rare, especially if you're talking about MM / second-tier PE. What is extremely rare, however, is for someone to get a job at a Megafund right out of business school having never working in PE beforehand... that doesn't really happen because there's simply plenty of people who do have prior PE and top tier banking experience to choose from at H/S/W (the only places megafunds these firms recruit from, generally speaking)
Just out of curiosity, which PEs would you count as a megafund?
I'd say in general, yes, as an associate at any PE shop, your work will be similar to banking (modeling / valuation analysis / debt financing / reading CIMs / etc.). In general though, PE mindset is different than banking - the deal team is making firsthand investments whereas in banking, you're basically selling the bank's services. Do you care how that investment you brokered between two parties is actually doing? Probably not.
The difference between VP+ roles at PE shops and banking is significantly different. I've seen more than a handful of ex-bankers who moved to PE and have a lot of trouble doing deals because the mindset isn't there. They'll learn but the runway is much shorter. PE shops in general, when hiring out of b-school, want someone who could hit the ground running. If I'm paying you "1-in-2" as some of the MFs did back in the day, I'd better not be explaining how a PSA or term loan financing works.
What is a PSA? Do you mean SPA?
Don't know about that. I know a few guys at HBS currently, and all have been having a very hard time getting any traction getting reputable PE gigs... conventional wisdom holds true... no pre-mba experience = no post-mba opportunities... even with a stellar background. I'm sure there are exceptions, but few and far between.
As to the original question, why is it rare? There's just not that many post-mba positions... its a partner track and firms just don't exponentially grow their head count.
Do you know what hedge fund recruiting has been like at HBS? I assume it's just as bad or even worse than PE.
This is correct. Also, like herserendipity said, the mindset from banking to PE is completely different and if you're coming in as a post-MBA associate, no one is going to sit there and train you. If there are two qualified guys coming out of a top tier b-school and one has done a pre-MBA associate gig at a decent PE shop vs. a guy who completed an analyst program at a BB investment bank, I would lean heavily towards the pre-MBA associate just because neither I nor anyone else at my firm wants to waste time training someone. Of course there are exceptions, but by and large, MBA grads with pre-MBA PE experience will always have an advantage in landing post MBA PE jobs. At my firm, 100% of the MBA grads we have hired have pre-MBA PE experience.
Sadly, even with PE experience, it is difficult to land a post-MBA job because there are so few.. Like Marcus said, it's a partner track and the number of post-MBA jobs that open up are definitely less than the number of pre-MBA assoc who graduate from bschool. I know plenty of guys who had worked in PE and went to bschool and then struggled to get a post-MBA PE job.
How is mezz & minority equity experience looked at?
I assume it's somewhere in between pre-MBA PE and IB in the hierarchy, all else being equal (you're still putting capital at risk, lbo modeling, etc.).
Is it possible to do the following?
Unrelated post undergrad role (bus development, accounting, BO/MO etc.) > MBA > IBD associate > MM PE?
Yes. Difficult but I've seen people do this from top firms (GS,MS)
Duff,
obviously the last step will be the toughest one, and bus dev. or accounting will definitely be better than bo/mo. I can't stress this enough - unless the mo is very quantitative or strategic.
also the earlier you make the jump the better, unless you wait until the senior vp years.
this would be easie imo: bus dev > mm ibd > MBA > IB > MM PE
disclosure: this is just from personal research, and posts on here - no personal experience, other than what I've seen during 1 year of B-school recruiting.
My recommendation would be to do a second year fall internship at a small pe shop during your MBA, and try to do a pre-mba pe internship unpaid if you have to...it will help craft your story.
Also, if you have any operational experience or personal business investments, I'm sure this will help you stand out. And, if you start developing a very specific niche knowledge, then you can use that to your advantage. i.e. knowing everything about energy space, or specific emerging market trends.
Megafunds will always have a structured process, and that is not realistic, but if you really want to do PE, there will be a way.
Bottom line is, if you can get yourself in front of someone, and you sound like the smartest guy he meets, then you get a shot. So if you really want to do it, keep getting your career as close to the skillset as possible, and work on ways to set yourself apart.
Why not try to get in touch with some second year iB anaylsts now? they will give you perspecitve, and you can start building connections for the next 6 years.
Really appreciate the response. Unfortunately I fall into the BO finance bucket, although with a pretty reputable financial company. My immediate term goal is to lateral into a boutique or MM IB analyst position, but have had few solid prospects (searching for about 8 months so far). With the exception of being a white male, I have pretty good stats for business school, so I was wondering if a rebranding sooner rather than later might be a better course of action(graduated in May 2010, would apply next fall). It sounds as if I should probably hold off without some additional WE, and that's how I was leaning anyways.
I just started expanding my job search from NYC to include the Boston and Charlotte areas, so maybe something will come up there. Have had a couple interviews but nothing to show for them. I desperately want to get the analyst experience under my belt, just need to find an opportunity.
Again, thanks for the thoughtful response.
the "rebranding" isnt as important to get into b-school. (assuming that you are not gunning for H/S/W/C/C) It will be much more important when you are IN school, and recruiting for banking. In my experience, the banks would rather you doing sales or operations in non-finance, than back office in finance.
The CPA's, consultants, F500 finance, and even PWM do much better through IB recruiting at the MBA levell then BO, MO, s&t, HF guys....They have a better story for "why banking", usuallyl have a stronger company brand, and can still learn all the technicals.
My advice would be to look at all boutique banks (which I'm sure you are doing), valuation and FAS departments at the boutiques, Big4 advisory, etc. if you can't get into one of those areas, then it would be much more valuable to work directly with clients in an "advisory" role even if it is outside of finance then to work in BO.
I started in BO, and it literally does not prepare you for anything...the only thing that you can use it to your advantage is that you come off very hungry for something more interesting, and you're a fighter etc....some guys/firms like that attitude, but it is a very tough sell
Traders, especially older traders tend to have a lot more understanding towards BO as a "cut your teeth" mentality than bankers.
Don't get me wrong, I don't think this will keep you out or anything, it just makes it tougher.
MBA to IBD Associate to PE is nearly unheard of. The VERY few instances in which I've seen this happen, its usually when a banking MD moves to PE and takes his bitch associate along for the ride.
Also... for what its worth, when I was on the networking grind, all I ever heard from PE guys was "you just need to get into ANY position where you're responsible for putting capital at risk." If you take that at face value, then you could argue that a pre-mba mezz. investing role would be beneficial in securing a post-mba PE gig. But from what I’ve seen, the mezz. experience tends to pigeon hole people. If that’s all you’ve got available, its probably better suited than banking…. and you could always go to a shop that does mezz. and traditional PE and try maneuvering towards the typical buyout/growth investment side of the business.
I wouldn't necessarily agree with that. Out of my MBA class, 7 people have made the switch from IBD/consulting into PE one year out of the MBA. I made the move myself and from my MBA associate class, 5 people made such move. But the thing that all those people had in common is that they moved within 12 months of going into banking, and they all had their eyes set on PE from the start.
If you go into your 2nd year as an associate, I agree that its then quasi impossible, unless you have a very specific skillset, language (more common in Europe or Asia) or connection. Reasons are - you're too expensive for the PE fund - the "mindset" difference as mentioned in earlier posts - some bankers don't want to take the pay cut that sometimes goes with moving to a small / mid market PE fund. Also bear in mind a lot of guys have taken 100K loans that they need to repay and they'll need the bonuses. - When you reach your 2nd year as an associate, you're starting to make some real money and you're so close to VP that many people think twice before moving. After having taken so much shit and being so close to the "senior banker" stage, many people don't want to move. - Finally, there is a selection bias - a lot of the guys going to IBD or Consulting after the MBA are there because they could not get a job in PE, so obviously many of them won't be able to make the move even afterwards.
For those who made the switch, was their pre-MBA experience in banking?
I've seen a transition from MM IBD --> MM Mezz shop --> MM PE (all pre-MBA roles). The individual is nothing special in terms of connections / experience, but he was able to successfully do it. Obviously this path will make you a bit older when applying to b-school, but I think that's an acceptable trade off if it means you can secure PE experience pre-MBA.
To compbanker/marcus/anyone else with experience, how do you think PE firms view pre mba PE experience outside US and western Europe.....say in an emerging market, so in South Africa or Brazil or Russia etc.
Don't think it would be as attractive as you might think unless the PE firm in question has a strong international angle where your international experience would come in handy.
For example, if its Apollo... it would probably do more harm than good since they need someone who has been doing deals in their sweet spot pre-mba. If its Carlyle on the other it may be beneficial since they love to tout their international fingerprint, assuming it wasn't a hole in the wall PE shop you were at.
Obviously only a handful of shops out there fall into the Apollo / Carlyle genre... but I think the same is true for some unknown $1b MM PE shop.
thanks everyone for posting your thoughts on this thread. But it seems none of the discussion above touched on the question what kind of experience counts as prior pe experience. By that I meant does a summer pe internship counts as "prior pe experience", which sounds like a pre-requisite for post-mba to break into pe industry.
any thoughts are welcome
Also I did PE internship during MBA and then went into Sponsors M&A. (and was a sector banker prior the MBA)
PE internship didn't help, because the question that came with that was : why didnt you get an offer? And also the experience is too short. Double edged sword.
Sponsor M&A experience was quite valued by the PE firms though.
But in the end, I think fit was the most important qualities - I got the job in my current PE firm over other guys with PE experience that didn't have the fit
banking, consulting, some lawyers. none of them had PE experience. The guys with PE experience would never go back to banking...
Has anyone on here had a pe interview before? If so, can you please describe what kind of questions you get? Is it a lot like banking interviews?
in house PE - forget it. But all the new capital requirements rules all the big funds are being spun off (BAML, Barcap) or are being very restricted in what they can do. And usually those banks will want to pick the top ranked analysts or people with strong track record so being an MBA newbie will put you at a big disadvantage.
My bad, meant 15%. I was surprised that so many did not have pre-MBA PE experience.
Voluptatem mollitia aliquam et nihil. Quia incidunt nesciunt assumenda tempore occaecati libero voluptatum omnis. Non recusandae qui porro voluptates molestiae accusamus et. Culpa odio quas nulla placeat veritatis iusto qui aperiam.
Velit aliquid doloremque aut laborum. Earum consequatur et velit eos nisi ut. Expedita aut quae similique ut non. Suscipit magnam debitis fuga voluptas. Consequatur qui sint quos quo consequatur. Soluta ipsam est veniam et.
Expedita sit voluptatibus alias provident odio odit. Cumque soluta sapiente eius laboriosam tempore quia quasi. Tempora et earum nihil harum animi officiis et architecto. Et rerum id molestias id voluptates. Rerum et ex minima recusandae nihil cupiditate expedita. Omnis quo dolorem sit cum ut eos necessitatibus.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Neque ratione provident placeat nemo molestiae laborum sapiente. Atque quia itaque vel voluptatibus sit. Reiciendis non error consequatur autem ipsum amet assumenda dolor. Culpa consequuntur atque aut. Alias quas exercitationem a atque praesentium nisi.
Minus vitae est rerum molestiae nisi veritatis quis. Est facere ullam minus quia amet similique voluptatibus tempore. Totam quo qui nesciunt sit illum amet. Unde inventore ea nobis consequatur non cum. At similique mollitia saepe nemo. Et id voluptas perspiciatis.
Modi aut velit accusamus consectetur. A totam aperiam error omnis. Quia fuga nemo dolorem natus et perspiciatis et. Nihil nesciunt soluta nesciunt. Rerum deleniti sed et id. Qui voluptatem eos cum dolorem.