Consulting/IB to Private equity

Question

Hi,

Could not find the right thread to post this question, so created a new thread altogether.

My long terms goal is to get into Private Equity. Currently I am working in the financial modelling division (cash flow modelling, transfer pricing, Bid model etc.) of one of the Big-4.

So post MBA, as my short term goal, I have decided to either get into M&A Investment banking or into a strategy consulting space, and then use either experience to give a shot at P.E. Is such a switch possible or is this totally abstruse? And if it is what is it that I need to stress upon in the applications to make such a transition.

Also will having a CFA charter help you in any way to make such a transition ?

Thanks.

mappleby · Answer

It's going to be very difficult. I would love to work in PE as well and have done a large amount of research. The problem is that post MBA you will get an associates job in Investment Banking. To make the switch to Private Equity they are really looking for the grunt work modeling skills you learn as an Analyst and you are more removed from as an Associate. It is possible if you network really well to make the switch but the traditional move is IB Analyst -> PE Analyst -> MBA -> back to PE. I would definitely recommend you read up here:

https://www.wallstreetoasis.com/forum/private-equity

There are a number of threads about switching to Private Equity from various careers. The bottom line is if you didn't follow the path I outlined above it is possible but very very difficult. If you aren't at Harvard or Wharton you definitely won't get it right out of your MBA and it definitely appears to get harder and harder to make the switch.

mbamust30 · Answer

Though I am not working for an I-Bank, but my work pretty much involves financial modelling. So my modelling skills are quite upto the mark.
In addition to that I have cleared two levels of CFA. Do these points support my case in any manner ?

To what you are saying, in that case the transition to P.E from consulting background seems impossible :shock:

Thanks for the link btw, it's a good read.

cheetarah1980 · Answer

I've seen people with a non-finance talk about a career change into PE in their essay and get into school. However, they present PE as a very long term goal and often position it as wanting to open their own firm (with seasoned PE pros) in a particular area of interest in which they will gain expertise through b-school and their immediate post MBA jobs. I've seen it work from and admissions perspective, but I've also seen it not work.

lala10 · Answer

CFA doesn't carry much weight in PE. It's a "nice to have", but no one is impressed by it. You'd be better off grabbing an MBA from a top school.

The thing is, the quantitative/modeling skills are really important but primarily on a junior level. As a senior associate/VP, where one would normally go in post-mba, they're looking for people who know how to navigate deals, conduct diligence, negotiate PSAs/credit agreements, etc.

Transitioning to PE is definitely possible from consulting. MBB are often feeders to 'consultant friendly' PE shops - Bain capital, KKR capstone, golden gate, etc. However, as others have said, it becomes much harder on a post-mba level.

I'd say it'll be pretty impossible to break into the well-known megafunds/middle market guys, but you may get a lucky break at somewhere smaller. I'd be wary of those places though and wouldn't go just for the sake of going into private equity.

u0422811 · Answer

I think you need to be a little more specific on what you say - people use the term PE to mean a lot of things.

If you want to break into the buyout landscape than I think you would be safe going consulting or IB (choose lev fin or M&A groups)
If you want to break into growth equity the same jobs apply but you could add more product groups to IB (technology, oil&gas, etc.).
CFA is pretty meaningless. It is a nice to have not a have to have.

If you want to focus on say like VC then that is a bit more of a complex route you can do it from many options: 1) a startup, 2) IB, 3) business development company, 4) secondary markets broker (very hard to do but I have seen it done)

Once you focus more on what you would actually like to do within the big world of PE its easier to fine tune your goal.

All in all - as others have said - a top tier MBA is not going to hurt you.

BTW by way of background I have worked in PE (growth / VC) for 4 years now.

mbamust30 · Answer

Thanks a lot guys ! That was a big help. I think I now understand the ground reality.

Thanks again.

MBAbot · Answer

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Consulting/IB to Private equity

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