UK
Business schools report a rush of interest in private equity careers from MBA students. But is an MBA the best way into the industry?
“We’re definitely seeing very strong interest in private equity from the students and we’re seeing more funds posting jobs on the website,” says Eleanor Fernandez, finance careers advisor at the London Business School. “But private equity funds don’t do big presentations like banks do – their needs are much smaller. They will recruit for one or two positions while banks will recruit for much larger programmes.”
Other schools seem to be experiencing the same phenomenon. The Financial Times last month quoted careers advisors as far afield as Judge Business School in Cambridge and Kenan-Flager in the US, both of whom claimed private equity was exerting a growing hold over their students.
But Guy Townsend, joint managing director of search firm Walker Hamill, cautions against treating an MBA as the magic wand for landing a private equity career – particularly if you don’t have prior industry experience.
“An MBA is one route into private equity,” he says. “But you’re better off going from being an analyst in a bank or a strategy consulting firm directly into private equity and then perhaps doing an MBA with a view to getting back into the industry later.”
Gaining PE experience before doing an MBA is the ‘optimum route’, says Townsend. “The sooner you pick up experience, the more attractive you will be relative to your peer group and the faster you’ll progress.”
As a VC practitioner, my view is that MBAs are a waste of space. Having myself done an MBA, it counts for nothing. My previous training as an accountant was far more valuable.
Having interviewed probably over 100 MBAs over the past few years, I am struck at the discrepancy between what they actually know and what they think they know and what they think they’re worth.
I now routinely bin CVs that mention an MBA because most MBA graduates are dumb, arrogant and a waste of time and space. I’m far happier recruiting people with some financial training, probably with some exposure to corporate finance or with direct industry experience.
The MBA is no longer worth much – experience has caught up and exposed it as a sham qualification.
MBA s vs accountants. I do agree with Allan. There definitely is a learning curve when moving from other industries to Capital Markets/IB.
But per my experience, people with some industry experience or fresh accountants climb that curve much more quickly than MBAs. I think MBAs are better off in general management positions in industry rather than in core financial roles.
That pleases me no end as I am keen to pursue a career in private equity and can not be bothered with all this MBA nonsense. I would rather get some hands on experience and then branch into that field later on. What sort of bonus could I command with 4 years experience to date?
You are full of sh*t and must have completed yours at the Sheffield U weekend course – or you have been interviewing applicants from 3rd rate B-schools. MBAs count for nothing but top schools by and large (and there will always be exceptions) churn out high quality people.
Private equity & venture capital investing are veritable sources of growth for many companies in the emerging markets.
The knowledge gap in terms of exposure to the real practice of PE & VC is so much in spite of the enormous potentials for practitioners here! How can you assist some of us to bridge this gap in terms of practical exposure for the practitioners to the business of Private Equity and Venture Capital?
I made some attempts to obtain attachment with some PE/VC companies in Europe even when I feel I am properly qualified (Good first degree in Accounting, FCA, MBA as well as being a final level candidate in the CFA Program), yet none of these companies were not willing to take me! I am presently based in Lagos, NIgeria.
Thank you.
Just wondering how you would view CFA as a qualification…combined with industry experience. Added bonus of no time out?
I am totally agree with Mr. Allan’s opinion. I started my career working in the corporate finance and investment banking then moved to the private equity industry, and I am currently doing my MBA. Frankly speaking ,what I gained from my work experience is much valuable from MBA.
It is correct that the perception of the MBA is one of a worthless piece of paper, even if it is obtained from a top business school. However, it provides an employee with a set of skills lacked by most managers. You only have to look at the sheer incompetence of some managers in The City to realise this. How does a philosophy degree qualify you for a job as a fund manager, or the position of CEO in an Asset Management Company?
I tend to disagree with the majority, in that a good MBA should be equally important as experience in accounting and corporate finance. People in these roles may feel at home doing private equity, but if private equity is not merely deal-based but also management focused, then an MBA gives important tools to manage the invested company, whether at the board level or actual management.
AN MBA IS A PLUS! However, I do agree that it needs to be backed-up with relevant experience. I believe you will find that MBA graduates are better strategic thinkers, are more creative in solving problems and will more quickly identify risks and discrepancies.
I think Allan’s views are very naive and could cost his company a lot of money due to his extreme bias. As a result, He would not be able to recruit staff even if they were staring him right in the face. As such, we need more people of integrity in such positions.
Allan, I completely agree with your comments. Can I please have your co-ordinates?
Nobody has made any comment on the usefulness of CFA in PE/VC career?
Regarding Bola comments of trying to obtain attachment in Europe in a PE/VC,believe you me you’ll not if you’re in Nigeria. I just wish you good luck.
Just shows the sheer ignorance and lack of judgement in making such naive statements Allan – Have you done some kind of crap language course at some Unknown Univ, and managed to get in VC but are now in awe of much superior people around you!!
An MBA from a quality school is still a contender but I agree that it has lost some ground against increasingly savvy skills acquired from deep end experience.
There is an abundance of quality, skilled talent out there and the common form of MBA is no longer able to attract that talent as it does not have much to offer that would provide sufficient added value from a cost benefit perspective.
One method for schools to regain some confidence in the MBA is to drag the content of the MBA into the 21st century and to offer teaching beyond what is already a common skill set. More tailored MBAs, a higher level of quantitative content, more competitive grading, etc. would be a start, though still not enough.
A great comment to read. Several years ago I considered an MBA and then discovered the exemptions from the CIMA programme it gave me were the Foundation level only!
It made me think what I was trying to achieve and what I wanted to get. I decided to go for the CFA and CIMA qualifications in parallel, the latter providing all the management thinking and theory I could get from an MBA. I can honestly say it was a great decision but some of these comments are good to read.
It also depends, of course, on the person. There are talented MBAs out there but that is more the person than the qualification.
MBA (Married But Available) my secretary was under that impression….
Anyhow, the discussion is futile in my view. Its attitude over skill in our industry, and merit driven – true talent will always stand out. MBA or not.
Finally, the PE space has topped for now – all you graduates should look for the next wave, good luck.
Amazing comments. I have worked in corp fin, industry, IBK and PE. I have a degree in finance, a CFA and an MBA from Wharton.
If you think the value of an MBA is the tuition you are totally missing the point. It’s about contacts and doors being opened at places you would never get invited to otherwise.
It’s not the degree, it’s the exceptional character of the person who can get INTO a school like that. Schools act as vetting blocks.
A top B-School opens doors and adds credibility. A second tier does not. I have had many meetings on the basis of my Wharton degree that I would not have had if I did not have one. It’s an expensive club but it’s an exclusive and valuable one too.
MBA is a type of manpower which is specifically designed to achieve the targets of the company in a high pressure environment.
The most lucrative skill the holders are expected to posses is to manage the pressure.
Even a highly knowledged person needs to be extroward if he wants to get maximum out of his team.
It’s better to have a basic qualification like FCA/CFA/CIMA/CPA/CMA along with work experience before doing MBA.
The qualification does not make the individual – it is what the individual does in the workplace in applying whatever skills have been learnt – whether from being a CA or having an MBA.
I have been in the PE industry for close to four years – I entered as a qualified chartered accountant. In my second year in PE, I decided to obtain the MBA as a way of broadening my own personal growth. How I apply whatever skills learnt or whatever knowledge gathered, is what will make me a success. I don’t believe in elitist thinking about MBAs – its the quality of the individual!!!
I do not know why we have to offend each other by expressing such agressive opinions.
MBA – if done at a reputable university – is NOT JUST a title but also a lifelong experience and great for networking and sharing. MBA will certainly loose some of its meaning if we consider it ONLY as an entry ticket to some Consulting, investment banks or PEs.
Anyone in the industry have guidance on the best way an equity analyst (ranked developed & emerging market experience, consumer/retail and teleco experience in bulge bracket IB) can move into private equity?
I have done my chartered training in a big 4 firm and done a masters in finance at a top 5 global business school.
I think we should not rubbish an MBA from the likes of Harvard, Wharton or London Business school. To do so is simply Naive.
However in life, branding is everything. Only an MBA from the top 10 global schools count for anything at all. The rest, as good academically as they might be, will not do much, if anything for your career. Why? Just because of competition.
In fact I would also add, that the accountancy qualification, is just that, an accountancy qualification. It’s no match and no competition against an MBA from Harvard, LBS or Insead. Any accountant who is naive to think otherwise, needs to look long and hard at how many of big 4 candidates end up in front office jobs.
I’d rather employ a chartered accountant over a MBA person anyday – they have real tangible skills. There are plenty of chartered accountants in front office jobs. remember most chartered accountants don’t start the qualifying process with the intention of going in to a banking front office job.
Is there room in the PE domain for an individual void of both CA, MBA titles but rather a law degree/lawyer and entrepreneur who built and sold for very high multiples a very successful 7 figure business financed from a student loan.
I did my MBA from Northampton University and it opened doors to work at Goldmans in M&A. I now work for a top PE fund. The MBA was a stepping stone.
I am just finishing off my MBA from a “good” University/Graduate School of Business and my final project before leaving…
“Is an MBA worth it?”
The reason I am asking the question is that I can see no benefit over the ACCA qualification and business experience I have built over the past decade.
It is also interesting to note that certain other top 10 business schools, and one in particular is offering a combined MBA/ACCA qualification.
Could it be that the MBA providers have cottoned on to the fact that a good financial qualification is worth just as much as an MBA and possibly more in the right hands and market.
At least they are practicing what they preach when it comes to strategic planning and marketing, as they have spotted a huge potential gap appearing in their coffers and have reacted to fill it.
“If you only had 20 years of experience as a CEO, you could truly appreciate the challenges ahead as an Analyst.”
Yeah!!!
As a Class of 2008 MBA, I guarantee you that nobody will have that experience and request such a job. MBA’s have great credentials. In general, they have experience, but not as much as some higher level positions. I guess that’s why we’re seeking a promotion. We feel that an MBA more than qualifies us to accept the challenges of higher level positions. Why would we spend years learning advanced knowledge only to wind up in the exact same job ??
I agree with Alan….New MBA’s in general lack the experience. My question to Allan is this….On a cost benefit level, who do you want as your employee now & 5 years from now ?? I would select the candidate with the most potential.
Well … would love to know how a Chartered Accountant with Strategy and Commercial Experience can get into VC or Pvt Equity …
TO all these people asking how to get in – that is your problem. Don’t ask me how to get in, go and search the answers for yourselves. PE funds are boutiques in order to keep the cost base low and the remuneration high. There’s no room for hangers-on. The first vetting stage for recruitment is seeing which individuals are capable of presenting themselves.
Guys,do you think that CMA would be better for me or MBA?
Ladise and gentlemen, i agree with the assertions that MBA is still the best as it doesnt teach you how to work for someone. it rather teaches how to be independent. After doing my MBA, my perception on many things and concepts has drastically changed
So big up to MBA. But that does not mean other accounting qualifications are not good. In fact am doing CIMA but just doing it for knowledge’s sake.
Having just finished an MBA, I can say that it was not a waste of time. Agreed, there were some very “aspirational” people on the course without the relevant experience but determined on doing a career switch to PE. The courses offered at the school were excellent and the alum network in the sector is very deep. Therefore, many recruiters at quality firms obviously disagree with Allan’s bias against MBAs and the others who follow his feedback. The quality of the candidate is based upon the talent of the applicant – not just on the qualifications he holds.
Perhaps the editor’s choice to start off with a rant has worked in gathering opinions! But then they say that the faults we see in others, we most fear in ourselves. Allan obviously proves this true.
Accountancy qualifications are big in England, but are just that in the rest of the world: certification for accountants. They do not compete with an MBA outside the UK (and some ex-colonies). PE/VC jobs want top people and top people are defined by respective value systems. An ACA is nobody in France, same as a Grande Ecole engineer is nobody in the US. Just know who you are, where you are, where you want to go. Then you will know whether an MBA (and which MBA, for that matter) suits you.
Hi Abdul, I would like to learn more from your experience at Northampton. Could you revert back at a_d_massey@rediffmail.com?