Some MBA applicants expect that a top MBA program can facilitate a leap to a job in PE immediately upon graduation from business school. Their disappointment is great when they discover that this is far from the truth.
While any student in a top MBA program knows how difficult it is to land a job in PE, the 2011 Private Equity & VC Compensation Report provides statistics to illustrate this fact: only 9 percent of PE employees are recruited directly from business schools. However, most of these lucky students have pre-MBA experience in top investment banking, consulting firms or relevant industries.
Not only should not you rely on your MBA as a jump start to a private equity career, but the chances that a school will connect you with a PE firm are small. Only 11 percent of PE employees were recruited based on their school relationships in the PE industry , according to the report.
One explanation for this trend is that PE firms usually do not have training programs. Investment banks and consulting firms often serve as platforms for training PE recruits.
The report also shows that the compensation gap between those who have MBA and those who do not decreased in 2011. In fact, less than 50 percent of respondents to the survey had MBA. Overall, those with MBA reported earning 10 percent more. However, those with more than 5 years of work experience (not just investment experience) earned almost the same salaries as those with MBA.
If a firm is doing well, the size of one’s bonus will often more than make up the difference not having an MBA makes. The lesson here is to be sure to fully understand the firm’s bonus program and payouts before signing on.
And if you were one of those lucky candidates who got into private equity after business school, it is a bit early to be ecstatic. Only 20% of associates in PE indicated that they are happy with their compensation. This is good to know before being upset by the fact that only 68 percent of PE firms were hiring in 2011.Leave the first comment ▶