Do I Need An MBA for Private Equity?

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  • Top private equity firms want employees with finance or investment banking experience.
  • Large private equity firms are targeting more MBA graduates straight out of grad school.
  • There are more private equity jobs available at smaller firms.
  • Private equity is among the most difficult career fields to enter.

Private equity is somewhat of an elite club. The field is notoriously difficult to enter. Most top private equity firms want skilled employees who they don't have to spend a lot of time training. In other words, you won't stand much of a chance at getting into a top private equity firm without an MBA.

A career in private equity can be very lucrative, with annual compensation running well into six figures. Although the work is difficult, it doesn't necessarily require the 80-hour work weeks common in investment banking.

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The traditional path to private equity is working a few years as an investment banker, getting an MBA, and then moving into the field. Today, however, some top private equity firms are starting to formalize their recruiting practices, targeting MBA graduates fresh out of business school.

Like in investment banking, most on-campus recruiting for private equity is conducted only at the top business schools.

Although most large private equity firms look exclusively for job candidates with an MBA, you can still get into a smaller firm without one. Smaller firms prefer candidates with an MBA, but it's not always a requirement.

If you don't have an MBA but have work experience in private equity, finance, accounting, or consulting, you likely stand a better chance at landing a job over someone without any experience. Getting an internship is also a helpful way to gain experience. But eventually, you'll probably need an MBA if you want to move up in the company.

There are more job opportunities available at smaller firms, which means less competition. Working for a smaller firm may mean a smaller paycheck, but it is a good way to get into the field if you don't have an MBA or didn't graduate from a top business school.

No matter where you choose to work in private equity, you need a strong knowledge base related to finance and investing. Getting an MBA with a concentration in finance from an accredited business school is a good place to start. Private equity also requires a solid understanding of business operations, business technology, sales, consulting, economics, and entrepreneurship. MBA programs can provide you with these skills.

Getting an MBA may give you the best shot at a career in private equity, but it's still not a guarantee that you will be able to land your dream job. Decide for yourself whether getting an MBA is worth the time and financial commitment by reviewing some of the pros and cons listed below.

Pros of Getting an MBA for a Career in Private Equity

Pros

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    Getting an MBA can dramatically improve your chances of breaking into the fieldof private equity, especially at top firms that only recruit at top business schools.
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    Many business schools provide an abundance of networking opportunities, which are critical to landing a job in private equity. Partners at private equity and venture capital firms often network with students and give lectures at top business schools. Professors, fellow students, and alumni clubs can all provide valuable connections.
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    Most accredited MBA programs help students land internships, which are one of the best ways to get your foot in the door at a private equity firm. Top schools may also be able to assist with job placement.
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    An MBA can increase your chances of getting promoted. A promotion in private equity usually comes with a big raise, additional bonus opportunities, and other valuable perks.
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    Earning an MBA should provide you with a solid background in business operations, which you can put to good use by growing companies and creating jobs.
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    An MBA can make it easier to find another position in another business industry if you are not able to get a job in private equity or decide to switch careers.
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    It's easier than ever to get an MBA while continuing to work thanks to the abundance of online MBA programs from accredited business schools.
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    MBA programs often provide students with cross-cultural experiences, which helps expose them to business management practices around the world. This knowledge and experience can prove useful in the world of private equity.

Cons of Getting an MBA for a Career in Private Equity

Cons

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    You might be able to land a job in private equity without an MBA. Smaller private equity firms sometimes hire candidates with only a bachelor's degree. It can also be easier to get hired without an MBA if you complete an internship with the company first.
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    Your chances of landing a job at a top private equity firm may still be relatively low, unless you attend a top business school.
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    Even with an MBA, it can be difficult to break into private equity without related experience.

Alternatives to Getting an MBA

Although getting an MBA is a good option for a career in private equity, there are a few other paths you can take if you are serious about entering the field. A master's degree in finance or a closely related field is often a solid replacement for an MBA. You can also take online courses to get certified as a chartered financial analyst (CFA) or pursue another certification.

Some universities also offer certificate courses in private equity, investment banking, and venture capital through their graduate business schools.

Frequently Asked Questions About Getting an MBA for Private Equity

Will an MBA help me get into private equity?

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Getting an MBA can help you pursue a career in private equity. Most of the top private equity firms either require an MBA or give strong preference to job candidates with an MBA.

What is the best MBA for private equity?

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The best MBA for private equity is an MBA with a concentration in finance from a top business school. Other concentration options include accounting, consulting, entrepreneurship, information technology, and business management. All non-finance options should include elective coursework in finance and investing.

Is a CFA credential better than an MBA for private equity?

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Either of these options is good if you want to pursue a career in private equity; however, an MBA is probably more advantageous. An MBA can also be more helpful if you ever decide to change careers. MBA programs offer opportunities to make valuable connections and learn more about business as a whole. If you just want to stick with portfolio management and equity research, then a CFA certification might be the best path.


Reviewed by:

Portrait of Krystal Covington, MBA

Krystal Covington, MBA

Krystal Covington, MBA, is a business growth strategist with 15 years of experience in marketing and public relations. Her company, Go Lead Consulting, provides clients foundational tools to build new client and customer relationships. Covington founded Women of Denver, one of the largest privately held membership organizations in Denver, Colorado. Her program helps women increase their business acumen, sharpen leadership skills and connect with other high-achieving women. Covington received her MBA from Western Governors University in 2012.


Krystal Covington is a paid member of the Red Ventures Education freelance review network.

Feature Image: MoMo Productions / Stone / Getty Images

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