Yes, PE funds prefer bankers

2 March 2010

1 minute read

Out of curiosity, and for your benefit, we have conducted a brief analysis of the backgrounds of 171 investment professionals at three leading private equity funds (Advent, Apax, Permira).

The results suggest that if you want to work on the buyside in private equity, investment banking - rather than consulting, is the place to start.

Of the private equity investment professionals we looked at, 49% were former bankers, while a smaller 32% were ex-consultants (many of them from McKinsey).

Our cohort suggests an MBA will help you get into private equity, but that it isn't mandatory if you're coming in from banking: 25% of bankers working in PE (in our sample) had an MBA, compared to 57% of former consultants.

Those who didn't get into private equity via banking or consulting started out either in the private equity industry itself, or in law and accounting.

AUTHORSarah Butcher

Global Editor

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singhyuk
12 April 2010
Steve's point is very accurate, though - if you count the strat houses that send #'s into PE (i.e. Bain,BCG,OC&C,McK, LEK) - each yeargroup will have not much more than 100-200 people. Even just one bulge bracket bank will have a lot more than that in each yeargroup, perhaps x10.
On the flipside Advent and Apax are relatively consultancy-heavy. If you threw KKR in there, the mix would look a little different.
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as
askivy.net
9 April 2010
PE houses prefer bankers because they are small and this is a way to "outsource" valuation modelling training and transaction training. The consultants are typically put to work on portfolio companies operational issues because they can't do the modelling.
Another interesting surey would be to look at the number of MBAs in PE - well above 50% of the investment staff on average. And its even more pronouced in big LBO shops, and at the junior level (which shows its getting increasingly common).
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an
anon
2 March 2010
pe = leverage up, long equity, ride the boom, exit before it busts, attribute performance to "added value". well done, i could do that with spread betting, although you would just call me a barrow boy punter as my suit is not as smart, i dont have a shiny mba and aint from oxbridge init!
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St
Steve
2 March 2010
I have worked at 2 of the 3 top strategy consulting fimrs in London so lets put a number on it. I would estimate new associate hiring in a year (i.e. direct from business school) into the top 5 London based strat consulting houses to be less than 100 people.
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Ja
Jack
2 March 2010
@Steve. Not sure about your stat of 10-20x annual intake into banking compared w/ strat consulting. Potentially true if you compare Mck/Bain/BCG etc. London operations w/ the IB sector here. However, European IB really is concentrated in London - i.e. most banks would cover all European countries out of London with support from smaller local coverage teams in the larger continental countries (but have majority of sector and product teams based in London). Strat consulting on the other hand operates a much more decentralised model i.e. majority of McK consultants covering say Sweden will be based there (makes sense to be locally based if you need to spend four weeks in a provincial city counting widgets). So to make the appropriate comparison you would need to take the total European intake of the strat consulting firms in all the local operations in European countries and add up. I seriously doubt you get to the 10-20x if you do the correct comparison - especially given how labour intensive consulting work is. Also, if you include only BB strat firms (McK, Bain etc.) you should probably also include only BB banks like MS, GS etc. If you add second tier banks, then same for cons.
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