Do you really need an MBA to make it in private equity?

So you want to get a job in private equity, or you already have one and you want to climb the ladder. You’re debating whether to continue building up work experience or go back to school to get an MBA. How important is it to get your MBA to have a successful career in private equity in North America?

How badly do you want that promotion?

Typically, you can join a private equity firm without an MBA, but your career trajectory may be stunted.

“Say you’re coming from an investment bank, you can be hired by a private equity firm as a pre-MBA associate, but that’s basically a glorified analyst,” said Victoria McGill, the head of fund management, Americas, at Selby Jennings. “Many junior PE people leave, get their MBA and come back with a more senior position or with a better title at another firm. You can join a private equity firm and be an associate, but if you want to actually progress up the ranks, you have to leave and get an M.B.A. – there’s not much growth potential without it,” she said.

We searched the eFinancialCareers resume database to calculate how common MBAs are across the private equity and venture capital sectors in North America, slicing the data based on level of experience. The trend is clear: Employees with longer tenures in the industry are more likely to have their MBA.

A less common but still effective strategy that McGill recommends is to join a private equity fund of funds like HarbourVest or Abbott Capital or a secondary PE fund and do private fund manager due diligence and research. Then after gaining a couple of years of work experience there, leave, get your MBA and get a position at a direct private equity firm.

“Get that experience doing fund manager research on various private equity firms, get your MBA, then go to a direct PE firm and you’ll actually be doing the investments yourself,” McGill said.

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