The world of private equity is small, elite, and coveted. Landing a position in PE is tough, but those who make it reap the rewards of astronomical pay, high impact of work, and prestige. Our 250,000+ data points at TransparentCareer allow a peek into the highly-sought-after world of private equity.
Only 1%-3% of MBA graduates land a job in the industry, and those within the circle tout the importance of “pedigree” of candidates in relation to where they went to school. If you want a chance to break into private equity post-MBA, chances are you need to already be in that space.
MBA graduates in private equity can have sky high salaries – we’re talking $300,000+ – but the average compensation comes in at a still-generous $215,020 (83rd percentile). This is made up largely of an average starting base salary of $122,667 in the 74th percentile. Average signing and relocation bonuses are towards the bottom of the barrel in the 20th percentile, but performance bonuses averaging at $75,667 (94th percentile) make up for lost ground. While even these starting bonuses are attractive, the potential for compensation due to portfolio performance can be extremely lucrative as time goes on. An MBA graduate in private equity can look forward to “carry”, or carried interest, as they progress with a firm. If returns on investments exceed a threshold, employees may receive a percentage of these profits. To compare compensation data and see how it stacks up against other industries, simply sign up for free and visit our Career Explorer.
An MBA graduate in private equity works an average of 57 hours per week and travel 25%, which is fairly standard for all other MBA grads (note: at top PE firms, expect the hours to ratchet up significantly). Common cities for these positions include Chicago and New York, though companies have offices all over the country and world.
Demand for MBA graduate jobs in private equity exceeds supply, and those who land a coveted spot enjoy themselves. All satisfaction scores were above average, with culture being 24% higher than in other industries at 8.7/10. Impact of work was also 11% above average at 7.8/10. Career satisfaction in private equity may stem from longer-term relationships with companies, exposure to all facets of an outside firm (not just the financial aspects), and the ability to contribute to a company’s growth and expansion. Industry insiders with experience in both investment banking and private equity also note that the environment and culture in P.E. is much calmer and more “cerebral” than the personalities you may encounter in banking. While all of this may romanticize the industry, it is important to weigh the potential downsides. MBA graduates in private equity should be prepared to spend great lengths of time working on a deal, only to have it fall through. If a deal does come to fruition, associates can expect to feel pressure for company performance and may see their compensation fluctuate based on deal performance as well.
MBA interns working in private equity also report above-average satisfaction scores, with recommendation scores coming in at 14% higher than all other interns at 8.2/10. Average intern happiness checks in at 7.7/10, while interns at companies such as KKR (Kohlberg Kravis Roberts) report an average happiness score of 9/10. Additionally, interns at Sterling Partners ranked their impact of work as 10/10, above the industry average of 7.6/10.
While summer associate positions in investment banking or consulting are important gateways to full time positions, an industry recruiter notes some small P.E. firms don’t hire summer associates at all. There are still some top-dog firms – such as Bain Capital, KKR, and Blackstone – but private equity is home to many small firms. For the few internships available, offers will peak later than other recruiting cycles – in early spring between February and April. In contrast, full time offers peak in late spring/early summer between March and June. Post-MBAs entering private equity will typically carry the title “associate”, and will then move on to pre-partner and partner status. To see a full list of employers and their satisfaction ratings, visit our Career Explorer.
Fewer openings lead to an extensive interview cycles, lasting up to 4 months across 4+ interviews at some firms. While larger firms tend to have HR departments to handle hiring, small to mid-size firms can be accessed via recruiters and on-campus connections. Previous experience and networking are also great ways to land full time private equity positions; another recruiter noted that many employees were chosen because they had worked with the company on a deal or they have worked for people that the firm knows and trusts. Besides connections, what are private equity firms looking for in MBA candidates? The ability to conduct due diligence independently for a potential project is vital for an associate. Strong project management is also necessary, and firms will want to know what past P.E. experience you have and what deals you have worked on. Private equity firms focus on returns and profits so a candidate that has made money, saved money, or improved a process for a firm in their prior experience is a real golden goose.