The value of MBAs for private equity

An MBA is typically regarded as a prerequisite to reach the higher echelons of private equity, especially at the larger firms. But is that really true? What does the data tell us?

You will find MBAs are almost in every PE firm

I looked at a couple of firms and checked the percentage of MBAs in each of those firms. Out of 315 executives, 166 had MBAs; about 52%. Views are mixed; in some firms an MBA is a prerequisite. A partner at a global firm recently stated "we view senior associate positions as post-MBA positions, and would therefore require that qualification unless there are exceptional circumstances". But the communications director at 3i also said last year, " the MBA is not a pre-requisite but it can be of tremendous help for some people, people with non-financial backgrounds for example".

The larger the firm, the more MBAs you will find

The largest PE funds such as KKR, Blackstone and Apax had the most MBAs. I've gathered some data here:

  1. PE FIRM, (% MBAs)
  2. Apax (77%)
  3. Blackstone (63%)
  4. KKR (61%)
  5. Candover (59%)
  6. Permira (58%)
  7. 3i (48%)
  8. CVC (46%)
  9. Bridgepoint (38%)
  10. EQT (22%)
  11. PAI (21%)

The number of executives with MBAs is increasing

Looking at the younger exectutives in the firm there is also clear evidence that the MBA is becomming increasingly popular among the new generation of buyout executives.

Among MBAs, five schools provide the vast majority of PE professional graduates

Five schools provide more than 80% of all the MBA graduates that work in private equity: Wharton, Harvard and Stanford in the US, and in Europe Insead and LBS. PE firms tend to hire their own kind, so the PE MBA community is a very closed circle.

Related Articles