Does Private Equity as a Career Goal Help or Hurt for MBA Admissions?

Among the clients I’ve had over the past three years, at a rough estimate I’d say about half came to me stating that (a career in) Private Equity was their Why-an-MBA goal. I could shake some from it, but not others.

This year again I’ve already seen a number of ‘PE applications’ and am fielding the question that inevitably comes with it: “Is PE a strong-enough goal? Is it too common?”

To answer this, and offer a perspective on career goal value for MBA admissions in general, let’s take a moment to look at PE.

In its simplest terms, Private Equity involves raising capital to be used by professional investors to buy into established but non-listed companies. The aim of the PE firm is to return significant returns to principal investors, which is achieved using the financial muscle or management expertise of the PE firm, or both, to grow the target firm or otherwise “release” its assets. The PE firm may need to be patient while its illiquid investment grows, but the idea is to cash out as soon as profit targets are met, take a part of the pile and return the rest to principal investors.

Is this good for MBA admissions?

It’s not terrible. PE is a necessary function in a modern capitalist economy, particularly in raising efficiencies and releasing value locked up in sclerotic firms, and it clearly demands many MBA skills. Certainly business schools have no problem with ambition, or you wanting to make money.

But it’s not great either, and to explain why it is necessary to consider what Admissions Committees like better, which is to have selected the true architects of tomorrow’s industries. They want the school to have formed and shaped the people who build the next truly great thing – in any sector. They want their alumni to be smiling down from the cover of Forbes or Fortune magazine, or your local equivalent. (This doesn’t mean you have to be an entrepreneur. Any genuine leadership role works.)

If you don’t believe me, believe the cornerstone of the Knight Management Center, the new home of the Stanford Business School, which says:

‘Dedicated to the things that haven’t happened yet and the people who are about to dream them up’

This dedication tells you who will be admitted to Stanford GSB: the people who look most likely to dream up and the build the things that haven’t happened yet.

Why does Stanford GSB — and all the other top MBA programs — want to admit this kind of applicant?

Take your pick: thinking idealistically, it’s about contributing to the economy and the world in the best possible way. “Change Lives Change Organizations Change the World,” yada yada. Thinking a bit more cynically, it’s about branding because, if in 10 or 20 years time the school can point to you and say “alumnus 2015 who changed retail in America,” and point to the person next to you and say “alumna 2015 who built Logo-Tech into a worldwide franchise”… well that’s very good for the school.

Set against this, PE is relatively anonymous and opportunistic. You don’t achieve much more significant than personal wealth via PE, and if you end up on the cover of the financial magazines, it will almost certainty be for the wrong reasons.

By Avi Gordon, the founder of MBA Admissions Studio, and author of MBA Admissions Strategy: From Profile Building to Essay Writing.

 

Comments

  1. Its like you read my mind! You appear to know so much about this, like you wrote the book in it or something.

    I think that you can do with a few pics to drive the message home a little bit, but instead of that, this is great blog.
    A fantastic read. I will certainly be back.

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