Year after year, the highest compensation packages dangled in front of the best MBA graduates come from either private equity firms or hedge funds. These MBA jobs are few and far between, and the people who get them are more often than not the most accomplished graduates of their classes.
This past year, business school employment reports were filled with freshly minted grads making a mint by working in private equity. A graduating MBA student in Stanford University’s Graduate School of Business this year nailed down a private equity job in the north east with a total compensation package north of half a million dollars. And this past year, the highest paid MBA at Columbia Business School landed a $310,000 base salary at a private equity firm, while a PE firm also paid the highest bonus to a Columbia graduate: a hefty $300,000.
As tantalizing as some business school employment reports are, however, they only give you a small glimpse of this world. Often times, schools report the percentage of grads who enter the PE field with other categories, such as venture capital. They sometimes do the same with hedge funds, which are often lumped into the category of “investment management.”
Wharton, for example, reported that 10.6% of its Class of 2013 went into a category it calls “private equity/buyouts/other.” What you need to know is that the median base salary for those MBAs was a whopping $150,000, a full $25,000 more than the median for the entire graduating class. Of the 37.9% of Columbia’s Class of 2013 that ventured into finance, only 3.2% of the class was lucky enough to land a PE job. At Dartmouth’s Tuck School of Business, just 2% of last year’s grads went into private equity, where the median starting salary also was $150,000, higher than any other financial category.
HARVARD, WHARTON & COLUMBIA LEAD THE PE FIELD
That’s one of the reasons we analyzed the member profiles on LinkedIn to come up with a list of MBAs from the top 10 U.S. business schools who are employed by nine of the world’s leading private equity players. They include such giants as TPG Capital, Carlyle Group, The Blackstone Group, KKR, Warburg Pincus, and Bain Capital.
The results of our analysis won’t surprise anyone who wants into this lucrative field and understands the high hurdle rate to get an offer from these top private equity firms. Harvard Business School has the most MBAs employed at the nine PE shops we studied, with 269 grads, including some pretty heavy honchos. At Blackstone, for example, co-founder Stephen Schwarzman, chairman and chief executive, earned his from HBS as well as his key lieutenant, Hamilton “Tony” James, who serves as president of the firm. Wharton comes next with 242 grads in place, while Columbia Business School is third with 133 MBAs.
That doesn’t mean you would be locked out of PE if you went elsewhere, but the path from these three schools in particular is well worn when your destination is one of the largest private equity players in the business. Indeed, when it comes to PE, many of the world-class schools hardly play in the field. A good example is the University of Chicago’s Booth School of Business, renown for its finance faculty. Yet, in this small cul-de-sac of the financial world, Booth has just a dozen MBAs at these nine highly prominent PE shops. The upshot: Wharton has 27 times the number of MBAs at these top nine firms than Booth, at least according to LinkedIn member profiles. Still, Booth can boast that Carlyle co-founder William Conway is a proud alum of the school.
NYU’s STERN SCHOOL SHOWS UP MUCH BETTER THAN SOME OTHER HIGHLY RANKED SCHOOLS
Though hardly definitive, searches of LinkedIn’s database provide a fascinating and fairly accurate glimpse at what you could call the “market penetration” of a school’s MBAs in any one firm. Sure, not everyone has a profile on LinkedIn, though people who fail to list with the world’s number one professional network are certainly in the minority at this point. It’s also possible that LinkedIn’s search algorithm could be slightly askew and count undergraduate business majors from schools such as the University of Pennsylvania’s Wharton School which boasts a large undergrad program. In any case, we think the results are worth a look–and we think you’ll find them quite compelling.
For the purposes of this analysis, we substituted New York University’s Stern School for UC-Berkeley Haas, which is ranked tenth by Poets&Quants. Haas had 18 MBAs in the nine leading PR firms, including seven at Kohlberg Kravis Roberts. But compared to New York University’s Stern School, which is ranked 15th by Poets&Quants, that’s a drop in the PE bucket. Based on LinkedIn data, there are 45 Stern grads at The Blackstone Group alone. The takeaway: When you’re focused on a specific industry and/or company, rankings matter less than MBA placements.