Management Consulting vs. Private Equity
Are you considering management consulting and private equity as your career options? It’s difficult to break into both fields because of high required qualifications, large applicant population and challenging recruitment process. We will discuss both career options in this article and hopefully provide you with some new perspectives.
The Difference between Two Industries
Management consulting is the act of helping companies improve their efficiency and productivity through intensive research and analysis of presented business problems. At the end of the project, consultants come up with sound recommendations for the client. Resolution of the problem signifies the end of the project, and consultants are then assigned to other clients of the firm. Consultants are paid for the quality services they render.
On the other hand, private equity (PE) is a financial sponsor that invests in operating companies. PE professionals source funds from investors, such as insurance companies, pension fund businesses, foundations, etc. and they use the money in purchasing shares of private companies. Private equity firms gain money from the management fee they receive and share in the profits earned by their equity fund.
How to Get to the Dream Job
Management consulting firms, like McKinsey, Deloitte and Booz, may consider applicants who don’t have previous consulting experience. They even recruit at universities and business schools to scout for students who are competent enough to do the job. On the other hand, private equity firms often employ applicants who have an MBA degree and experience in a closely related industry, such as investment banking, corporate finance or management consulting.
In both fields, networking is an important move to get a slot in any firm. Headhunters and recruiters may look at your winning job application but still, your documents would appear more credible if they come with a recommendation or referral from key people. Try to list the names of those who can help you with this. If you’re still a student, join sessions, workshops and networking activities organized by your private equity or consulting club.
Interviews
Both firms follow almost the same recruitment process. It starts with resume screening, then psychometric testing and finally interview rounds. The interview phase is divided into two: fit and case interviews. The fit interviews consist of questions formulated from the resume while the other one focuses on your technical and problem solving abilities.
- Management Consulting – Candidates are given a business problem, and they are expected to come up with a logical, acceptable structure and analysis. Cases provided are similar to what consultants deal with every day. To ace this phase, consulting frameworks must be utilized to structure the answer logically.
- Private Equity – Interviewers assess your general understanding about investments. They may ask you to come up with a SWOT analysis or ask your opinion about an investment in a mobile phone company. In the later rounds, you may be given a leveraged buyout (LBO) case to resolve. Further, most firms will ask you to join a dinner or drink with the senior partners or CEO to get the final approval.