To MBA or not to MBA? It depends on which type of PE fund you are targeting…

Private Equity is really a ‘tale of two cities.’ There is not just one monolithic private equity fund profile. The expertise needed by the fund depends upon which type of fund you are talking about.

There is the ‘big’ private equity. These are the names that you see in the news on a weekly basis. These are the groups that have been in business for thirty or more years and have accumulated massive capital bases.

If you want to work for one of these funds, I would pretty much ignore The Wall Street Journal article attached. Sure, it’s always possible to find a fit. But in most instances these groups want prestigious business school and Wall Street investment bank M&A experience.

However, over the last twenty years or so, a massive category of private equity funds have grown and thrived. These are the ‘smaller’ private equity funds. When I say smaller, I mean only smaller in reference to the size of the famous mega-funds.

In many cases, these ‘smaller’ funds have different expertise needs. In order to compete, these funds need to operate in a more entrepreneurial fashion. They need to be scrappy. They need to be innovative. Oftentimes, they need to be able to operate more closely with the Founders/CEOs of their portcos. In other words, they often need to be more ‘operators’ than ‘financiers.’

For this second category, I would agree with the attached article. An MBA never hurts, but it is not a prerequisite for being a valued member of the fund.

To be clear, there is nothing wrong about being big or small. Just different needs.

There has been a lot written lately about how the mega-funds are winning the capital raise game these days. I am sure that is true. However, don’t count the ‘smaller’ PE funds out. In many cases, they operate closer to the entrepreneur, and will continue to deliver great returns for their LPs.

If you are a ‘smaller’ PE fund, feel free to reach out. E78 Partners can often be that outsourced expertise you need to help compete against the bigger firms in this environment.

mpatterson@E78Partners.com
www.E78Partners.com

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