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Breaking into private equity: Some firms promote execs without MBAs

Business school isn’t always a requirement for candidates seeking careers at private equity firms.

Some buyout shops promote their most talented associates and analysts into more senior positions without their having an MBA, several sources tell PE Hub. Such a practice is rare and typically reserved for the best performers, persons say.

“We have directly promoted some of our star associates without them going back to business school,” one private equity executive at a major buyout shop says.

While lucrative, the path to private equity is quite regimented. Candidates typically work at an investment bank for two years after graduating from college. Management consulting is allowed but banking is preferable, sources say. Executives spend another two years at a private equity firm working as an analyst or associate. At this point, applicants typically attend business school and then queue up for a PE job upon graduation, sources said.

Most PE firms require candidates to attend business schools. But some have become more flexible. Firms including the Blackstone Group, CCMP, Great Hill Partners and Hellman & Friedman have been known to elevate talented execs and let them skip B-school, sources say. Blackstone, which will “work with” candidates if they want to attend B-school, has several executives that have been promoted without an MBA, PE Hub has learned. Such executives typically demonstrate a history of professional success, plus exemplary work ethic and outstanding maturity, a second PE source says.

Jobs in private equity are “extremely competitive” and the industry is contracting, one recruiter says. Just because a candidate attended business school doesn’t mean a position will be waiting for them when they graduate, the recruiter says.

Candidates should pursue parallel paths, the recruiter says. They should apply for business school but try to secure a more senior role at PE firms without an MBA. “If you can get the job of your dreams, take it,” the recruiter says. “Chances are it won’t be there.”

However, a third PE exec emphasized that promoting candidates without an MBA is rare.The source says his firm has only promoted one associate/analyst without B-school in the last 20 years. “Most [firms] still require MBAs,” the person says.

Blackstone has “no hard and fast rule” regarding analysts attending business school, a spokeswoman says in a statement. “Analysts are with us for a period of time, at the end of which some stay, some choose to go to business school and others go elsewhere,” the spokeswoman said.  “At Blackstone, our priority is to retain top talent so regardless of business school, we seek to hire and keep bright, talented, and dedicated individuals.”

Officials for Hellman & Friedman and CCMP could not be reached for comment.

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