The exit opportunities are one of the biggest attractions to working in consulting. Exit opportunities are broad and plentiful. Although consulting lacks the sky-high salaries of investment banking, it offers just as much of a career booster. Although exit opportunities from MBB are famously the best, they are fantastic after working at any strategy consulting firm. In this article we split potential exit opportunities into four categories. Those are strategic management in a large organisation, a financial role in a fund or similar, entrepreneurship and other alternatives like politics.
This remains the most popular trajectory for management consultants. After learning everything there is about business, many consultants want to have a crack at running one themselves. After working in a consultancy, it is typical for recent graduates to exit into mid-level or senior strategy roles at some of the world’s largest firms.
MBB graduates dominate the FTSE 100 and the Dow Jones in a ridiculous way. Almost 30% of their CEOs worked at McKinsey, Bain or BCG at one point.
At a careers talk in Cambridge, we were once told that 2 years at McKinsey got you into a strategy role at a great company. 5 years got you pretty close to the board room. 10 years got you to wherever you fancied. This is particularly true of McKinsey but holds true for lots of places. So long as you keep beating a company’s “up-or-out” policy, you value to other firms grows exponentially.
This is a new one for consulting. In many ways it doesn’t make much sense to move into financial services from consulting. You could have started in accountancy or banking and had direct experience of a balance sheet. However, its becoming more and more popular.
There is a growing volume of movement from MBB in particular into boutique banks, hedge funds and other variations of trading. Although consultancy doesn’t teach you the technical skills needed to succeed at these jobs, it is still a stamp of your value that you were a successful consultant! Lots of companies trading in derivatives hire exclusively from the top three consultancies or top three banks.
Mitt Romney was the first consultant to truly follow this path. After working at Bain shortly after its creation, he founded Bain Capital Credit. Although Romney is an exceptional polymath, this illustrates the trust people place in ex-consultants. Bain Capital Credit went on to become an immensely successful trading firm.
A useful comparison of exit opportunities in consulting and investment banking:
This link is become stronger and stronger. Trading firms are actually investing in consultancies. Naturally this encourages the transfer of personnel between the two. In the UK, 51% of PA Consulting was purchased by the world’s second biggest hedgefund, the Carlyle Group. They have since secured an impressive return on this investment as the firm became the UK’s fastest growing consultancy. It is looking likely that they will soon exit to make way for new investors.
With these developments, financial institutions are the most likely to handpick or head hunt consultants. Rather than having application rounds and entry levels, the big private equity firms are more likely to just reach out to McKinsey, Bain and BCG’s leading private equity business analysts.
The myth that consultancy makes it hard to transfer into private equity is wrong. In fact, it is looking like over 50% of consultants at top firms will still be doing this. This has been encouraged by certain firms acquiring a reputation for hiring consultants, such as Capstone, Audax and Golden Gate Capital. Perhaps, Goldman, Morgan Stanley and JP might be more valued than MBB due to focus on financial statement but this difference is pretty minimal.
This is a more complicated one. After a career in consultancy, lots of people want to employ their own start-up ideas. Having seen so many start-ups fly or fail, consultants think they own the keys.
However, unlike other roles, where your background in consultancy gets you through the door, your start-up idea actually has to be good. Whereas you can learn trading and become good, your start-up actually has to be good!
Perhaps the best advice for anyone considering consulting and its exit opportunities is this. Although investment banking might enhance your chances to join the very biggest hedge funds, consulting’s exit opportunities are incredible if you aren’t yet sure about what you want to do. Investment banking allows you to go deep in balance sheets and models, but it doesn’t expose you to business or to C-suite executives. You do these things from day 1 in a consultancy and your exit employers know it.
Finally, it is worth noting that consulting is a good place to start to take any path. The breadth of experience and skills you learn as a consultant make you an attractive hire full stop.
Lots of people go into politics. Mitt Romney also did this and similarly, Netanyahu worked at McKinsey and in the UK, Jeremy Hunt worked at OC&C.
People also go into politics at a non-elected strategy role. The British civil service for example is full of consultants who now make high profile public policy decisions.
In an ever wider sense, the abilities of people who are able to become consultants has carried them into even further reaching professions. John Legend, star of Hollywood and international singer-songwriter started off at BCG!