To MBA or Not To MBA? With Hedge Funds and Private Equity On

by Derek Loosvelt | September 18, 2007

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Once upon a time the financial career path of the most compensation-ambitious undergraduates included a two-year analyst program at a top investment bank, followed by two years at Harvard or Wharton and a return to the financial world as a banking associate or private equity analyst.  There wasn’t much decision-making involved in whether to get an MBA or not, provided that you could get into one of the top programs.  Today, though, as an article in the  discusses, the decision to get a graduate business degree or not has become more difficult, if not made a 180-degree turn.

Despite the cache that HBS and the Wharton School still posses, many young hedge fund traders and private equity executives don’t see the point of leaving the financial world only to return two years later, missing out on millions in compensation while incurring half a million in debt.  And the most sought after investment banking analysts are now able to rise through the ranks without going back to business school, moving on to the associate and director level and beyond in a very short time.  In fact, a Citi recruiter quoted by the Times estimates that 15 years ago nearly 90 percent of the employees in Citi’s analyst classes went on to get their MBAs, but now only about 50 percent are heading back to school.

Still, many believe that an MBA has value, and the numbers of those choosing to get their MBAs has not diminished.  Finance executives agree that changing careers – moving into business and finance from another field – is a worthy reason to get the graduate degree.  Networking is another solid reason, as business school helps people gain contacts they can call on later in their careers when looking to raise money or get deals done.  However, those looking for the big score seem to be increasingly foregoing the degree.  As a former dean of the M.I.T. Sloan School of Management tells the Times, “I don’t think you will see MBAs less represented in executive suits, but you may see MBAs less represented in the lists of the world’s richest people.”

Speaking of the world's richest, today it was announced that hedge fund manager Citadel Investment Group – founded by 38-year old Kenneth Griffin who was ranked No. 512 on Fortune's list of the World's Richest People in 2006 – has poached Goldman Sachs' head of investor relations, a move signaling that Citadel is ready to make a move to the public markets.  Griffin, also Citadel's CEO, hasn't been shy about his plans for an IPO in the past, and has also mentioned his plans to diversify Citadel, turning it into a viable competitor to banks such as Goldman Sachs and Morgan Stanley.

Although it might not be the best time to access the public markets, Citadel is well known as a strong performer, and it's been doing extremely well even during the recent economic downturn.  Its funds have risen 20 percent since the beginning of the year while others have fallen, including Goldman's flagship Alpha fund, which has decreased 33 percent in value during the same period.

Griffin, by the way, received his bachelor's degree from Harvard.  He doesn't have an MBA.


Filed Under: Finance

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