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Business schools are bullish on private equity.
Amid the recent flurry of deals to take public companies private, M.B.A. programs are offering more intensive private-equity courses and strengthening their connections with buyout firms to help students land jobs. At the same time, schools are trying to lure junior employees of buyout shops to their M.B.A. programs to groom them for higher-level positions in private equity.
"Private equity is the sexy industry where the money is being made and where many of our applicants want to be," says Rose Martinelli, associate dean for student recruitment and admissions at the University of Chicago Graduate School of Business.
More M.B.A. graduates are indeed getting jobs in private equity. At Harvard Business School, 11% of the class of 2006 secured private-equity positions, up from 7% of the class of 2004. They commanded a median base salary last year of $125,000, plus median additional compensation of $77,500 from bonuses and other extras. "It is certainly lucrative, but students also find it appealing because they get a lot of responsibility early in their careers," says Jana Kierstead, Harvard's director of M.B.A. career services.
Despite its growth, however, the private-equity industry still isn't hiring nearly as many M.B.A. graduates as banks and management consulting firms. Although more firms are recruiting on campus or posting jobs, students must often resort to personal networking with alumni to catch the attention of a buyout shop.
Many firms seek students with private-equity or venture-capital experience, but some will hire people with backgrounds in investment banking or consulting. "You don't want to be blind to the idea that people can bring value with different backgrounds, but a combination of an M.B.A. and private-equity experience definitely gets you in the door faster," says Robert Morris, managing partner at the private-equity firm Olympus Partners.
To get that edge with recruiters, schools are trying to attract more students from buyout shops. Of Harvard's 900 incoming M.B.A. students, about 100 have worked in private equity. "Harvard has long been the school of choice for candidates from private equity," says Deirdre Leopold, managing director of M.B.A. admissions and financial aid. "The case method here affords them valuable practice in assessing messy and complicated problems with no right answers.
Dartmouth College's Tuck School of Business hopes to compete with Harvard for some of those same students. This past school year, it went on the road, promoting its M.B.A. program and Center for Private Equity and Entrepreneurship to employees of private-equity firms at receptions in New York, Boston and Silicon Valley in California. "We told Tuck's dean that to be more successful in placing students in private equity we had to become more proactive in finding applicants with private-equity experience," says Renny Smith, managing director of TH Lee Putnam Ventures and chairman of the advisory board for Tuck's private-equity center.
The University of Chicago and the University of Pennsylvania's Wharton School are also reaching out to the private-equity industry for prospective students. "But in the current war for talent, it's tricky getting more students," says Thomas Caleel, Wharton's director of M.B.A. admissions and financial aid. "Private-equity firms are doing very well and are offering obscene compensation and big promotions to keep people from leaving."
People who do leave typically want to round out their business skills and expand their network of professional contacts. "Business school is a great place to develop connections, which are extremely important in private equity," says Martin Keck, who just finished his first year in Tuck's M.B.A. program and previously worked for the private-equity firm Silver Lake. "You'd be amazed at how many referrals come in and how many relationships are fostered through alumni."
Business schools have offered private-equity classes for some time, but now some schools are developing more rigorous courses to better train students. Next year, for example, Columbia University plans to launch a "master class" in private equity, which will be limited to 36 M.B.A. students. Laura Resnikoff, an associate professor at Columbia Business School, will teach the class along with a recently retired private-equity executive, focusing on a company that was taken private and later went public again. Principals in the case, including members of the management team, investors and lawyers, will speak to the class, and the students will make their own presentations to private-equity professionals.
Columbia is also increasing networking opportunities for students interested in private equity. It is linking its executive M.B.A. students already working in private equity with younger full-time M.B.A.s in a program called Private Equity Pathway. In addition, a new advisory board of alumni is working with Columbia's student club for private equity and venture capital, and executive recruiters specializing in private equity are giving students career guidance.
"We have students with the horsepower but not the familiarity with private equity," Ms. Resnikoff says. "We need to provide many different ways for them to gain that familiarity and confidence."
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