Career Advice: Management Consulting vs. Private Equity

Many bright, ambitious college grads who want to make a lot of money right out of school consider two career paths: management consulting and private equity. However, there are differences between them, including skills needed, compensation and work-life balance.

What You Need to Know

• Management consulting and private equity offer high salaries for recent college grads.
• A degree from a prestigious university helps a lot.
• Neither require 80- or 90-hour workweeks.

Job Requirements

The first step to gaining the inside track to a management consulting or private equity job is to attend a highly rated university—such as an Ivy League school, Duke, the University of Chicago or another in that echelon—and to graduate among the top in your class.

Popular majors for aspiring management consultants include management, economics and even pre-law, since navigating legal issues represents a big part of management consulting.

Many students aspiring to work in private equity major in economics or finance.

Spending an extra two years in school obtaining an MBA provides a huge advantage to getting hired in either field—not to mention, in many cases, a larger salary.

Specific skills required in management consulting include problem-solving ability and exquisite people skills. Consultants must be able to examine complex management structures and identify areas where efficiency can be improved. Moreover, they must frame their findings in language that resonates with C-suite employees, many of whom are married to a certain way of thinking and reticent about accepting outside ideas.

Private equity requires many of the same skills. The job entails using financial leverage to make equity investments in private companies or to conduct leveraged buyouts of public companies, thus turning them private. Excellent problem-solving abilities are needed to identify top investment opportunities.

With millions of dollars on the line in nearly every investment deal, strong quantitative skills are a must in private equity.

Starting Salary

Starting salaries for management consultants and private equity employees come in well above the U.S. average, which is a primary reason entry into these fields is so competitive.

Coming out of school with a bachelor’s degree, a new management consultant at a large firm can expect to make between $59,000 and $99,000 their first year, as of 2024. Where they fall within this range depends on the region of the country where they are working and specific job duties. Someone with an MBA, particularly one from a top school, can earn significantly more than that amount the first year. As of 2024, the average salary for first-year consultants with MBAs is $149,000.

In private equity, compensation typically consists of a base salary plus bonus. Therefore, total income for the first year can vary greatly based on market conditions and individual performance. As of 2024, the base pay ranges between $61,000 and $154,000, while bonuses can range from $5,000 to $35,000.

Work-Life Balance

Neither career is a nine-to-five, Monday-to-Friday gig, particularly during the first few years, but unlike investment banking and corporate law, 80- to 90-hour weeks are not the norm in management consulting or private equity, even for a rookie.

Management consultants generally work between 40 and 60 hours per week. However, this figure does not include travel, which most consultants do a lot of during the first few years.

Private equity associates get to the office around 9 a.m. or a little before and, depending on workload, leave between 6 p.m. to 9 p.m.

What Are the Big 4 Management Consultant Firms?

The “big four” management consulting firms by revenue are Deloitte Touche Tohmatsu (Deloitte), KPMG International (KPMG), PricewaterhouseCoopers (PwC), and Ernst & Young (EY).

Is McKinsey Part of the Big Four?

No, McKinsey is not part of the “big four.” However, McKinsey is often grouped with two other strategy firms: Boston Consulting Group (BCG), and Bain & Company.

What Is Private Equity?

Investors in private equity (PE) invest in private companies (that is, firms that aren’t listed on a public stock exchange) and buy out public companies to make them private. 

The Bottom Line

Working in management consulting or private equity can offer recent college graduates the opportunity to earn a high salary. Though they differ in a few ways (e.g. compensation, work-life balance), there’s one thing that they share. While the top firms in both industries prefer graduates of top universities who rank highly in their graduating classes—or even better, graduates of top MBA programs—neither career imposes rigid educational requirements. This makes them attractive picks for students who want lucrative careers without being bound to years of post-college schooling like their classmates pursuing law and medicine.