What are the best exit options for consultants?

Anonymous B asked on May 04, 2017 - 3 answers

I'm wondering where most consultants actually end up in after consulting. I see a lot of consultants transitioning to startups for instance. Is that really the best option or is it overhyped?

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Anonymous replied on Aug 23, 2016

Frankly, exit options are quite broad (excerpt of what I remember my fellow alumni doing):

  • Large companies (typically after advising the industry), often "strategy department" or in-house-consulting
  • Other, often smaller consulting firms (with chance to become partner)
  • Private Equity
  • Startups (more recently; typically joining funded ones, but also starting new ones)
  • Other professional services (HR/recruiting, coaching, ...)
  • Academia/think tanks
  • Government
  • Freelance consulting
  • Joining/taking over the family's business

Also depends on the major, a lawyer/doctor has other options than a physicist. I remember an internal analysis that physicists stay with the firm longest on average, both a combination of them being the smartest and having (ceteris paribus) the least amount of options compared to other majors.

Regarding startups/PM opportunities - yes, for sure, especially if you are < 3 years with a firm. Short term, consulting helps you with about anything:

  • You learn to bring order into complexity, structure things and communicate them clearly, as well as present your work -> universally applicable
  • You learn to work really hard and accomplish things fast as part of a project team
  • You learn how corporates work and think and how decisions are made (great if you want to sell to them)
  • You gain access to a highly valuable network (colleagues and alumni)
  • Having worked for the firm is another stamp of approval on your resume

However, these effects diminish over time, and after a certain period you actually become less valuable when you think about going into startups:

  • Your salary level gets so high that it is really difficult to find adequate alternatives (took me 3 years after starting my own company to get to almost equal level)
  • Your level of entitlement skyrockets (perks, expected comfort level when traveling)
  • You forget how to do actual work - you only manage & communicate, and are even further detached from "business reality".
  • You focus on learning internal consulting firm things (internal processes, how to sell projects, how to become a partner, ...) which are generally not as valuable when switching careers

To come back to the question (lol), it's not easy to say which is the most lucrative, as it's a combination of risk/reward. Corporate tends to be very stable with limited upside, but also limited downside and better work life balance. PE is paying better, but in the end depends on bonus and performance. Startups are usually paying (way) lower, but you have the upside to hit it big (albeit rare). Actually, freelance consulting is quite lucrative if you find a niche and project flow (lower rates but also almost no overhead cost so everything goes to you) but less sustainable over the long run as you're selling your time but in general don't really build a career.

Hope this helps somehow :)

Srihari
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replied on May 04, 2017
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So firstly, this varies A LOT by region, tenure, etc,(and everyone has a different definition of 'best option') but here are some of the most common routes.

1) Younger consultants (post undergrad, post MBA) tend to go to the start-up scene more than older ones. I think whether you do that is about your own tolerance for risk and how passionate you are about the start-up you find, etc. Pay may not always be great to start, but you get equity - which means if it does well, it's a HUGE upside.

2) Corporate roles - most commonly in business development/corporate strategy, but you often see these in any functional role. These leverage the consulting skillset very directly, but obviously less risk than a start-up. People who want something more stable/safe, but less working hours tend to go this route. Pay may be comparable or slighly less, but the trajectory is definitely slower than consulting.

3) There are a lot who go into PE/VC, again, very commonly among younger consultants. Financially, this is probably the best, but not everyone wants to do this type of work. Also very much leverages the consulting skillset.

Francesco
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updated his answer on May 09, 2017
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Hi Anonymous,

I actually ended founding a startup after my experience at BCG, however that is still not the most common outcome in many countries for people exiting consulting (in Italy for example that’s still rare, mainly due to the fact that the startup ecosystem is not so strong). I would expect that to be far more common in countries where the startup (and Venture Capital) ecosystem is more developed, such as Germany, UK and US. As mentioned by Srihari, age could also be an important factor when deciding whether to move to a startup, either as a founder or as a first employee.

As for the general exit opportunities, besides the ones mentioned by Srihari some other routes may include:

  • Freelance consulting
  • Smaller consulting firms to move to partner level
  • NGO/Government roles

In general, opportunities are pretty broad and after the first few years you could easily move to pretty much everything in these fields, in particular with a MBB stamp.

As for what are the best exit options, that would depend a lot on personal preferences. Some people would prefer the low-risk/stable-path corporate word; others would go for the high-risk/high-reward startup option.

For a complete list, you can also check the following answer of Dolf:

https://www.preplounge.com/en/consulting-forum/exit-options-most-lucrative-ones-249#a459

Best,
Francesco

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