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Investment Banking vs. Management Consulting

Business school students often wonder whether to pick Investment Banking or Management Consulting as their main career. This is an endless debate on every business school campus. Both paths attract smart overachievers willing to go the extra mile. Both paths offer a steep learning curve. Both paths offer excellent pay. And both paths will make you work very dearly for that money. In this post we are going beyond popular believes to find out how these two career paths actually play out and compare to each other.

To be clear, we are talking about M&A Investment Banking and Strategy Consulting. We are talking about the plain vanilla products. We are talking about your typical entry-level jobs for business school students. Not some obscure niched-down Debt Capital Markets specialists or IT consulting or risk management consulting. These are your plain vanilla M&A Investment Bankers and Strategy Consultants.

We will look at the type of work, the recruiting process, hours, culture & lifestyle, salaries and exit options. That’s a lot of ground to cover, but as stated, we go beyond popular beliefs. We are trying to give you as much helpful information as possible for you to make the best decision for your career. Finishing up, we’ll give you our opinion on who should be picking Investment Banking over Management Consulting and vice versa.

The type of work

M&A Investment Banking is about selling and buying private companies for your client. It’s NOT about buying or selling stocks. It’s transaction-based business of privately held companies. The bank only gets paid if the transaction is completed. If you are on the sell-side, you are trying to sell a company for the shareholders that mandated your bank. If you are on the buy-side, your clients have tasked you with finding companies they would like to buy. Investment Bankers facilitate the transaction process by structuring the transaction process, taking care of valuation, identifying potential buyers and taking care that all necessary data is compiled for the transaction to move forward. It’s a lot more about thinking how two companies might strategically fit together in the long term. In other words, it’s about figuring out how to make a deal work. This involves dealing with a lot of data and simplifying the data into a clear picture for the transaction to move forward.

Management Consulting is about solving a specific problem in a specific company. It’s about collecting information and giving the best possible recommendation on the potential course of action. It’s like renting out brain capacity for a specific project in a company that nobody has time for because everyone is busy with running the company. Projects can greatly vary. You may be trying to launch a new shampoo brand for a large corporate in a new market one day. Or you might be thinking about how to “transform” or restructure an underperforming business unit. Management Consulting projects are a lot more operative and involve a lot less finance and valuation than M&A Investment Banking. The biggest difference is in the business model. Management Consultants get paid by a daily rate. This means they always get paid no matter what happens. It’s a time for money exchange. On the flip side, you are forced to work in billable hours, whereas bankers get paid when the transaction gets closed. In other words, as a Management Consultant you are tasked with academically solving a problem based on the data you collect, whereas as an Investment Banker you are trying to make a deal work.

Recruiting and interview process

M&A Investment Banking interviews are very straightforward. There is a set amount of knowledge that you need to internalize and master. By master we mean you can comfortably walk through a DCF in a high-pressure situation without fumbling any concepts or details. The concepts are always the same. Accounting, valuation and understanding Investment Banking plus fit questions. That’s it. It is a fixed body of knowledge that everyone can master with enough time and effort. While the interviewing process may differ slightly from bank to bank, you will get asked the same questions throughout multiple rounds. One interview might focus more on fit questions. The next one might focus on technical questions. The smarter you are, the harder the questions get. We want to see how far you can go. In other words, if you have done your homework properly, no Investment Banking interview should throw you off. At some point, there should be no “new” content if you have prepared properly.

The recruiting process for Management Consulting is vastly different compared to Investment Banking. To break into Consulting, you have to master the case interview format. It’s more about mastering an intellectual process as opposed to internalizing a fixed amount of knowledge. In short, you form an initial hypothesis and systematically ask smart questions to either confirm or revise your hypothesis. Training for case interviews requires a lot more coaching and speaking out loud because the cases are always new in every interview. Plus, to gain a full-time offer, you usually have to pass up to five case interviews. This ensures that you don’t just got lucky and have a method that is consistent and repeatable. Consultants have to sort out the thoughts of their clients and not get confused themselves. Interns usually would have to pass three interviews. In short, case interviews require a lot of on-the-fly thinking.

Hours, Culture, and Lifestyle


As a Junior Banker, you can expect to work between 60 to 80 hours a week on average in Investment Banking. If a live deal is heating up, it can get even more stressful. Weekend work is nothing out of the ordinary. If nobody forces you, you do some preparations on the weekend to be ahead of the game on Monday. If things get stressful, your entire deal team is in the office. You will spend a lot of time in the office in Investment Banking. You will take a lot of late-night taxis home.

Management Consulting is extremely stressful as well, but not as bad as Investment Banking. If we had to put out a number, it’s about 50 to 70 hours a week. The stress ramps up when you are at your client’s site Monday through Thursday. If you are not at your client’s, things are more relaxed. So, Monday through Thursday it is high intensity. Say from 9AM to 10PM or even later plus the red-eye flight on Monday. Thursdays are more relaxed because of travel and Fridays are also more relaxed because you are not on-site. Weekends are consistently off because no corporate works on weekends. Yes, Consulting does have a slight advantage. But it is still a very demanding job and requires a lot of traveling.


Investment Banking on a junior level does not require a lot of traveling. You just hang out in the office. Your VPs and Associates do the traveling. But they do day trips rather than staying with a client for days or even weeks. If you want to sleep in your own bed, pick Investment Banking over Management Consulting.

If you want to travel, pick Management Consulting. Consultants usually work closely with their clients and at their clients’ offices. Depending on the firm, you might be on a Monday through Thursday or even Monday through Friday schedule, where you work onsite with the client. Beware what you wish for. Yes, you do get to collect more airline miles than a banker, but you get to take a lot of red-eye flights, aka a 7AM departure on a Monday. You only get to see airplanes, airports and taxis – no sightseeing. That’s your best case. God forbid you have to take some regional train or rental car to get to your client’s office in the middle of nowhere.


Investment Bankers tend to be more salesy and more polished on a more senior level. Their job, after all, is to convince a potential investor to buy a company hundreds of millions of Euros. Investment Bankers also talk to a lot more parties than does a Management Consultant. An Investment Bank talks to a host of potential investors, strategic or financial, on a daily basis. A Consultant, on the other hand, only deals with one client and one project team at a time. Investment Bankers are not concerned with every single detail of a deal. However, one little detail might kill the deal. They are only interested in the main highlights. The main drivers and the main deal-breakers. Based on that type of work, Senior Bankers tend to be a lot more salesy and polished.

Management Consultants are more academic and to a degree nerdy. Their entire work is based on collecting data, revising their hypothesis and delivering the best possible recommendation. They are less concerned with selling something. They are more concerned with considering all data and all different dimensions of a problem without overlooking any material evidence that might change the entire hypothesis. This is very similar to how scientists work and how they might nerd out about smaller details. That’s why a lot of Senior Management Consultants have PhDs. It’s because they like to take a deep dive into a topic on a theoretical level as opposed to “selling” you something.

Entry-level salaries and bonuses

Both, Investment Banking and Management Consulting offer high-entry level salaries. Both career paths are high paying, high stress and high intensity. However, the payment structure is a little bit different. Investment Bankers only get paid if the transaction is completed. In other words, based on a success event. Management Consultants get paid by the daily rate. In other words, time vs. money exchange. This is reflected in the respective compensation packages.

Investment Banking salaries include a base salary and a bonus. The bonus is paid once a year, for example in March. So, you have to work for one year to get your first bonus. The bonus is discretionary meaning you have to legal claim on it. It is a mere gesture of kindness from the bank. It is the big carrot for an entire year’s worth of hard work and usually accounts for 20% to 60% of your base salary. Total compensation including bonus of a first-year M&A Investment Banking Analysts totals at around EUR 70k to 90k for continental Europe depending on how well your team did. If a firm offers you more base salary say at the EUR 70k range, you will get a cut on the bonus range. If a firm offers a lower base salary, say EUR 60k, they may want to sway you with a potentially higher bonus of up to 40% to 50% of that base salary. It does not matter if you only have a bachelor’s degree or a master’s degree. Investment Bankers don’t care about degrees. Just get good grades, get your interview game up and get the job done.

On the other hand, Management Consulting salaries are more driven by a large base salary. For tier 1 firms in continental Europe, you will top out at a base salary of EUR 70k per year with a rather symbolic bonus of around 10% of your base salary. For lower-tier firms, you will go lower in terms of base salary down to EUR 60k or even 50k. The bonus stays roughly the same at around 10% to 20% of your base salary. This is the entry-level salary for a graduate with a master’s degree. If you only have a bachelor’s degree you can take a little bit off. Consultants place a higher emphasis on degrees and grades.

These figures should only be used to give you a rough indication and a high-level idea of how the compensation model works. We do not advise you to pick a job based on salary alone. Pick the job, where you will most likely be good at. The message is that both careers pay extremely well for a graduate with a master’s degree and zero full-time work experience.

Career progression and promotions

While both career paths have significant differences once you become more senior, there are a lot of similarities in the beginning. In both, Investment Banking and Management Consulting, you get hired for your analytical abilities. On a junior level, you get hired to process a lot of data and to make pretty slides pretty fast without a single typo or formatting error. So, at the beginning of your career, you get promoted based on your analytical capabilities. This will carry you throughout your first two levels. In Investment Banking it’s the Analyst and Associate level. At McKinsey, it’s the Associate and Senior Associate level.

However, once you are trying to make VP or Engagement Manager, you are going to work a lot more client-facing. Your superior analytical abilities will not get you any further. You are now expected to execute the deals or projects given to you. You are expected to make your client happy. In other words, the more senior you get, the more client relationship management and sales are involved. The skillset that got you the job and the first promotions will not help you to advance further. You have to learn sales and client relationship management at some point.

If you want to make Partner, you have to slowly build your own book and bring in new clients. Making pretty slides pretty fast is only going to get you so far in both careers. At some point, you have to learn how to sell yourself as a trustworthy adviser. That’s where both career progressions are very identical. You get hired for your analytical capabilities and error-free work. But to progress beyond junior level, you have to learn client relationship management, sales and eventually how to bring in new clients.

Exit Opportunities

In Investment Banking the two most common exit options we are seeing are Private Equity and Corporate Development. You just switch from the sell-side to the buy-side. Instead of selling a company and moving on, you are now trying to make a good long-term investment financially or strategically by picking the right companies to invest in. So, the job functions are very similar to what you have been doing in Investment Banking. They both tie in with transaction-based business, deal-making as well as valuation and finance. Keep in mind that your exit options depend on your deal experience. If you have been working on a lot of industrial deals, don’t expect to jump into Venture Capital. Also, don’t ignore that a lot of people just stay in Investment Banking. They would switch from larger bulge brackets to regional boutiques or they just stay at a regional boutique.

As opposed to Investment Banking exits, Management Consulting exits are a lot more operative and a lot less finance. While some Consultants do make it to Private Equity, they are not your typical Consultant. They usually worked in the Private Equity practice doing commercial due diligence. Your typical Consultant is most likely going to exit into a corporate, where he was liked on his projects. These corporate roles usually are some type of head of “business unit” or some type of management role similar to your former line of work. Consultants that gain a lot of exposure to e-commerce usually exit into Tech with roles, such as Product Manager or even early-stage startup CEOs. Similar to Investment Banking, you are your project experience. Your exit options will be largely a function of your project types. If you have been working on a lot of automotive projects don’t expect to become the next CEO of an early-stage SaaS company. And don’t forget that a lot of people just stay in Consulting because they like project-based work – always something new.

Investment Banking vs. Management Consulting: Which one’s right for you?

At the end of the day, you have to decide which choice is best for you. We can only advise you to pick the one where you will more likely be good at and where the work is more bearable for the long run. If you do it full-time, you will spend at least two years collecting enough experience to make another move. Both jobs offer high starting salaries. Both jobs are high-stress and high-intensity. So, you might as well choose the one where you are most likely going to be good at. If you are good at your job, you will enjoy your job – not the other way around.

M&A Investment Banking is about deal-making, finance and valuation. You are trying to buy or sell a private company on behalf of the shareholders. You will be bombarded with a lot of data. You will need to sort and synthesize that data into a clear picture and recommend how to move forward with the transaction. Investment Bankers don’t have to travel as much as Consultants do. Investment Bankers get paid only when a transaction is successful.

Management Consulting is about solving a specific problem of a specific company. It is a lot more operative and a lot less finance compared to Investment Banking. In Consulting you start with little to no data and have to strategically collect data to form your hypothesis and recommendation. It’s more academic and less sales-oriented. You are academically solving a management problem and giving the best possible recommendation. You have to travel a lot more because you are working with your client on-site. Management Consultants get paid by the daily rate.

So, now what? A good proxy of whether you enjoy the work and will be good at it is the recruiting process itself. If you hate valuation and finance, you will probably hate Investment Banking. If you hate synthesizing a lot of data into a clear picture, you will hate Investment Banking. On the other hand, if you hate case interviews, you will most likely hate Management Consulting. If you hate to ask questions and think about all the different dimensions of a problem academically, then you will probably hate being a Management Consultant.

Again, pick the one where you will most likely be good at. Investment Banking interviews involve a set amount of knowledge that you need to get comfortable with reproducing in a high-stakes situation. Case interviews, on the other hand, are about flawlessly executing a hypothesis-driven process of data gathering and synthesis over and over again. Pick the one that will most likely play into your strengths. If you are a finance guy and like to make deals, pick Investment Banking. If you like to academically debate about management problems, pick Management Consulting.

Additional resources

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