Secondaries Comp / Culture in 2023
Does anyone have insight into what compensation, culture, and exit opps tend to look like for associates joining secondary shops. Focused on experiences at BX Strategic Partners, Alpinvest, and Lexington. Also what do exits look like, possible to go to direct PE after a stint at a secondaries shop?
Evercore PCA AN1 all-in comp is higher than M&A
Base: $120
Bonus: 80-100%
Signing Bonus: $25k
All-in was ~$250k for AN1
What year was this? Any associate comp numbers for EVR PCA?
They've hired AN1 as high as 175k base in the last year
Holy shit. 175k base? How tf did they negotiate things that high.
Bump
Going through the process of lateraling right now as an AS2 (ignore title). Initial offers I'm getting are 140-160k with 50%-80% bonus target.
WLB depends entirely on the firm but is certainly better than IB or direct PE.
Next to zero chance of moving to direct PE unless you're at a firm like Partners Group where you may be able to network and move internally.
Any insight into how that scales for a VP / principal? Have heard like ~400k range cash comp, which is tough relative to traditional PE. Curious about carry as well with smaller pool from lower fee structure.
At the bigger shops senior associate pay is around 400k VP probably 500-600 with director being above that.
I'm not sure TBH I've heard that there's not a huge bump in base salary but you start receiving carry and there's a significant increase in bonus
Have seen people moving to HIG or other MM shops so not entirely impossible (from top secondaries shops)
Can I pm you please?
What are the exit opps for associates coming out of secondaries programs. Is it really that tough to get into traditional PE or VC / Growth?
Secondaries is the exit opp, plenty of people never leave the industry. Otherwise, it's to asset management / allocator roles usually, and I've seen some smaller Corp dev roles too.
Also worth mentioning secondaries investors moving to secondaries intermediary roles. Pay may be better. I would imaging very hard to move back to the investment side.
Asking from a RE perspective as that’s all I know and nobody on the bloody RE forum appears to know much about secondaries. Curious about the space as well. Are there opportunities to capitalize upon distress here or is the space more so dominated by GP led transactions where you are recapping a portfolio whose business plan has been executed and thus are generating core or core plus returns? Do RE secondaries players also purchase stakes in debt funds ? It seems a bit different in the sense that in traditional acquisitions you deal with a buyer and negotiate a PSA. In this case, you are removed from the ground level markets and are instead negotiating between a fund manager and LP's in that fund? Do you think this is a good niche to go into and build a career in? It seems almost as if you are a capital allocator. Are the deals you work on in this space interesting ? If I'm purchasing a stake that is 50% invested and 50% capital has not yet been called, can I still lever the whole stake I am purchasing? Also, if a secondaries specific fund is raised, then is there not pressure to deploy capital just like any other closed end fund? Thoughts on giving this space a shot?
Is pay at top secondaries firms in-line with traditional PE?
Think it's similar at junior levels given cash comp is based on management fees. Fees are lower for secondaries teams but the fee gap is offset by secondaries being more scalable.
Would imagine the gap in pay diverges significantly when carry is considered. Some structural advantages that direct PE enjoys is higher expected MOICs for funds (typically 2.5/3x gross vs 1.5-2.0x) and higher carried interest fees (20% vs 10-12.5%).
If you're successful you'll be highly paid regardless. Illustrative best case scenario may be something like $20 million net worth in secondaries by 50 vs 75 million in direct PE due to carry gap.
Trade off for less pay is much better work life balance. I doubt partners are working more than 50 hours a week. If they are it would be because they are including travel in that number.
Agreeing to the scalability of Secondaries, which also accounts for the carry. So for the larger funds such as those mentioned by OP you can get to figures comparable to direct PE as well.
taking from the above Lexington e.g. they are raising $15bn now. Doing a rough calc with assuming a 1.7x on that size and 12.5% (what I think they have, in any case industry is 10-15%) that's roughly $1.3bn carried for a team size of c.50 people as per their homepage. Assuming Man Co takes 25% that's around $20m per team member if I'm not missing anything
What’s carry allocation typically look like at a secondary fund? Have heard of associates at smaller funds getting allocation but I’d assume at bigger funds it’s not till like VP or Principal / Director?
Don’t think my comment posted so I’ll try again. When does allocation typically kick in for secondary funds? I’ve heard of associates getting allocation at smaller funds but at larger more established funds is it VP or principal / director level?
Evercore PCA is the highest revenue generating group at the entire firm
How'd you know this?
any insight on comp at pensions/SWFs like CPPIB/GIC?
Bump
Per a recent HH discussion, 600-800k cash comp at sr VP/director level. Carry is opaque and depends on the firm. Holding fund size constant, GP led funds will payout more carry than diversified or LP only funds (former having a higher target MOIC). I have no basis for this, but would think the comp tracks private credit moreso than direct PE?
what type of secondaries firm is this? is this someone with 8-10 years experience?
No specific firm; datapoints from a HH for director level comp.
If we're talking about the top firms, then MF PC is higher than that at that level. Senior VP/Director is ~$800k-$1MM at the best shops (in line with MFPE), so it looks like secondaires comp is at a slight discount
Interesting. I do wonder what the carry differential ends up being. In any case no one is exactly starving at these comp levels
interesting - my sense is total comp is higher in secondaries though due to carry being different in PC
If by senior VP you mean someone 3 years out of business school you'll be hard pressed to find many funds paying a million dollar cash
For people in secondaries who had originally been in direct investing, would be curious to know how the experience transitioning has been. Imagine less intense, but how exactly? Is IC less rigorous? Deal processes less structured / bank-driven? Timelines more drawn out?
It’s less intense because you are monitoring rather than actively managing investments post close. I don’t find the upfront DD work to be any less stressful than when I was on the directs side. This is largely because you are expected to do a larger quantum of deals each year than on directs. So while each individual progress is less rigorous, they add up
do u just do infra secondaries? based on your profile history...
What is the reputation for Alpinvest, Coller, Harbourvest and LGT?
Alpinvest - overly European in investment allocation, very risk averse, doesn't like to invest in tech
HarbourVest - huge shop, decently regarded
LGT - bunch of pricks work there
Coller - super crummy returns. Embarassing.
Thanks! How's Alpinvest's and LGT's return and comp though? I suppose Harbourvest is good and Coller is bad.
Any thoughts on MM firms like Hollyport or Glendower?
Would secondaries offer more promotion opportunities than traditional PE since it is growing faster and a less competitive space?
100%
it is basic unit economic. Lots of revenue in the space (evercore pca is highest earning group in the whole firm) = not that concentrated = higher revenue per head
For a hybrid fund that does primary, secondary and co-investment, are investment team paid the same cash and carry regardless of which strategy one focuses on?
Depends how the firm is set up. Some silo by deal type (would assume primary team is paid less), others like Pantheon mix together.
I see. Thanks! Is there any general rule of thumb on secondaries vs co-investment on comps?
Typically no, primaries team will be paid way less.
Co-invest and secondaries comp is about the same, bonuses tend to be higher for co-invest
Any insight on Apollo S3? It is their new secondaries arm
I saw in a presentation by Evercore PCA yesterday that they are investing out of a $4B 2022 fund, mostly committed at this point. Supposed to be fundraising later this year into next.
What is the longer term outlook for secondaries as a strategy? Is the recent growth just due to short term liquidity/rebalancing need or are there some structural growth factors that drive the growth of secondaries to outpace PE in general?
Secondaries is fast growing industry with immense upside in the long-term as LPs and GPs become more sophisticated with different liquidity solutions. LPs are now actively managing their portfolios that are now over-allocated to PE as private valuations haven't followed public markets and with sponsor M&A and IPO exits way down in a challenging macro environment, many GPs are looking to double down on their rock star assets with secondary capital. The main problem hindering growth is honestly lack of capital on the buyside. I currently work at PJT Park Hill and the amount of deal and pipeline volume is insane. The group continues to grow and junior talent is paid top dollar.
Would echo the lack of capital on the GP-led side. There aren't enough buyers of size to fill out the books of the larger single-assets.
What should a first year analyst in Secondaries expect to make?
Base + Bonus ?
Bump, what do typical bonuses look like?
At a big secondaries shop, it is on line with IB and PE first first year 110 base
At a big secondaries shop Base is on par with PE and IB coming out of school
Good to see someone in RE secondaries here! Have a few questions about the space if you don’t mind as I’m considering an opportunity in this space.
Are there opportunities to capitalize upon distress here or is the space more so dominated by GP led transactions where you are recapping a portfolio whose business plan has been executed and thus are generating core or core plus returns?
Do RE secondaries players also purchase stakes in debt funds ?
It seems a bit different in the sense that in traditional acquisitions you deal with a buyer and negotiate a PSA. In this case, you are removed from the ground level markets and are instead negotiating between a fund manager and LP's in that fund? Do you think this is a good niche to go into and build a career in?
Are the deals you work on in this space interesting ?
If I'm purchasing a stake that is 50% invested and 50% capital has not yet been called, can I still lever the whole stake I am purchasing?
Thoughts on giving this space a shot? Opportunities you see in the space? It seems as if Ares / Landmark shit the bed on fundraising. How does that bode for future of RE secondaries ?
did you ever figure out the answers to these
Anyone has any info on GS AIMS?
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