Entrepreneurship vs. Megafund PE MD
Recently (and surprisingly) met a family friend is a senior partner MD at a top megafund (Blx, KKR, Carlyle), and that led me to wonder...
Does anyone have any clue about how much these people are paid? Just curious cause this lady was extremely down to earth, drove around in an Acura MDX with her two daughters. Awesome family - but far from the BSD conception that I usually associated with MM MD's.
How do these people compare with successful entrepreneurs. Let's say an entrepreneur through the IPO of his company has a net worth of $100 million USD. Can an MD at a megafund build this amount of wealth in a reasonable time-span? I've always thought MD's at BB's, megafunds make $2-3mil max... but maybe I'm wrong?
Marry one of her daughters.
or just marry her...and get that acura. yea baby.
2-3 mil max? No man, that's more run-of-the-mill for MDs, I think. I'm talking senior MD/partner though, maybe that's the case for a fresh MD.
How much do MDs at BBs and megafunds make?
the thing your not allowed to forget is. If you build a company and sell it for 50mm,your rich, but you dont have power or connections on the same scale that a KKR MD has. quantifying that is difficult.
Like would you rather own a firm that makes you 5million a year or be F100 CEO who gets 2.5 million a year?
I'm not so sure that's true. I suspect that people who get $50M from selling a company get mad respect and actually make a lot of great connections. (Note, I said suspect because I don't have any experience. I'm hoping someone can chime in with more anecdotal evidence for or against my claim).
I thought most businessmen (CEOs, bankers, fund managers, entrepreneurs, whatever) were mainly in the game for passion and to make money. That's what I'm aiming for. So honestly, I don't really care that much about connections just for connections sake. I'd much rather own some tiny firm that nobody knows about, making $5M a year, than earn half as much as a F100 CEO (assuming, of course, that the day-to-day enjoyment for both jobs is equal).
Not to be rude, but why do so many on WSO seem so concerned with prestige and connections? Is that what you guys are really aspiring to in life? Is that really why you're working so hard to pursue finance?
Running your own show is nice too obviously because you don't have to answer to anybody, and don't get bitch slapped about by the board or investors.
I'd rather build and sell a company for 50mm. In most places, MD money is great, but you have to stay in the game and keep working to become liquid. With 50mm, you're free to do whatever you want and still enjoy a great standard of living. You could work on some other project or you could pursue your hobbies.
Plus selling a 50mm company will definitely give you "prestige". It's impressive as hell.
You guys are forgetting that the founder usually doesn't make close to what he sells the company for. Most founders in our portfolio companies own
[quote=CharmWithSubstance]You guys are forgetting that the founder usually doesn't make close to what he sells the company for. Most founders in our portfolio companies own
Id prefer running my own shop or own fund over answering to others as well, just saying there are alot of intangible perks to the KKR md relative to the entrepreneur.
Think about this, would you rather be a trader making 10mm a year or an md making 7mm?
The md makes less but when hes done with a deal he created a new conglomerate for example. The trader doesn't really moves markets, its more of a pure money generation activity. Id still take the trader but hey.
I see what you're saying. (I'd prefer the trading job, but that's for purely interest/passion reasons.)
I don't know specifics of pay for megafunds MD, but I think you have to keep in mind a significant portion of their comp is in the form of carried interest and fund performance.
If you assume average BB MDs make $2-$4M all-in comp, then I'd expect MDs/Partners at a megafund to make say $1M-$2M cash and the rest in the form of carried interest, which could be worth multiples down the road. If you have some carry in a $3B fund that turns out to be 3x, then you're going to get a RIDICULOUS check when the fund liquidates (potentially $30M+), which would equate to having received an extra $4M in annual comp over the course of the fund's life. This could also be worth zero if you end up like JC Flowers or some other funds that have returned less than 1.0x.
My only direct knowledge is based on a conversation with a megafund who MD who made the comment to me that his entire net worth was basically dependent on fund performance because he had such significant fund committments and so much of his comp was based on carry or required to be plowed into the fund. He might have been exaggerating and I may have misunderstood, but that's at least some primary source data for you.
Good to know. Thanks BananaStand. It seems Felix Dennis has a point when he says, "Ownership is not the main thing. It's the only thing."
Temporibus non numquam laboriosam ut. Repellat qui iure asperiores sed omnis vero suscipit sit. Laborum nostrum amet fugit earum accusantium tenetur. Ipsum non placeat corrupti deleniti voluptate.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...