Megafund vs MM 1st Year

Hi all,

Just wondering if anyone had all-in comp numbers for first year associates at megafunds and MM funds for 2015. I've seen a few older threads on the topic, but was just curious how the numbers currently stand.

I'll start:
Larger MM
140k base up to 100% bonus

 

2015 associate at a ~1.5B MM LBO fund (not AUM).

$120k base $120k bonus Also, significant co-invest rights in all the deals closed while there

"If you want to succeed in this life, you need to understand that duty comes before rights and that responsibility precedes opportunity."
 
satellite:

The range I've seen is 250-300 all-in. Bonus 100% of base. Hours per week varies a lot depending on deal flow, some days are chill, some are like banking again. When I was looking I remember hearing about some megafunds paying 400-500 all-in, but don't know if that was pre-crisis or just bullshit

Mostly bullshit in today's environment (can't speak to pre-2008), but still possible at some places - as mentioned Apollo is known to pay a ridiculous amount so the $400k range is certainly possible there. (Also known for having banking hours or worse).

And yes, pay structure is certainly more variable in PE than what you see in banking. That being said, the average numbers I posted are what I have seen in the funds my friends are I are going to and the funds I know people at.

 

Megafund average is ~140k base and ability to make the same in bonus (~280k all in if you are good and it's a good year)

Top MM (e.g. Golden Gate, GTCR), will be neck and neck with this (may pay $135k instead).

MM will drop down to ~120k, and some of the smaller shops will pay ~110K. Usually these types of firms have some ability to coinvest to make up for that though.

 

Roughly accurate but it's highly variable. Certain funds elect to pay lower base salaries but disproportionately higher bonuses. Some vice versa. Offhand can think of one MF that pays $160k base plus $100 bonus, and another that pays $120k base with $150 bonus.

 
ledger123:

and pre-crisis, some of the megafunds used to have a "million in two" clause for their associates, meaning $1M in all-in comp their 1st two years combined. pretty ridiculous.

I can also confirm this. H&F had some ungodly numbers and was at the front of the pack. Apollo as well, as others have mentioned. Although Hellman has a massive advantage in culture.
I am permanently behind on PMs, it's not personal.
 
rampagejackson:

Seems like bb ib associate is consistent with mm PE pay and elite boutique ib associate pay is consistent with MF pe these days..

If you factor in signing bonuses/etc you aren't "ahead" on PE comp until you get to post-MBA. Especially considering Associate pay at banks is $300k for 1st yr associates + 50k sign on.
 

One of the biggest benefits of being in PE is that you do not have clients. which means you have a good sense of timing on your deals. No more fears of a Friday staffing at 5pm that's going to suddently blow up your entire weekend. I've been in PE for 5 years and that's never happened to me once. You can more effectively manage your time, see the pain points and actually PLAN and live your life.

Sorry, but I'll take over uncertainty any day. Of course, PE professionals work a lot. But at least they have some semblance of control of their lives. No point in arguing - if you're one of those that are trying to argue that banking > PE, you're in the minority. The number of people attempting to leave banking and break into PE prove it.

 

The issue is that as a PE associate your "client" is not the CEO of XYZ company, but rather it is your VP and your principal. If your VP or principal calls you into the office at 7pm on Friday asking you to build an lbo model or put together an analysis by Sunday morning (which has absolutely happened to me and other people before in PE numerous times), you are going to do that. To the VP/principal, their client is the MD who is generating the analysis/questions/diligence points that the deal team will need to look into. Ultimately, doesn't matter if an external is generating deadlines, if the firm is hierarchical and people want to impress (like it is in PE), false deadlines become just as urgent as real ones. It doesn't matter that the bid is in a week, if my principal wants to see my lbo model today you betcha that he/she is going to ream me out if it is not done, whether or not I had other projects until 3am the next morning.

Maybe my sample set had bad experiences, but wanted to give my two cents

 

Still different - in PE, I've had a lifestyle that's 100x better. As an associate, I got my work done and let my superiors know if I have plans coming up (wedding, weekend trip, etc.), so that they have full transparency. Sure, things come up out of nowhere, but I have NEVER had a weekend full of plans blown up like I constantly did in banking.

I'm a VP now, and of course I'll email associates with last minute requests and tasks, but for the most part, I try not to do that and I feel like I do a decent job of anticipating next steps to avoid burning weekends. That's not always possible in banking.

 
Best Response

Perhaps you've had a different experience, but from my own, I can tell you that the hours are much better in MM PE in two ways:

1) The hours are generally less intense. I've had 80+ hours here and there but that's not the norm. And it's much easier to plan. If I'm going to work all weekend, I usually have visibility of that ahead of time and am able to plan accordingly. This doesn't happen often, but when it does, I'm glad it's not happening at 5pm on Friday as I'm getting ready to peace out. I remember as analyst in IBD, every Friday at 5pm I was on egg shells. The best one was 5pm on the day before Thanksgiving break I was thrown onto a project that had me working all Thxgiving weekend long. That just doesn't happen in PE. Though I have to work on holidays sometimes, I do that remotely with my laptop and on my own time. Also, the nature of PE firms is generally flatter and less bureaucratic. That means less face time (at my firm at least) and more flexibility with holidays. Unless we're really busy on a deal, I can tell my boss "hey I'm off for the next couple of days" and he doesn't care as long as I can work remotely if needed. That flexibility is so fucking huge after going through the life controlling gauntlet that is IBD.

2) The quality, not just the quantity, in my view at least, is significantly better. For me, it was difficult at times to stay motivated and positive during long hours in IBD when I was plowing through hours of relentless work and turning tedious comments from VPs just to make a client happy. Even worse, was knowing that the likelihood of my work resulting in a deal closing was low. That's just the nature of IBD. Most pitches don't come to fruition, and unless you're on a sellside deal, which I did many of, there's still a risk it doesn't close. In PE, everything I do usually has a purpose and meaning. In PE, I don't just credit myself for the deals that I do but for the ones that I avoid. So if I spend a lot of time diligencing and researching an opportunity, and I don't go through with it, it's not a big a bummer. Better to do no deal than a bad deal. That's even the case when I go knee deep in a process and end up with a losing bid, because I know I lost the bid to a price I wouldn't have been comfortable paying.

 

I would agree with this completely. There's a lot of group think driven self-justification. I don't find diligence work to be interesting at all. I know some do, but to suggest that there's only tedious bs work in banking is just false. Hours wise, I think that PE associates have better hours compared to MBAs who start banking as associates. However, if you stayed in banking the hours are definitely comparable. Direct promote associates are usually more efficient at their jobs, so it's really not that bad. My friends at megafunds probably work the same as me. After reading these forums, I thought associate life would be hell, but as I'm easing into the role, my hours have actually improved significantly. I think my target comp this year is slightly higher than MF comp.

If my peers move up to the point where they get carry in a MF and their fund does well, they'll probably do better than me comp wise. There are a lot of variables involved in that though (top MBA, recruited again for senior associate, fund doing well), and I'd prefer the steady higher yearly cash flow.

 

PE is pretty vast, so it's harder to discern a general pattern for base salaries. I think in general, base salaries are lower at the junior level in PE and comparable at the senior levels. carry is also highly variable, but keep in mind you probably won't receive any carry until you're a senior associate (post 2 year IB, 2 year PE, 2 year B school). Depends on how your fund performs, but obviously if you have carry in a fund that does well you will do much better than your banking peers. As for inflection point, I think prior to receiving meaningful carry (senior associate / principal) banking wins out on comp.

 

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