I mean, it's a small PE shop and you took the offer straight out of school. Yea, you're grossly underpaid, but then what were you expecting? The people I've met who went straight to small PE shops (not anything elite) hadn't made the cut for IB as undergrads. If you think you're undervalued, stop complaining and lateral asap.

 
PE_Reaper:

I mean, it's a small PE shop and you took the offer straight out of school. Yea, you're grossly underpaid, but then what were you expecting?
The people I've met who went straight to small PE shops (not anything elite) hadn't made the cut for IB as undergrads. If you think you're undervalued, stop complaining and lateral asap.

Pretty much this.

There's usually a reason a PE shop hires out of undergrad -- they' can't afford an BB analyst. Lateral ASAP is what I would advise

 

Firm could be testing you with compensation these last couple years, I can see some small sized firms are unlikely to invest a lot into the growth of their juniors in fear of them leaving, so you may need to prove your willingness to stay and move up because your partners want to know you want to fill bigger shoes and they might already get a sense you want to leave.

 
Best Response

Do you not look at your portfolio company's monthly results, seriously? Since you're at a small shop you should be able to answer that question - "Are your portfolio companies performing well?" - for yourself. Pull your head out of the sand and figure out if:

  1. Your partners are bad investors (lateral)
  2. Your partners are skimping on you because they can (lateral)
  3. Your performance isn't actual on par as you've stated (exit to corp fin/dev. or try to lateral)

As someone also at a small PE shop I would take the 0 and 14k as a personal slight, and be looking to leave regardless. I also know what our portfolio companies returns are...

I wear smoking slippers to work
 

Thanks for the candid advice. Portfolio companies are performing well, no issues there. Partners are not bad investors, the issue is that carry is the only pot of honey available to pay incentive comp, and I'm a long way off from carry. Ex: KKR can afford to pay bonuses out of 2% mgnt fee, we can't.

 

OP I've been in your shoes and I'd 100% recommend lateraling to either a BB IBD group or another fund that will pay you decent.

I would bet my bonus that your bonus will not improve that much in year 3. It's time to move on. Partners at small firms with this compensation mentality won't increase your pay, they'll wait till you burn out and hire the next smart kid they find who will take the same comp you were tired of.

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

I would agree that depending on your base, your total comp does not seem out of line with lower mm firms in my region.

Try and stay positive by realizing you're getting more exposure to the M&A process than in any other role you could have (assuming you've gotten to close a few deals). Learn and develop as much as possible and you should be an attractive candidate for other positions if you choose to lateral.

 

Questions

What state/city? What industry do you all focus on? What are your workload/hours like? What deals did you work on? (Were they big, did they go well, did the company have good flow?)

I could be wrong but these things are important to take into account. You're also an analyst, I am surprised a "small PE shop" has an analyst program that's why I asked for clarity on location and industry.

 

You've given out too much information. Please delete specific numbers and details about your fund. If you're one of two analysts, it will not be hard to identify you.

I think it'll be hard to lateral into a decent private equity gig with your experience. I would try, but if that doesn't work consider trying to lateral into IBD.

 

I'd echo the above. 350mm AUM is decent enough that they should be able to pay you market or at the worst slightly below market rates. You've put in 2 years which is a good amount of time and you should have enough experience to pretty easily make the case that you could be an associate at a MM firm.

If I got those bonus' I would have a sit down and seriously ask why they're compensating you the way they are. If you're getting no bonus is that the same for the associates and VPs? Not enough money is bullshit if they're taking a management fee on 350mm. Maybe they can't pay you a 150k bonus but they should be able to do enough to keep you interested, especially if you're as good as they say you are.

 

I wasn't saying that you suck. I'm saying that market comp for first year analysts at megafunds (straight out of college with no IBD experience) is similar to first year IBD. Bonuses are pretty comparable at that level. These are funds that are much, much larger than your fund and have a good amount of income from management fees. How many funds has your firm closed? You say that the only pot of honey that they have available to pay incentive comp is from carry, but if your fund is relatively new or if the more recent funds haven't done terribly well, then you have you answer.

You haven't told us your base, so it's hard to make comparisons, but let's talk bonus numbers. Looking at the Hendrick's report cited above, they don't even have analyst comp numbers. They have associate / senior associate comp which is for some reason lumped together. For a fund your size, between 250 - 499m, the range of associate bonuses for last year is 25k to 125k. Expect toward the lower end for associates compared to senior associates, and expect even lower than that for analysts. Suddenly, your comp doesn't seem so out of market does it? Is 14k too low? Maybe, but if you asked me to guess the bonus of someone in your position working 65-80 hours a week for a firm that size I wouldn't guess more than 25k.

You made a risky play joining a small fund straight out of undergrad. It might pay off if you stick it out and end up getting carry in the fund, but until then I wouldn't expect much comp. If you're getting good experience and think you could keep rising the ranks, maybe you could stick it out. I would personally leave.

 

I was in a very similar situation. It really depends on the context. Here are the questions/considerations that served as the basis for my decision:

  1. Am I getting the experience / building the requisite skill-set to position myself for future success regardless of the outcome of this specific situation / role?
  2. Is the fund perorming?
  3. Have the partners communicated plans to grow AUM with the next fund? This is predicated on the answer to point #2 being positive. Also consider where the firm is in the fundraising cycle
  4. Is there a track to the next level for you?

When I was in your situation, I answered "Yes" to all of the above and stayed put. It's worked out well thus far. The PE industry requires much patience. This is not only true from an investing standpoint but a career standpoint as well.

 

Enim ut in omnis et. Quod rem nihil omnis fugiat enim optio. Hic autem non autem dolores minus.

Ab ut neque non dolores fugiat neque. Magni consectetur quibusdam quis consequatur beatae neque. Nam facilis ut est saepe quia ab. Nulla et voluptatem fugit qui sint molestiae voluptatum.

At veritatis cum accusamus. Rerum placeat voluptate qui dolore. Occaecati maiores eum consequatur voluptas. Illo et itaque doloribus voluptatum.

Reiciendis et earum qui quidem animi. Rerum alias sed iure odit ad distinctio quod et. Praesentium maxime sint aliquid quae. Perspiciatis iure eveniet architecto laboriosam nobis.

 

Mollitia ea blanditiis ipsam autem corrupti omnis eos consectetur. Dolorem tempore in ipsum nulla voluptas harum delectus.

Natus dolorem voluptate illum non. Mollitia id atque quia quis. Eos in non assumenda neque vitae laborum dolorem. Consequatur iure aspernatur eveniet quisquam aperiam quia.

Accusantium nihil esse dolor omnis at dignissimos repudiandae. Quibusdam tempore qui temporibus deleniti. Deleniti molestias magnam error et ut iusto ad.

Career Advancement Opportunities

March 2024 Private Equity

  • The Riverside Company 99.5%
  • Warburg Pincus 99.0%
  • Blackstone Group 98.4%
  • KKR (Kohlberg Kravis Roberts) 97.9%
  • Bain Capital 97.4%

Overall Employee Satisfaction

March 2024 Private Equity

  • The Riverside Company 99.5%
  • Blackstone Group 98.9%
  • KKR (Kohlberg Kravis Roberts) 98.4%
  • Ardian 97.9%
  • Bain Capital 97.4%

Professional Growth Opportunities

March 2024 Private Equity

  • The Riverside Company 99.5%
  • Bain Capital 99.0%
  • Blackstone Group 98.4%
  • Warburg Pincus 97.9%
  • Starwood Capital Group 97.4%

Total Avg Compensation

March 2024 Private Equity

  • Principal (9) $653
  • Director/MD (21) $586
  • Vice President (92) $362
  • 3rd+ Year Associate (89) $280
  • 2nd Year Associate (204) $268
  • 1st Year Associate (386) $229
  • 3rd+ Year Analyst (28) $157
  • 2nd Year Analyst (83) $134
  • 1st Year Analyst (246) $122
  • Intern/Summer Associate (32) $82
  • Intern/Summer Analyst (313) $59
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
BankonBanking's picture
BankonBanking
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
Secyh62's picture
Secyh62
99.0
5
kanon's picture
kanon
98.9
6
DrApeman's picture
DrApeman
98.9
7
dosk17's picture
dosk17
98.9
8
GameTheory's picture
GameTheory
98.9
9
CompBanker's picture
CompBanker
98.9
10
Jamoldo's picture
Jamoldo
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”