ABF Long Run Comp vs DL / Other Groups

When comparing ABF (Asset-Based Finance) compensation progression to other Private Credit (PC) teams or private markets, here’s what you need to know based on the most helpful WSO content:

1. Base Compensation Alignment: It’s common for ABF teams at MFs (Mega Funds) to have base compensation aligned with broader PC divisions. This means you can expect similar starting salaries and bonus structures as other PC teams, especially at the associate and VP levels.

2. Growth in ABF: The growth in ABF, driven by the increasing demand for structured credit and niche financing solutions, has made it a lucrative field. This growth often translates into competitive compensation, particularly as you progress to senior roles where deal origination and structuring expertise are highly valued.

3. Comp Progression:

   • Associate Level: Typically, ABF associates at MFs can expect total compensation in the range of $200K–$300K, similar to other PC teams.
   • VP/Principal Level: Total comp for VPs in private credit, including ABF, generally ranges from $400K–$1M, depending on the fund and performance.
   • MD/Partner Level: At the senior-most levels, total comp can reach $1M–$2M+, with a significant portion tied to carry or deferred compensation.

4. Comparison to Other PC Teams:

   • ABF teams often have a broader product scope, which can lead to more diverse deal exposure compared to traditional direct lending (DL) teams. This diversity can make ABF roles more attractive for long-term career growth.
   • While DL teams may focus on straightforward cash flow lending, ABF involves more complex structuring, which can command a premium in terms of compensation at senior levels.

5. Private Markets Comparison:

   • ABF comp progression is competitive with other private markets roles, such as private equity or real estate credit. However, carry structures in ABF may differ, with some funds offering less lucrative carry compared to traditional PE roles.

In summary, ABF compensation progression is robust and competitive, particularly given the field’s growth and complexity. It stacks up well against other PC teams and private markets, with strong potential for long-term earnings, especially at senior levels. If you’re passionate about structured credit and niche financing, this could be a great opportunity!

Sources: Unpredictability of PE is Killing Me, Total compensation at Financial Technology Partners?, PERE comp table, Banking -> Startup PM on who SHOULD join IB, Toronto - Boutique Investment Banking Compensation