Analyst Comp on Carve

Based on the most helpful WSO content, when negotiating compensation with your PM, it's essential to consider the following factors:

1. Carve-Out and Performance Fee Structure:

   • If you're working with a $200mm GMV, you need to understand the carry pool and how it's distributed. For example, if the expected return is 15%, that generates $30mm. Assuming a 15% performance fee, the carry pool would be $4.5mm.
   • The distribution of this pool depends on the number of investment professionals and their seniority. Typically, the PM and senior analysts take a larger share, leaving a smaller portion for junior analysts.

2. Your Contribution and Role:

   • If you're a junior analyst, your bargaining power is limited unless you’ve made significant contributions to the fund's performance. Demonstrating your value through money-making ideas or strong execution can help justify a higher carve-out.

3. Market Benchmarks:

   • For a fund of this size, junior analysts might not expect to hit $250k-$400k in a "normal" return year unless they have a contractual guarantee or a defined percentage of the carry pool.
   • Top-performing analysts with over five years of experience at similar funds can earn $1mm+ in total comp, but this is typically tied to their ability to generate P&L.

4. Negotiation Tips:

   • Map out the carry pool and understand the fund's cost structure. This will give you a realistic view of what’s available for bonuses.
   • Be prepared to discuss your contributions and how they align with the fund's performance.
   • If you’re considering other opportunities with better comp prospects, you can leverage that to push for a higher share.

Ultimately, your target should align with your contributions, the fund's performance, and the overall carve-out structure.

Sources: Q&A: HF Analyst @ $5bn+ Fund - Breaking In and Transition to Risk-Taking Role, REIT Compensation at the Analyst level?, What is a Reasonable HF Analyst Bonus in a Bad Year?, Large hedge fund analyst compensation