How many points in GP for partner or senior analyst?
I was wondering if anyone had any input on how many points should be allocated to a senior analyst or partner at a HF?
My thinking, using a hypothetical 10 IP fund . Net PnL is money after expenses and back office comp.
Founder: 80% of net firm PnL
3 Partners: 5% of net firm PnL
6 Junior analysts get paid from remaining 5% (so maybe their comp equals about 1% each but is more a fixed cost).
Anyone have other thoughts? Should partners be higher than 5% in this scenario? Is 5% too high? Do the 6 Juniors deserve more like 10% of the pie to split?
I was speaking with a friend recently who said a founder was considering offering him much better terms than this (founder was only going to keep 60-65%) and my thinking was it was almost exceedingly generous.
It's normal for founders to get 80% of PNL? Fuck, I need to start a fund
Playing around with some assumptions, this feels about right.
Lets say a $1B fund in a 20% year. $200M of P&L. Nobody gets 20% anymore more like 12-15% on a blended basis and if your fund is well established (most $1B funds are) founder probably has $200-300M of that $1B. Then you have back office bonuses, CFO, COO/Biz Dev. Bonus pool for Founder and remaining IPs is more like $20M. So with your breakdown partners get $1M each ($1.2M Total Comp), juniors $300-400k ($500 Total Comp) and Founder ~$15M or so. That checks out to me.
I know lots of senior analysts/partners at SM are used to getting $2-5M+ at D1/Melvin/Tiger but the truth is that party looks to have ended and the figures I listed above are probably realistic (and good money for anybody on an absolute basis). If you want to make millions going forward you probably need to be a PM at a MM or Partner at a Low Net SM with a formulaic payout. The mask as slipped off the going long tech stocks and being a “real investor with a long time horizon partnering with great businesses”
Lol at people making 2-5 million at tiger/melvin. There are senior analysts/pms at tiger/pershing/viking that make 9 figures constantly and are billionaires
Yes thats what $5M+ would be inclusive of and you may want to change “are” to “were” in that statement given the current state of those funds with maybe the exception of Pershing for now
I swear half of these posts must be from PMs looking to underpay their team
$1bn fund and 20% returns is $30m of incentive for team assuming 15% fee. Even if some of that is founder money that is $25mm. Then you add the 1.5% of AUM so another $15mm which is used to pay the GP partners and salaries, back office etc. so let’s say $25mm plus $5mm from the management fee after business expenses.
That’s $30mm for the investment team. Even if founder takes home $15-20mm there is $10-15mm left where the partners should see $2-3mm each and the junior analysts $500k.
The tiger and Melvin partners were making 8-9 figures. Those days are gone. But $2-5mm comp should absolutely not be crazy for a lean SM esp in a year that is up 20% (which is a very good year if you are low net)
There are a lot more SMs that are CF negative on management fees rather than having an extra $5M. But yeah, is there enough to pay Senior Analysts $2-3M? Yes of course. Does that happen? Yes. It comes down to generosity and your PMs willingness to pay/keep you. In an environment where the vast majority of funds are deep under a highwater mark and losing assets expecting $3M is a good recipe for disappointment.
I meant in a 20% year. Very different if under HWM in which case you get your base and some discretionary amount
OP here, agree with you that the above poster had some potentially arguable assumptions (but they still had good insight). Generally directionally long SMs get 17.5% perf fee and Melvin+other tight net funds get 25-30% performance fee. Melvin and many other funds disclose their fee structure in SEC filings. If a fund was getting 12-15% perf fee you are super desperate and also a $1B fund will not be $200-$300MM founder money, you can see in form ADV filings (also mandated by SEC) a good SM will be 5-15% employee capital. Founder money is prob more like $100MM.
Guess maybe my initial 80% could be too high, maybe 70-75% is more the right number? Seems like you are implying a 50-65% range which seems very generous.
Founder takes 72.5% (~$30MM), Partner 6.5% (~$2.80MM each), Junior Analysts each get ~1.3%, 8% total (~$570K each), if using the $1B hypothetical w/ ~$5MM to back office + other exp. That could make more sense.
This makes sense for $1B fund but what about a fund that is just triple the AUM size. Then numbers would seem rather high with partners getting $10MM and junior analysts making $2MM each...?
I'm amused everyone quibbling over the comp points but no one even questions the 20% return assumption.
OP here. Agree I made 10-12% gross assumption when doing math personally but my question was related to allocation of carry, not actual comp so went with other posters 20%.
Seen many of your other posts on website, curious how you would allocate to your analysts and senior analysts at your platform?
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