Sr. Analyst Comp for New Activist Fund
New $500mm event-driven / activist fund being spun out of a $2bn family office in the US. I would be employee number 2 after the CIO. Family office will provide all middle and back office functions for free until we take over $100mm outside money. They are also providing research access, technology, and an office at no cost for 2 years. Fees are 1.5% on outside money, 17.5% incentive.
I have 7 years buyside experience (1 year at an LO, 6 years at an occasional activist / event-driven fund) and have generated a ~15% IRR on positions where I have direct attribution.
Sitting down with the CIO and family office founder to discuss comp. My ask is below:
Base: $250k, Bonus: 100% - 200% with a 75% floor, 7.5% of the incentive
Too high? Too low? Any and all thoughts appreciated
Based on the most helpful WSO content, your proposed compensation package seems ambitious but not unreasonable given your experience and the structure of the fund. Here's a breakdown:
Base Salary: A $250k base is on the higher end for a senior analyst, but given your 7 years of buyside experience and the fact that you would be the second employee at the fund, it could be justified. For context, senior analysts at established funds often see bases in the $175k-$250k range.
Bonus: A 100%-200% bonus with a 75% floor is aggressive, especially for a new fund. While bonuses in the 100%-200% range are achievable at successful funds, the floor might be a sticking point, as it guarantees a significant payout regardless of fund performance. This could be a point of negotiation.
Incentive Cut (7.5%): This is a strong ask, but not out of line for someone with your track record and direct attribution to a 15% IRR. Smaller funds often offer higher upside in the form of carry or incentive participation to attract and retain top talent. However, the CIO and founder may push back on this percentage, especially given the fund's early stage and reliance on family office resources.
Suggestions:
Your ask is bold but not unreasonable for someone with your experience and the unique structure of the fund. Good luck with the negotiation!
Sources: base/bonus 1st year analyst at HF, Interview with Simple As...Hedge Fund Analyst, What is a Reasonable HF Analyst Bonus in a Bad Year?, What is reasonable comp for an Associate at a Fundless Sponsor doing deals at $50m-$500m+ EV?, https://www.wallstreetoasis.com/forum/real-estate/bonus-compensation-structure?customgpt=1
Bump
Looks good to me but the incentive is pretty high if you're guaranteeing a 75% cash bonus floor and you haven't proven really anything there yet - I think you probably are better off asking for low-mid single digits on incentive with planned scale to > 10% over time..... but 7.5% from the get-go seems really high.... rest makes sense...
I would say the reverse. If you are employee #2 you should aim to be a partner and nearly a co-founder. Which in my mind would imply 10-15% of incentive, and possibly a lower bonus.
You're taking career risk here and should aim to be richly rewarded if things go well. Having substantial equity in the business (i.e. a good chunk of the incentive fee) is the way.
This. Otherwise makes no sense to join a startup fund unless you have zero other options.
Curious as well. Bump.
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