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Not an answer to your question, but I had a question for you as you are 3rd year at MF. Incoming analyst at a good IB group with good exits, does my non target and bad sat score background matter
Yes
What would you be willing to take? A lot of factors to balance. What would you think is fair for the service you want to provide that fund?
More than MF VP given the higher risk. Obviously expect less cash comp, hopefully more upside.
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don't know how the numbers would work for this to be worth it. I imagine it would be less cash than you are currently making and instant VP (so you get carry at least, should be at least $2M dollars-at-work but could see yourself negotiating as high as $4-5M) with fast track to principal within a year or two. This saves you a potential year for the VP promote and potentially 3-5 years for principal (likely will require a fund II that you are implicitly betting on)
Have tou seen this. Do you mind sharing your background?
I've seen this for people with 2 yr PE + MBA + worked with founder in past if its a spinout
Joined a fund of similar size (150M) a few years ago as a VP, base was 155k, bonus was 160k and carry of 3M based on a 2.0x MOIC.
Appreciate the resposne. few questions on this.
I know this is alot of questions. Thank you for your time.
Fund III currently, carry % stayed the same
The vesting schedule is 80% over 5 years with 20% deferred till exit, for tax implications read up on Section 83(b).
Above market carry but below market cash comp so they kind of 0 each other out, I have a few friends that did the same thing (taking below market cash comp for higher carry) but I wouldn't say its common
I guess you could say it's uncommon but not unique
I used my cash comp and what I was told to expect as carry from my old fund as a bargaining chip
I've seen this for people with 2 yr PE + MBA + worked with founder in past if its a spinout
How about without MBA
How typical is it for people to get carry packages of that scale at VP level?
For a first-time fund below 200M id say that's an 80-90 percentile carry package
Thanks for the very thorough response. When you coinvest into the funds, are you able to leverage your capital in the fund through the banks the fund has a relationship with (heard this can be possible at hedge funds). Also are you coinvesting on deal by deal or into the entire fund. Thanks again for your insights into all this.
Yes, 50% LTV, prime + 25, interest only, non-recourse, all the after tax distributions go towards paying down the line.
At my firm co investments are done at the fund level.
Glad I was able to help
Bump. Curious to know what the final package was.
I have been offered roles at firms like this and the cash comp has always been around $300k with 5-7% carry on initial fund with the expectation of hitting 10% on fund 2
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