Placement agent comp? Is this figure accurate?
I was headhunted for a small boutique private equity placement agent. They have no information online other than their website and they don't appear in any of the preqin leader boards/rankings. Their website is pretty good and lists their previous fundraises which show deal sizes of over $100m on average so working with lower mid market pe funds.
The headhunter quoted me pay that just sounds too high and I'm unsure if this is just a lure / tactic to get candidates interested in a small boutique that can't rely on branding / big deals, only to find out a year after joining bonuses are nothing like the headhunter said.
The headhunter said base for the analyst / associate level will match IBD but I could expect bonuses of 'over' 100% at the analyst level and 'over' 200% bonus at the associate level. This just sounds too high for an analyst / associate in fund placement? especially at a small boutique with average deal sizes just over $100m?
What's everyone's thoughts? I can't exactly question the headhunter / say this, as I risk coming across as rude, losing this mandate and potentially lose this headhunter as a contact. I can't even imagine the larger top players like Park Hill paying this? I mean I'm pretty sure even the top paying EBs don't pay their IBD associates 'over 200%' bonuses?
I have no first hand experience but have done a bit of research on this. Long story short, those figures could add up. A small but highly successful firm operating in the goldilocks zone where they are charging 1%-2% on initial raise plus retainer plus a tail commission on presumably larger subsequent investments into future funds can pay IB basic and have a higher range of bonus for outstanding performance. How good you would have to be to make bonus of around 200% of basic? Probably good enough that you are being incentivised to not walk out the door and set up your own shop. Is this firm you have interviewed with operating in that space or just BSing you to lure you in, I have no idea. Are you good enough to hit your targets raising money for funds that have probably been passed over by the placement agents at the banks, again no idea. But this is a very tough job, I researched it as career option but was ultimately disheartened by what I saw on LinkedIn, a lot of people do this for a while then leave maybe then they are bouncing between IR roles at PE firms after that. Some people make it and do very well in this field but I am looking for an easier way to make living. But again all this is supposition based on internet research.
Interesting thoughts thanks!
Using a 2% fee, over the past 3 years they’ve averaged $400m annually (uncertain whether they are sole or joint placement agents) but assuming they’re sole and raised approx 90% of these funds that’s $7.2m fees (2% x $360m) split across 10-15 people (including non-deal staff) in the firm doesn’t seem high enough to afford paying their associates above a 200% bonus considering the majority would go to the partners, and compared in IBD where a single transaction could earn a $7m fee but maybe it does work considering they’ll have significantly lower overheads than an IB.
Agreed a lot of people from placement agents end up in IR roles, the idea of IR doesn’t excite me either but I do think fund placement could be quite interesting (especially if they pay this well and offer a better work life balance than IBD haha)
you’re gonna get like 40% of the fees paid to your shop for money you bring in. base similar to IB is probably accurate. bonuses probably not. that’s basically true if you do well, but it’s commission not bonus
I don't see how commission at a placement agent is any different than a bonus in IB -- they're both commission, but for different things.
Sounds like the recruiter is trying to trick and lure you in so they can close the mandate and get their commission.
Ignoring senior level comp as that’s just too variable, at the top agents like Park Hill you could expect 100% bonuses at the associate level but 200% or higher sounds unrealistic at the junior / associate level for fund placement.
Unless this boutique agent is killing it with above $20 million in annual fees for a team of 10 people I wouldn’t expect a 200% bonus at the junior / associate level.
They can be very lucrative, but these are tough gigs. Have to be a vey talented salesperson to survive in these roles. Some PE shops also provide carry to their IR team.
What are common paths to doing this?
The larger placement agents have graduate schemes where you can join straight from university whereas others agents tend to hire laterally candidates with backgrounds in IR/Sales/IBD.
Could someone who’s naturally more of a numbers / maths person and doesn’t have the typical salesman personality do well in this role?
Also a common exit point for when buy-side partners "retire".
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