What were IB/PE salaries before 2008?
Were pre-2008 salaries indicative of the glamorous life that the media portrays of Wall Street? Like how much were analysts making out of college before the crisis? Were there more 25 year olds making millions?
Also curious. I have no Idea, but if I had to guess I would say there weren't IB/PE analyst and associates making millions because 2008 was very real estate focused.
Now the 80’s though before Excel and LOTUS, I heard that was crazy
Interesting topic. I'm here for the comments.
Aside from inflation it hasn't changed much at the analyst or associate level. If anything compensation has gone up at those levels. When you hear people refer to pre 2008 as the "good ole days" they're referring to senior banker comp and less bureaucracy. Dodd-Frank called for a lot more compliance and risk management at these bulge bracket banks. This has added to the IBD cost center causing senior banker comp to go down. I've heard stories of MDs taking home 50.0% - 60.0% of their fees back then. Now it's closer to 30.0% - 40.0% to help alleviate the added compliance and risk management costs. There was also less competition and pricing transparency back then so fees were likely higher too. Further, every new deal at BB probably goes through 3 or 4 different committees to be reviewed for headline risk, profitability and marketability whereas there was much less of that 10 - 15 years ago.
... at what shops are bankers getting 30-40% of their fees??
I should edit that my experience is limited to MM IBD. Pretty standard for MM bankers to get that. I was told HW gives 40% to MDs by my old MD. My old firm gave 30.0% to MDs. I'm sure BBs are little less but would be surprised if they're lower than 20.0%. At some point it would be more advantageous to go to a MM bank if you have the relationships.
I know that Greenhill has a policy for new MDs where they will get 40% of their fees. I think that it goes down over time, but an analyst that I spoke with mentioned this to me when he was talking about the burn out at the junior level. Makes sense I suppose....larger cuts at the senior level=more stress for juniors.
Not at all. A super star MD at HW is bringing in probably ~$20mm - $30mm in fees. So yeah he's taking home $6mm - $9mm at 40.0% of his fees assuming he hit his budget. That's a super star and just think of all the bankers that only do $5mm - $10mm in fees. If they're not taking home 30% they would be better off being an audit partner at a big 4 firm.
Not sure what you think these guys are doing in fees each year and how many deals they're closing. MDs are lucky if they close 3-5 deals a year and a lot of these deals in the middle market are below $100mm in EV. Further, there's a lot more pricing transparency out there and fees as % of EV are being squeezed. Very few MDs, BB included, are pulling in fees north of $20mm a year.
The massive fees you see at the BB are getting split amongst the coverage banker, M&A banker, LevFin banker, group head of each of those groups and likely the head of IB. I'd be shocked if the pot for all of those bankers isn't at least 20.0% of the fees. I'm sure some of it is deferred in the form of stock and tied into hitting their budget, but fairly certain 20% - 40$ of deal fee is market for an MD to take home.
Edit: I also think you're underestimating just how low the overhead and how profitable each head in IBD is - especially at a MM IBD. They can definitely afford to give the MDs 30% - 40%.
I have heard from sources I would consider to be reliable that post-MBA Associate all-in comp was about $3-400k, which adjusted for inflation is about $450-550k in today's dollars, so let's call that half a mil. Today's post-MBA Associate all-in comp at BBs is about $250-350k, so half what it used to be? Doesn't sound like too much of a stretch.
today is more like 300-375k at a top firm
I heard the same. My colleagues told me the comp of a VP was about one million (BB, average comp)
https://dealbreaker.com/2012/04/bonus-watch-2007-this-is-how-much-every…
I think this pretty much answers your question. Makes me feel old - when this first came out I remember it being a hot discussion topic for like a day or two.
Also I would like to know what that associate who made 600k did. Also the one who made 110k.
The same thing...with en extreme disparity in skill level (assuming meritocracy)
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