Just an unrealistic thought experiment, but if i were to take the usual 2 years in IB -> PE route and stay there as a partner, would I be able to surpass 100M in NW by 50.
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Of course, everyone who goes into PE hits nine figures
If you don't know the difference between 'there' and 'their' the odds seem rather slim
just fixed it big bro
Good, You can now surpass 100m in NW by 50. To answer your question, the typical PE investment professional, even those making partners, will not hit 100m. Typically you'll start getting carry at your late 20's and assume a PE fund raises a new fund every ~4 years that means by the time you are 50 you will have carry in 4-6 funds (+ other co-invest if you happen to be at a MF).
Assuming you start off at $5m of carry at VP and it scales all the way to ~$25m at partner you can see how $100m NW is probably a long shot. I am hoping to have ~$20-30m to my name by the time I am 50 (currently a VP at MF)
If you start your own fund, maybe (big maybe)... otherwise it's highly unlikely.
Fwiw... you don't need $100m NW to feel rich.
It's exceptionally unlikely.
People who are currently partners at firms with good performance and favorable AUM expansion could. New professionals joining the industry are not going to be able to short of some outlier path like pursuing the independent sponsor model or launching their own firm.
You have to understand the entire industry is a pyramid. There are few seats at the top. The people who are currently in those seats fought a long time to attain them, and they intend to sit in them for the longest time possible. Said differently, the 45-year-old partner you meet probably plans to keep the seat for two decades.
This creates downstream effects. Everyone else has a longer time between promotions. 'Senior associate' becomes standard. Vice president can be a five-year band. Firms create a new band called 'Managing Director' between principal and partner (see: KKR, and Apollo very recently). Firms launch new vehicles dedicated to specific strategies because that's a clean way to create a new pie that the new mouths will be fed from.
You can have a very comfortable life, but it's not a nine-figure outcome.
Returns tend to correlate to risk. Joining an established platform and clawing your way vertically is stressful, demanding, and unpredictable. It is not very risky.
Someone who succeeds at that vertical climb to such a point that they have an attributable track record, viable Limited Partner relationships, and an adequate sourcing network may choose to pursue their own path in order to generate more wealth. More risk, more reward.
To attain a 100m net worth in PE on a typical low risk MF track, you have to be absolutely stellar at what you do and even then it is very unlikely at best. Most people attaining 9 figures in PE are people who raise their own funds and have exceptional experience in a niche area.
At a privately held PE UMM but not a crazy returning or scaling one. I can't disclose a lot without risking doxing my fund but I have gotten my hands on a ton of internal info that suggests that CONDITIONAL on staying there past 50 (which is the top 1% outcome) all the deal team partners are well north of that figure. Have carry quantum for all funds realized, cross checked the deal team partners for the last couple of years (incl. churned ones), know how much junior layers below make in carry (in bps) and so have reasonable estimate of what would be an average deal team partner carry allocation for those quantums, and this is materially higher than the $25m above. Of course at this level a ton of your carry is attributed deal by deal so if you suck you suck. This also triangulates with other info circulating within the firm (individual GP commits, etc.) and even a couple of public articles suggesting net worths in that zip code. Also I don't know why everyone thinks once you make it to partner you stay there forever, there is a ton of churn at that level still and you are always one bad deal away from getting sidelined
no
depends how aggressively you invest your own money. 100m definitely won't all come from carry
Yes, at some firms. Besides the obvious factors of performance and fundraising momentum, the factor not discussed enough here is the firm’s philosophy on allocating carry to the next generation of partners. There are some top UMM funds that have a culture where carry is reallocated in new funds based on contribution to the new fund vs. outright seniority with older partners phasing out over time. Unfortunately, many firms now go public or now sell a minority stake, which reduces the carry pool for the next generation.
How much carry do u have
I always find these questions strange. Do people not recognize that to get to those levels of wealth you need to build a business 90% of the time?
Not quite exact, you need to make money through capital (rather than selling your time) broadly speaking and being an investor definitely qualifies. Hence why these jobs are so attractive and competitive.
Agreed. Don't have hard data on this, but would wager there are 50 employees (i.e. non founder/CEO) in America worth >100M.
Correct. If you’re an employee, you’ll never technically be paid “your value” or “what you’re worth.” When you’re an employee, and especially a highly paid one generally you’re creating a profit or an owner is making a spread off your labor/output.
I find it very difficult to believe an employee (non CEO) could create that much value to someone in order to be worth $100M.
There are probably 50+ employees at each of BX/KKR/H&F/APO worth over $100mm
Nah this number isn’t correct at all. There are well over 10 employees at Wellington alone, for example, who are worth around or greater than 100MM. Obviously not liquid, but adding up properties/collections etc. I bet there are 50 employees in the US who make 100MM per YEAR, but definitely way more than that with net worth over 100MM.
You forgot how stock option is a magic wealth creator. Plenty of non-CEO/Founder have this kind of wealth from FAANG. Very common in PE too, Jon Gray is worth $7bn+ he's not CEO
This is so false lol
You need to start your own fund. Getting to 9 figures in any industry that is not super nascent almost always requires taking the risk of building your own thing (as it should be).
Chimp, if you put it all on red you might get there
The real question is why do you care about this. How is your life materially better at $100mm net worth relative to $20mm. I am in a seat that will probably get me to $10mm by 40 and therefore $30-100mm by 50 and I think every day about what I'm giving up in the here and now (i.e. the time to forge meaningful relationship with the people I care deeply about) in exchange for having more money at 50, which I probably won't really appreciate. Even now, as a lowly borderline millionaire in my late 20's, I don't really care as much about first class upgrades and luxury hotel rooms and picking-up-$500-dinner-tabs-without-stressing as much as I thought I would in my early 20's.
This - does the OP know how much 20-30M actually is? You can buy a nice NY apartment + Boca winter home and still have lot of cash left over. Unless OP is dreaming of flying private and buying private island compounds I don't know why one would aim to reach 100M.
Has been said by others many times on the site, but if you are choosing career based on being able to own a private jet one day, you need to reassess. Almost no billionaire mapped out their professional life to become a billionaire. They became one because of luck, hard work, and being obsessed about the work they do.
What is the career path you’re currently on that can get u go 30-100 by age 50, and how do you mathematically get there from 40-50 (seems like a big uplift)?
Top LO? Public or private LO?
Concentrated long only with hedge fund fees and a private investment platform. Think ValueAct, Starboard, Pershing but slightly smaller, slightly under the radar. $1mmish net worth late 20's. That will double at least once, maybe twice by 40 so that's $3-4mm right there. I make $400k in a bad year, $1mm in a good year, more than that in a killer year (yet to have a killer year but I've only been in my current role for 2 years). Over a five year period with 2 bad years, 1 okay year, 1 good year, and 1 killer year, my mean would be around $1mm pretax so $600k after tax. No overhead yet, I'm not even engaged. Right now I spend $100k per year on myself but that will probably ratchet up with dependents towards the back half of my 30s. Basic formula =FV(.10, 10, 400, 1000) = 9mm. Do it again in my 40's and you get $30mm. I think by 40 my $1mm mean will be closer to $1.5-2mm mean as I should participate more in the fund's upside. If my average return is only 10% after tax I'd be very surprised, my PA and private investments are levered and illiquid. Plus, I'm just a cheap, shrewd person that has done everything I can to maximize optionality / increase the long term return potential of my portfolio. I have already made some once in a lifetime deals (bought a condo out of foreclosure that is easily worth 3x what I paid, put $100k in the market in late March 2020, etc.) so will probably do make similar investments another couple times between now and 50. I'm not banking on any of this obviously, I live like I make a quarter of what I make.
More like 20-30ms
No, you can't.
I'm not in PE so I can't comment. But think of the companies that PE firms are buying and who their respective owners are. Lot of these owners are worth 100 mill + before 50.
You have to do what you are good/passionate at and the money will come. Whether it be in an industry vertical (LMM or MF deals) vs in different industries (tech finance medicine, law, etc.)
The problem is that not many people can figure this out and capitalize it accordingly. Lucky and support play an important role also. Having a supportive partner and not getting a divorce, good health, avoiding tail outcomes that can kill you, etc.
The earlier you figure this out/control for this, the more likely you are to achieve this. Good luck.
Highly unlikely without starting your own firm / rising to the top of a sizable one. Given PE is likely to consolidate significantly over the next ten years, think the prospect of this is highly unlikely unless you’re a strong performer in a growing, respectable firm within the next few years and just ride it out 👊
The vast majority of people with 100m+ NW are business owners
You need to take on risk which often looks counterintuitive
Creating a vastly successful company is impossible for any particular individual. It takes a special type of personality to relentlessly pursue an idea in order to flip the odds into a few % chance
I think you should ask yourself, what can you not do with say $10M that you can with $100M. What are you chasing and why? Is it for the right reasons?
i want to buy elections
Hilarious thread
How does it vary by industries and the folk that have 'made it' in an industry?
Potential scenarios include 1) Senior partner at MBB 2) MD at BBIB 3) Partner at top VC 4) MD at IB Trading 5) Partner/Trader at Quant Fin 6) Surgeon 7) SVP at Big Tech 8) Top executive at another industry such as Pharma, Automotive, Consumer, etc
Just a thought, since WSO loves discussions.
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