Can PE Fund Withdraw Offer if Tried to Negotiate Pay?
Hi guys, if I try to negotiate an offer with a fund due to a competing offer, can they withdraw the offer? Competing offer is not my number one choice but the dream offer they gave is a bit low on comps.
Would appreciate any help here!
So I never negotiated comp because in my case I believed they give their standard and negotiating won’t lead anywhere. Think if you want more money - you should push for it after a killer first review and say hey I’m great - why don’t you pay up.
What I would do in your case - I wouldn’t mention another offer but just give a call to your contact at the fund and just speak to them about your concerns, say you think it’s low and ask for an advice on how to go about it. No one likes to be cornered, but people like other people who are open and friendly.
Good luck!
Totally disagree. Once you work there, you have zero leverage unless you are literally the best associate of all time
Beta take
Thanks for your comment.
My option might not be “alpha”, whatever it means, but is a sensible, pragmatic and practical approach for someone who is scared to lose the offer. It also always helps to build a nice solid foundation for an open and friendly relationship with your superiors which will pay off over a long term.
Always negotiating what you want and pushing for what you think you deserve might be very “alpha” and great in theory but if played badly might end up very awkward at best.
For people who suggest “you don’t wanna work for a place who might recall the offer” - again maybe it’s very beta of me, but that’s a real risk and personally for me it took many years to land a PE offer and maybe it’s my only chance. I wouldn’t risk it for like +$500 per month post tax.
Lastly, maybe that’s how I reason because I’m a girl and what’s acceptable for other men might be perceived very differently if it came from a woman. I do have an experience of an offer recalled when I asked for $10k more per year (it was a banking offer and I didn’t want it) and the explanation was that that’s above company’s policy and any further negotiation would make things just worse so we should part ways.
So yeah, my experience so far is that there are lots of things that sound cool in theory, but one should decide carefully which battles to pick. Sometimes doing “beta” stuff repeatedly can get you further in life than any “alpha” could ever dream.
"You guys are my first choice but I have a competing offer that is [meaningfully] higher in all-in cash comp. Is there anything you can do to bridge the difference? I don't have a full appreciation for what you guys can do so let me know what you think is fair. I want us both to be happy after I sign."
"Let us see what we can do." "Ok, thanks for the consideration."
"No, sorry we can't do that." "Ok, I understand. Is there a way we can be creative? I know cash comp can hurt fund liquidity. Would you guys consider a carry grant to help increase the competitiveness of the offer?"
Lol, good luck in asking for a carry grant if it wasnt given at the beginning. Carry is a zero sum game and has been allocated/thought about ad nauseum by the senior team.
Maybe that is consistent with your direct experience but it conflicts with mine. You don't get what you don't ask for. For the right person, I believe funds will try to be creative. OP did not say what level he is recruiting for so that does influence the ultimate outcome. That said, if its a LMM fund, those funds recognize that carry is a tool to bridge gaps in cash compensation. It probably won't take much in terms of carry to sweeten the deal and there will be a vesting schedule so the fund is not really taking that much risk.
The worst that happens is they say no.
Also, having participated in talks about carry strategy, the people you want to work with do not view carry in the way you describe. Carry is a tool for alignment. The right people think about growing the pie not allocation of the pie.
Sometimes the low offer when you're starting is a shit test, they want to see how you work and if it doesn't work out a year or so in it saves them a chunk of change. I've asked OP's question to more senior friends and posed this same scenario and been told bringing up another, higher cash comp offer is a good way to be told "then go work there if that's what you're looking for". If this is OP's "dream offer" then I believe trying to optimize for comp in the short term, what more than likely amounts to maybe $20k-$30k, is recklessly short-sighted. When I joined my fund it had everything I wanted but I had to take a nearly 25% cut on market comp. End of last year though the boss made it up to me with a fat bonus in addition to my regular EOY bonus, then added a 3rd bonus on top to cover the taxes (probably unrealistic to expect this but as long as we're sharing anecdotes I figure why not).
If cash comp for anyone VP-level or below can hurt a fund's liquidity, they're probably not someone you want to work for. My guess from OP's profile is that he's looking for an ASO role so asking for comp is probably not the right move either unless it's a smaller/more startup fund. Maybe it's better to incorporate some type of performance-based metric for an additional EOY cash bonus vs part of the carry pool (whose to say OP even stays around long enough to collect it).
I agree with the sentiment of thinking more long-term but that does not preclude you from asking for more. I'd be surprised if any real fund made it a practice of lowballing prospective employees as an "intro" year. My perspective is a fund would respect someone with a sense of their own value and the confidence to ask for more. The ability to negotiate is an important skill in PE. Why not demonstrate you can do it for yourself. Worst case is the prospective employer respectfully says no.
The fund liquidity comment is just meant to be a smooth transition to the point that matters - asking for carry. Carry vests based on a schedule so even if "he's not around" he will be entitled to collect based on whatever is vested. The problem is a gap in comp between two offers. The point of the thread is to offer solutions to that problem. Carry is a tool if incremental cash comp is rejected. OPs variable comp is already performance based. It's not an individual sport so specific metrics don't really make sense in this arena at the junior level. If you want to tie to fund performance, which is what really matters, oh why there is something called carry that already captures that.
Always ask for what you want before you take the offer (within the limits of what is reasonable), try to make a case for why you deserve a certain pay and then see what they offer you.
And if they withdraw the offer because you tried to negotiate, then it might not be the place you want to work at
Yes, they can withdraw it at any time. Hell you can sign the contract and pass the background check, and they can still pull the rug out from under you.
And once again, why can’t people include comp numbers in their posts?
Would be helpful for a general info perspective and also to advise you on how far you should push back.
Thanks everyone for the discussion. Super informative.
They shot you down cold but are making you do another interview round again? At this point you might as well stick to your guns, since you do have another offer. What do you have to lose?
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