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Based on the most helpful WSO content, compensation for associates at independent sponsors in the lower middle market (LMM) can vary significantly depending on the structure of the firm and deal flow. Here's a breakdown of what you might expect:
Base Salary: Typically lower than traditional private equity firms, often in the range of $85k to $120k, depending on the region and firm size.
Annual Bonus: Bonuses can range from 50% to 100% of the base salary, though this is highly dependent on the firm's performance and deal activity.
Deal Fees: Associates may receive a portion of the deal fees, but this is less common and usually reserved for more senior team members or those directly involved in sourcing and closing deals.
Equity (Deal-by-Deal): Equity participation is a key component of compensation at independent sponsors. Associates may receive carry or co-investment opportunities on a deal-by-deal basis, with percentages varying widely (e.g., 1-5% of the sponsor's equity allocation).
The variability in compensation reflects the entrepreneurial nature of independent sponsors, where pay is closely tied to deal success and firm performance.
Sources: single big deal comp, PERE comp table, BB/EB compensation in Madrid, https://www.wallstreetoasis.com/forum/investment-banking/total-compensation-at-pwpevrmoelis?customgpt=1, Debt and Equity Brokerage Analyst Compensation
Associate 2 here.
- Base: $125k
- Transaction Bonus: $75k/platform closed (targeting 1-2 platforms per yr)
- Discretionary Bonus True-Up: $75k (occurs when we don’t hit our target 2 platforms per yr yet performance is good)
- Carry per Deal: 1-2% of carry
All-in Cash Comp: $200-275k
We haven’t been successful at closing 2 platforms/yr yet so take the high end with a grain of salt.
Appreciate it. Just checking what % of carry do MD/Partners get in your firm?
We typically stick with your standard 20% promote, however, if the deal is more hairy or we’re working with new LPs, we are amenable to lowering it to ~15% post-hurdle.
Naturally, my partners get the remaining net of my carry allocation (~15-19%).
Are you sure you’re getting 1-2% of the 20% (implied 10% carry) versus 1-2% of the 100% pool (more normal)?
Looks way less to me too! I believe he meant 1-2% of the deal and not carry. What % of carry do associates & VPs usually get in LMM IS firms?
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