Didn't get paid a bonus as a PE Associate...
To preface:
This is a longish post under a burner account. If you don’t want to read it the TL;DR is that I work at a small PE shop as a first year(and now 2nd year) associate and didn’t get a bonus this year. Don’t think its personal performance or fund performance based(will get that info) and want some advice.
I’m familiar with the buy-side, other career options in finance, and that my path and my choices are up to me so I’m not asking for a “fix my life” type of answer(and don't need to be bashed for doing so) just looking for advice for some of the monkeys who have maybe been down this path before.
Anyways here’s my situation:
I work at a small (sub 200MM)PE fund in a major market. We’re industry focused and my background is a unique mix of banking and industry work(about a year in each). I moved over to his firm a little more than year ago and have had a great experience so far. It’s a small group of partners and associates, all good guys, we’ve done a deal or two, hours are pretty decent(60 or so a week, fairly flexible), not a 2 year and out firm, and I have a lot of responsibility and essentially do all the busy work on the deals we do (no mid level guys, just associates and partners). Feedback has all been great, I actively work to bring the investor mindset to the table, work to source deals, take on additional projects, etc etc. I’m by no means a gift from god, but I’m hustling and learning as much as possible.
Now with that being said, our year just finished up and it looks like no one at the junior level got paid a bonus this year. Our base salary is a little higher than the industry average(125k base) but with no bonus the comp is still low especially in a major market. There are no other significant perks monetary to mention(no carry, co-invest, etc).
On my contract it stated that bonus was discretionary and while I should have asked for more clarity around that when I signed, I did not(I’m a young guy, but lesson learned).
So that’s my situation, I know my performance has been good and I also know the firm is growing and also doing well. We returned some money to investors this past year and are on track to have some good exits this upcoming year. Based on the fund economics, I have a really hard time understanding how they couldn’t scrape together something small or at least disclose what was going on. It’s also not like we’re a lifestyle fund or anything like that, I’ve had some long days, last minute fire drills, cancelled a vacation, stuff that I completely accept accompanies a PE lifestyle, but in my opinion warrants a PE comp package. All in all, I think that even with the size of our fund, I would have liked to hit 150k or so my first year, so essentially a 20% bonus. I don’t think that this is unreasonable, but correct me if I’m wrong.
I’m planning on scheduling a sit down with the partners in the coming weeks to discuss “goals” for the upcoming year so I’ll be sure to get an idea of what the situation is.
My questions to the forum are:
What would you do in this situation? Is it time to start looking for other jobs? I don’t necessarily feel married to staying in PE long term and I know a lateral would be hard not only because lateraling is difficult in general, but also because my lack of a true IBD background will make it even tougher. I’ve had some tempting industry offers floating around for a while now.
Is it worth bringing up compensation in my meeting? I know that bringing up comp is generally a no-no, but I feel as though I have to say something because there’s no way I’ll be productive the next year if I don’t know what my progression looks like.
Anything else worth asking for? If they can’t bring up cash comp by a significant amount should I just try to half ass my work and put in 40 hours a week? Take a ton of vacation?
I know in the long run the five figure difference won’t make a huge deal, but I’m feeling a little low morale right now and kind of want to be petty.
I’m sure will clear up a bit once I have a chat with them, but wanted some outside opinions as well. Thanks for reading.
Run.
Maybe ask why you didn't get a bonus and if they give a BS answer then press them on it. I'd make a fuss about it because what else do you have to lose? They can't direct work away from you since there aren't many other people there and if they don't try to fix the situation you're not gonna work hard. The only downside is maybe they look at you differently but you weren't gonna stay for the long run anyway given what just happened. $200mm aum isn't really much to pay the bills but $125K all in comp in a big city is not really enough imo. Cost of doing business
My buddy works at a similar PE firm that is similar in size and similar in investment strategy. When you initially got the offer and got a $125k salary how fucking stoked were you? I'm guessing you were through the roof and extremely happy. That is Upper MM/MF level base salary, although I know those guys make up with it with bonus. Do you think you could have gotten a $125k salary somewhere else? My buddy also works similar hours to you and earned a bit less. Much lower base, nice bonus.
The only thing I could guess is that there were multiple funds at your PE firm, and since you mentioned they returned some money to investors, that once they liquidated that fund, that no one got a bonus and that only the partner track/carry people received their carry as added income, thus no one getting bonus and you getting screwed a bit. If you are 2 years out of school and only did 1 year of IB $125k at 60 hours seems low, but not insultingly "please leave our firm" low.
Hope you get a bonus, but talk with them for next year. Sounds like a good spot to be at nevertheless.
Great advice there. Do not ever ever ever half ass your work in a company. Even if you think you have another offer elsewhere and it's almost in the bag, key is "almost". Unless you signed somewhere else don't fuck up. One year is low, and everyone will keep asking you why you stayed only one year. If God forbid in your next fund you get fired after a year people will really start questioning the 2+1+1 - can the kid not hold a job for more than a year?
My advice is ask and tell them that you are disapointed that you did not have a bonus, ask them if there are issues with your performance and reasons why they might be unhappy with you. If it's all juniors who got shagged - I wouldn't sweat it so much. 25K is peanuts. Also take everything into perspective especially with what GridironCEO said and his comparison point.
1) Unionize with your fellow associates 2) Seize the means of production 3) Send the higher-ups to the gulag
Have you thought of theft of company property to supplement your income?
Haven't logged on this account in a while as its a burner account, but wanted to update for the good of the forum.
About a month after my post, I got my base bumped up to 135k but still no bonus. Still not huge money, but it was enough to keep me interested. I also got a strong performance review and the team was overall very impressed with me.
Since then we've had a couple of portco exits that I had limited involvemnet in(we invested prior to me joining the firm), but the partners still decided to pay me a significant bonus. With that my all in comp was ~200k or so.
The process wasn't as formal as a typical PE firm, but I ended up in apprioxmately the same place. I'm planning to stick around until my two year mark and see if I can negotiate something more traditional moving forward.