Do PE IR guys get paid on par with Investment team?
Curious if anyone has any visibility on compensation as you approach the upper levels of IR/Marketing/BizDev roles at large funds? It appears that compensation becomes very close to that of the investment professionals, particularly as you get to the upper levels where equity stake gets invovled. I'm assuming many firms can't justify a huge pay differential, especially when there is plenty of $$$ to go around. One could also argue, that the Head IR/Marketing role is more important than the COO or CFO.
I know they are very different jobs, less technical, perhaps less perceived "prestige" or whatever...let's not go there, because not everyone cares about that. I've been interacting with a number of folks who made the switch for lifestyle and/or they realized they didn't have the deal sourcing capabilities to to get to the top on the investment side, but their network was strong enough to make a killing on the IR/marketing side and have really enjoyed their new roles.
Curious if anyone has some good insight regarding comp and career progression.
I'm sorry, but i simply can't imagine these guys make anything close to what someone on the investment side would make.
In a meritocratic world, I’d agree with you
I think the easiest way to get actual data on this (versus listen to WSO speculate) is to find a list of BDCs and look at their proxy statements to determine some comp #s. I know BDCs aren't exactly equal to PE but the basic business models are pretty similar, especially if you actually know what the BDC does. Plus comp varies so much from PE firm to PE firm that any numbers or answers you get are basically just guesses anyway.
My personal opinion is its highly unlikely the IR / marketing folks make the same kind of money as folks on the investment team (e.g. carry into the millions / tens of millions). However (and this is contrary to WSO popular opinion), this does NOT make it a bad career - if you can succeed as someone in a support function, and make hundreds of thousands of dollars a year in a low cost of living area without getting absolutely crushed in your "work-life balance", I think that's a success in 99.99% of people's minds, and is definitely a success in mine.
TLDR: don't let the opinion of others dictate your career path, prestige / $$ won't make you happy and there's lots of ways to make money.
Piggybacking here - some of the larger PE firms are public, not sure if the positions we are talking about get captured in the proxies but if you're gonna check BDC's you might as well check BX, etc.
The reason why I think they CAN make as much is because Private Placement firms (Park Hill, Lazard PFG, UBS PFG, etc.) charge 2% of any capital raised as a fee. That's $20M fee for EVERY $1B raised...it can add up pretty quick! $3B fund, that's $60M in fees. Having an in-house capital raising/marketing team avoids the cost of hiring a 3rd party private placement firm. Many of these guys often get hired from private placement firms because they know the fundraising process very well and have all the right investor relationships. As a result, they can command salaries that are on par with investment professionals. They may not be making as much as the investment GPs, but one could argue the value they bring to the firm (aka avoidance of hiring a private placement firm) justifies this high salary, far more than any other non-investment function. Without capital, there is no investment team, there simply is no PE firm. For comparison, a great CFO, which one could also argue is rather "generic" skill-set, can only earn a few mil (if they are lucky) as a partner at a big-4 accounting firm - their opportunity cost is at a whole different level.
First of all, no one uses placement agents to raise their entire funds. It would be way, way too expensive. Second, partners are heavily involved in the fundraising process, particularly with large LPs so it's not like PE funds totally outsource their fundraising. In my experience, IR is a support function, they will build list of potential LPs, set up meetings, draft marketing materials, deal with due diligence / compliance, but at the end of the day, LPs are investing in the investment team so they want partners heavily involved in the fundraising. I can guarantee you that when KKR goes to CALPERS, Henry Kravis is leading the meeting, not some random IR person.
Also, you are severally misguided if you think that partners at Big 4 can earn millions
Out of your support staff, the CFO and Head of Business Development are going to make the most money with IR and Marketing coming afterwards, but it's still not close. A senior accountant or general counsel might bring in anywhere from 150 to 300 at a large fund that requires these type of people in-house, but the comparable investment guys are making quite a bit more. General counsel that's also a general partner (I've seen this in a few places) could see outsized gains that are on par with more junior partners. A CFO isn't making partner level money typically, but still does very well. Generally speaking, don't look to make the same amount of money in IR, but you'll work a lot less and should have a lot less sources of stress.
Sorry I should have been more clear. My post was regarding BizDev/Marketing....not referring to back-office IR, as in period fund reporting, etc. I'm referring to the the team that has investor relationships and is selling and marketing the fund to potential investors.
these guys are still pretty low on the totempole at PE firms.
work less? less stress? Sorry, that's highly incorrect. I've done both, and this is very very incorrect
.
Umm, no not even close. Why would they even be CLOSE to what investment professionals make. At PE firms and all other investment firms, the people actually making the investments and executing the deals get paid the most. Then there's a huge level down for anyone not "front-office" unless you're a founding member and have transitioned to like a COO / CFO role.
Bus dev guys also paid considerably less than investment professionals.
Huge amount of inaccurate and speculative responses here. Head of IR for a good firm will be a Partner and will be paid accordingly. Top IR people are highly respected and will see decent carry. Obviously it's not going to be the same remuneration as the very top deal makers, but they will make big bucks if they are hitting their fundraising targets.
Also, at a lot of firms the founding partner will in essence be a fundraiser for 3/4 years out of 10 working very closely with the IR team.
Good point. I think what also adds to the confusion is that IR/BizDev folks tend to have inflated/fancy titles for sales purposes (investors don't want to feel like the firm sent a junior guy to pitch to them). Further, some of these guys are paid according to what capital they can get committed, not necessarily correlated to how invested capital is performing.
Some would also argue that the blue-chip firms have no issues fundraising, therefore their IR/Marketing folks have it much easier, than say, an emerging manager or a fund that is not performing well...and thus hiring good BizDev folks for those firms will require a more enticing comp structure/package.
correct
No, even at boutique/small firms you will not get close in IR. The larger the firm, at the moment the easier cash comes in in terms of fundraising (survivorship bias, shortage of good shops to allocate capital to). The remainder of their role is back office, and typically have high travel cost/ expenses,
You may go to more fancy lunches, but end of the day pay will not be on par with investment professionals. That said, the gap is much slimmer, particularly early in the career (think pre-carried interest). On the bright side...nice meals, people focused role and generally good coverage of current portfolio and deal pipeline. If you have a very low probability of getting into an investment team, it may be a route into a shop (though arguably another low probability route).
low likelihood of being able to jump from IR to deals
Pay and career progression would generally be less. At the end of the day; competent investment professionals will generate alpha if they move to a different fund. There many (I think I can look across the floor and see a few right now) IR/Salespeople who claim they're on a first-name basis with leading institutional accounts, but wouldn't have a single call returned if they weren't calling on behalf of the firm. Just like mediocre law partners, these guys hop from firm to firm, collect a mid to upper tier comp package, and then dip to another firm and blame fund performance/market conditions as a reason they didn't raise any assets.
It's just ultimately that for most IR/Salespeople, their value-add is more questionable at the end of day. Alpha is immensely hard to generate, but most clients are reachable if you are polite, moderately attractive, and work through the right channels.
There is one guy I have met at four different funds - he "parachutes" in, offers his relationships for the new fund, then hops to the next one. His institutional relationships trust him; and any pay+bonus he takes is essentially a placement fee.
Still, low-stress, still very good pay, and if your rolodex is legitimate you will live comfortably for years to come.
totally wrong about low stress, or the idea that a rolodex can carry you
IR at least at the firms I know well get paid on Commission. They can earn a massive amounts but depends on the firm. At some lesser well known shops that may find it harder to raise capital I have known individuals to get c. 3% raised.
Base in most cases isnt good. The more established the shop the higher the base and I would imagine the lower the commission.
Working in IR is more about the lifestyle. The hours are great, you do a lot of wine and dine the pay is very good considering. On a hourly basis they will probably be very similar but you will never see someone in IR pulling anywhere near the sort of hours investment teams do.
totally wrong about lifestyle. See my longer response.
How can you say totally wrong? I am purely talking about my experience. In which my above description is 100% accurate of our IR team. It does not surprise me at all that it is different at different firms. But to try discredit just because your mileage was different is poor form.
Having read your post I would say that some of the senior people at my firm came from IR and that may be why they get it better than your experience.
Aren’t guys like Schwarzman, Rubinstein, Black etc...basically IR guys? They get paid pretty well
Yes but IR guys don't sit on the IC
they are founder/owners selling the firm they built
From what I’ve seen / heard, at the junior level at least it’s same base but much lower bonus %.
I've done both jobs - investing and IR. For context I'm post MBA and have 10+ years front-office deal-based experience.
I can tell you you're totally wrong about IR being light hours, low stress, and nice meals. Fuck that, I can buy my own nice meals if I want, and the last thing I want is to be shut in a meal room while the partner verbally masturbates with an LP, 3 nights a week.
My experience in IR has been extremely stressful, especially when compared to my previous time on the deal side.
It's significantly worse than doing deals on several levels.
When on deals you work in a team on more interesting work, and while there's a fair bit of product-delivery stress, it is generally manageable if you have a good team lead/partner.
That is, you do have to do a lot of research, often quickly, and return the discrete product- model and PPT.
However in IR you're tasked with raising the fund. Very open ended problem with limited guidance.
OK, how do you do that?
Got to hunt down LP leads that might be a fit for your fund.
That's 60% of the process right there - finding the LPs that have the interest, dry powder, and strategic fit to actually invest in your unique product.
Then you have to hook the LP and get them interested. You have to pre-qualify them, pitch them, educate them, etc. Only then can you bring in the partner to help you close. In some cases, the partners I worked with were great, in other cases (including my recent fund) the CEO got to where he is in life doing deals, and he can't sell and is a certified grade A a-hole to boot. So when the funds don't get raised after introducing him, you get flack. You can't come back at him with "because your ass can't close the leads I give you, and the product is s**t. You can't market to save your life, and your returns are negative. And you're surprised people aren't giving you more money to burn in a pit? Really?"
That may be the truth, but no one wants the truth these days. Going out and trying to find leads, figuring out how to position and market the fund, and then following up and tracking a few hundred unique leads that you have in the pipeline - that's at least as hard as doing the investment work, and significantly less interesting.
No, you've just got to take the abuse.
And if a fund does get raised easily, the partners think you added limited value.
My experience in IR has been that it takes me dozens of hours to find a lead, qualify the lead, pre-sell the lead, etc.
Then I bring the dumb-ass partner into the room, and he fucking can't keep his story together.
He was too arrogant to take any coaching.
So he rambles, fails to answer the question, and clearly gets offended at the challenging 'push-back' type questions the LPs ask.
Then you leave, and the LP doesn't invest.
Partner beats your ass for it later.
My experience in the investing side was - I get to look at interesting tech and companies, evaluate new and interesting technologies, and work with 3-4 colleagues to make an assessment of the investment opportunity. We get to run the show - we can ask the company questions, and they answer.
We can hire industry experts - and they break down the tech for us.
We hop on Capital IQ and get the equity research reports to give us some industry insights. There's a bit of modeling - and that part did always stress me a bit, because you best be sure the numbers are right. But other than that, not too shabby a job.
Fucking IR. I hate it.
Partner rattling your cage about no money coming in, pushing you to write long-ass PPMs for each of the funds you're raising, nit-picking the way you're presenting the funds, and then on top of that I had to do quarterly reports.
The deal teams don't want to give me the quarterly updates on the portfolio companies because they too prefer to do deals than to piddle around in IR. So now I've got to chase them. And I have to repeat that thankless process every 3 months.
You think I went to an Ivy undergrad, worked my way up as an analyst, went to a top 10 MBA, so that I can write quarterly reports? Really?
And I've got to go to conferences to shill the fund.
If you're marketing a good product it's fun. LPs want to meet you and hear your story. But if your product is mediocre - you really have to hustle to get LPs to take a meeting, and they later then don't invest. Then going to conferences suck. That's why we all drink so much.
Money doesn't come in, because our fund product sucks - but it must be my fault right?
I mean, who wouldn't want to invest in a fund that got a negative 15% return and can't keep to a unified strategy, and has high team turnover, right?
On comp - it depends.
If you're the IR/fundraising partner at a fund, you can def. get carried interest.
If you're not a partner - then for sure deal team gets paid much better than IR does.
In general, IR is a dis-respected, low-interest, low-quality-of-life part of PE.
And the misinformation I see above reflects that mis-understanding of the role.
A lot of the better people in IR came from the deal side.
That's why David Rubenstein is mostly an IR guy, and why most firm MPs are IR guys in the end.
Mind you, there certainly are "executive assistant" type of IR people. Some girl (statistically speaking) with a liberal arts degree, lining up meetings and adding limited value.
But they are generally not taking full charge of the fundraising process, and there's a difference between those folks and the deal-professional-turned-head-of-IR people.
My advice is - if you're a finance person with even halfway decent deal sourcing or executing capability do NOT do IR.
IR adds a lot of value - but it is generally not treated as such. And the functional role is far worse than deal team, pay is worse, it's less interesting than deals, and respect is generally less irrespective of whether money is coming in or not.
What's keeping you in IR?
I am no longer in IR. I run the in-house PE fund of a family office. That said, the reason I kept going back to IR is that I'm a foreigner (non-Chinese) working in Greater China. That means I had less relevance as a deal professional. Chinese founders prefer to deal with local deal teams. That's why I got shifted over to IR by my former employer; Chinese cultural issues. Thereafter I have been faced with the quandry of whether or not I want to move back to the USA, where my wife would be less happy, and where the firms I worked at before would be total unknowns. It's extra hard making both a geographic shift and a role shift at the same time. I'd better big-boy-pants-up tho soon and go back to SF and try to make the career shift happen otherwise it's just going to get harder later. It's also hard walking away from a well-paying job, as you can imagine, esp if you have 2 dependents (wife+baby).
Thank you - very interesting perspective on the role.
This is exactly how I feel. I worked at a VC as IR at the start of my career, but the firm fails to raise the fund because of track record. I was fired for some strange reason, which I think was only for the partner to cover his mistakes. Then I've been switching jobs. Now I'm an IR at a hedge fund, raised some money at the beginning of the year, but then getting really difficult. The fund is very volatile and has a loss of more than 15% this year. But the PM expects me to "do something" and push me to follow up with potential investors more actively. Operations don't care about what you have to do, cuz you are only adding extra work to them. Research team thinks you not professional, doesn't understand the magic of valuation and you are just a functional role. Really hope to get to the deal side or analyst side, feeling so stuck. That's why I googled and saw this lead..
earthwalker7 what about BD professionals?
Sounds like you were doing IR for a firm with shitty track records, fuck them anyway that's the past. What would it be like if your firm is actually legit with proven alpha ? Also I'm curious what kind of things can you do post IR?
one bit of advice I'll give to anyone considering IR (other than "don't") is that you're better off going to a placement agent. Placement is in many ways easier/better than IR. 1) the firm can pick the top funds as clients, which makes the fundraising process much easier 2) you have teams all over the world with local coverage areas, so it's better for fund marketing, because you have deeper relationships that are easier to maintain 3) you get respect and pay like an investment banker (which is where most of these groups spun out from) 4) you're kept more interested and engaged because it's always new clients 5) you get a proper travel and marketing budget, whereas most PE funds are tight around that 6) you have a proper brand name on your CV, which unless you're at TPG or Carlyle, changes are doing IR for a random PE fund is a step down from a placement agent
working for a placement agent is great, but difficult / impossible unless you have over 10 years exp or a solid network.
What if it's a placement agent within a bank? In which case the bank would provide the network (ofc you still have to get to know the people / maintain relationships). I've recently been considering possibilities but came through a few opportunities that were for really niche products within a bank (and so was worried if that would limit future career options (non-investment)). Typically would work with DCM/bankers and connect issuers with investors. Any thoughts would be appreciated! Thanks.
At some funds you'll notice IR heads are random chicks who are as senior as principals / VPs where (i imagine) a lot of investor facetime is done by partners. Then there are other funds that take IR super seriously and where there are 2-3 IR partners and multiple principals. At those funds IR makes roughly the same to maybe slightly less. I speak from experience regarding the latter.
it's nice to see that some firms 'get it.' If you don't take care of the LPs when you're off-cycle, it makes fundraising later much harder. Never rest on your laurels. There's no business to be done in a PE shop if it has no money to invest.
earthwalker7 What would your opinion on IR/fundraising at a brand-name fund/MF? Most of the problems you encountered seemed to have been due to the quality of the product you were selling. Would you recommend IR at a shop with a solid product?
miscer You mention that the IR team can make roughly the same as the investment team at funds that take IR seriously. While I can imagine the senior IR partners/principals being compensated well, do you know what compensation looks like at the junior levels compared to the investment team?
Might be a completely irrelevant data point, but I was offered to interview for a BO role at Bain and the all in was around 70k (an entry level BO role). So, doesn't really matter what your role is, your pay will be above market average at these giant PE firms.
I imagine IR, if it's fundraising/biz dev focused, is compensated relatively well. They might not be generating alpha, but bringing in revenue still essential and keeps the firm running. Imagine there could be some carry component as well, particularly at a larger fund. Don't know anyone who does the role though, so would be interesting to see if there is meaningful carry outside the IR partners.
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