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 $$$ to go around. One could also argue, that the Head IR/Marketing role is more important than the COO or CFO.
I know they are very different jobs, less technical, perhaps less perceived "prestige" or whatever...let's not go there, because not everyone cares about that. I've been interacting with a number of folks who made the switch for lifestyle and/or they realized they didn't have the deal sourcing capabilities to to get to the top on the investment side, but their network was strong enough to make a killing on the IR/marketing side and have really enjoyed their new roles.
Curious if anyone has some good insight regarding comp and career progression.
I think the easiest way to get actual data on this (versus listen to WSO speculate) is to find a list of BDCs and look at their proxy statements to determine some comp #s. I know BDCs aren't exactly equal to PE but the basic business models are pretty similar, especially if you actually know what the BDC does. Plus comp varies so much from PE firm to PE firm that any numbers or answers you get are basically just guesses anyway.
My personal opinion is its highly unlikely the IR / marketing folks make the same kind of money as folks on the investment team (e.g. carry into the millions / tens of millions). However (and this is contrary to WSO popular opinion), this does NOT make it a bad career - if you can succeed as someone in a support function, and make hundreds of thousands of dollars a year in a low cost of living area without getting absolutely crushed in your "work-life balance", I think that's a success in 99.99% of people's minds, and is definitely a success in mine.
TLDR: don't let the opinion of others dictate your career path, prestige / $$ won't make you happy and there's lots of ways to make money.
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
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.
[ ]
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.
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).
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