Hi guys - I recently accepted an offer as VP at an MF. I was told that I will receive carry via the broader firm carry pool (I’m in IR in a direct capital raising capacity).
Is anyone else in their firms “carry pool” and can explain how it works relative to earning traditional carry?
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Based on the most helpful WSO content, the concept of a "firm carry pool" typically refers to a shared pool of carried interest allocated to employees of the firm, which can include those in roles not directly involved in deal-making, such as Investor Relations (IR). Here's how it generally works compared to traditional carry:
Traditional Carry: In a private equity setting, carried interest ("carry") is a share of the profits generated by the fund that is distributed to the fund's management team. This is usually a reward for enhancing the value of the investments and is typically allocated to those directly involved in sourcing, executing, and managing investments. The amount of carry an individual receives is often directly tied to their involvement in successful deals.
Firm Carry Pool: For roles not directly involved in the investment process, such as IR, some firms offer participation in a firm-wide carry pool. This means that a portion of the overall carried interest generated by the fund is set aside to be distributed among a broader group of employees. This can include professionals in IR, operations, legal, and other support roles.
Allocation: The allocation of carry from the firm carry pool is usually based on seniority, contribution to the firm's overall success, and other factors determined by the firm's management. It might not directly correlate with the success of individual deals, as is the case with traditional carry.
Purpose: The rationale behind a firm carry pool is to align the interests of all employees with the success of the firm, encouraging a collaborative effort towards the firm's goals. It recognizes the value that professionals in non-investment roles bring to the table in terms of capital raising, investor relations, and overall firm operations.
Variability: The specifics of how a firm carry pool is structured and distributed can vary widely from one firm to another. Factors such as the size of the pool, the criteria for allocation, and the timing of distributions are typically defined by the firm's partnership agreement or compensation policy.
In summary, being part of a firm carry pool as a VP in IR means you'll participate in the financial success of the firm through a shared interest in the profits generated, even though your role is not directly involved in making investment decisions. This is a way to incentivize and reward the broader team that contributes to the firm's success.
Sources: Confused about carry at PE Fund, Actually Realizing Carry, Carry in REPE, How does MF Carry work?
Carlyle? It’s a shitty structure but better than nothing I guess.
Thoughts on Carlyle?
Carlyle or their carry program?
Doesn’t the KKR carry pool operate in a similar way?
I’ve heard this too, I believe it doesn’t really matter which investing group you work under as seniors all get similar carry, part of the “one firm” culture and one carry pool. I’ve heard even investor relations / fundraising roles get carry from this pool, although I don’t know how true that is.
Yes it does and can be quite frustrating as it doesn’t incentivise individual/team performance as much as other arrangements
Believe KKR does weight the carry more heavily towards your strategy (e.g., North America PE), but it is a broader firm carry pool
Almost all the MF now structure their carry pools like this. Granted for the following year at the end of the current year. Will grant as a $ grant that they value it at, assumes a $ deployed in the year ahead and target return. Upside/downside driven by how active of a deployment year it was and the actual end result of said investments. They headline $s are usually aggressive and you need to handicap meaningfully based on a more realistic outcome.
What’s the typical vesting period for carry at MF?
Is it tiered timing schedule (Y4: 10%, Y5: 20%, etc) or more cliff?
Carlyle doesn’t vest.
What‘s Carlyle‘s VP Carry Dollar at Work for investment professionals vs e.g. Private Wealth distribution?
Apples to oranges. Investment professionals get a grant once per fund (sometimes you can get jump ball carry on top if you’re well liked) while non-IPs receive an annual allocation. On my fund vintage, VPs maybe got $2M grants for the fund, say they pay out over a decade, and I get ~200k in deferred between RSUs and carried interest annually. In theory they are similar but the mechanics of mine are severely limited. Both of these figures go up over time. Investment professionals vest carry non-IPs don’t so I consider my “carry” worthless.
Frankly I’m over it. I joined a MF to build out a brand new strategy, built everything from the ground up with the literal exception of underwriting transactions - although I still manage the financing/syndication/closing on half of those, exceeded target on a first time raise, launched a new business line for insurance clients, and brought a business unit from $0 in cap markets fees when I joined to $10M for 2025.
Was very underwhelmed by comp this year despite being paid “tops for my role” - well why am I doing 3 other jobs. My anecdotal experience is that taking on extra responsibilities is rewarded with a pat on the back more than outsized comp at large companies. In my personal position I’d make 25% all in more (most of which would be cash) in a sellside role (niche ABS, rapidly growing, will likely jump over next year tbh).
I am burnt out and quiet quitting with a few other things lined up.
If you go into fundraising do it at a place that gives real carry or join an early enough organization that you can get some contractual EV where possible. High stress, white collar jobs are mostly just a path to upper middle class at best and a recent health scare has shifted my perspective. If I’m going balls to the wall it’s because I’ve got a contract that pays me accordingly “discretionary” bonuses are for coasting or average employees. I haven’t decided whether I’ll just coast or if I’ll continue running at wealth creation but with kids in my near future I can tell you right now that I’ll never miss a school event over some BS, ego driven call/email/text/pitch.
There is so much more to life then making richer people richer. I know a guy who only takes on carry paying mandates. After several years of trying to adjust the pools of comp I get paid out of I’ve finally flipped the script and started just telling people “hey, I’m not going to get paid anymore for doing this but if you are then be my guest and go right ahead.”
/endrant. It was a long 2025 and FRE generated came no where close to where I should be compensated.
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