Growth PE Comp Progression

Much has been said about the typical Comp and Comp Progression at traditional Buyout PE shops. The Heidrick & Struggles report documents what PE professionals make at each step in their career. Generally, above a certain fund size (including carry) it is something like Associate ($400K), VP ($1M), Dir ($3M), MD ($9M), then sky is the limit for the senior MD's.

Growth Equity is much more opaque. There is some good information on WSO about analyst/associate compensation at the top firms, with associates making perhaps $200-$300K with additional upside on sourcing. And some have stated that MF Growth associates make equal compensation to their traditional buyout peers. What I would like to know is, how does this income scale over time, throughout the VP/Dir & MD levels? There is no "Heidrick & Struggles" Growth private equity report for earnings at more senior levels. 

M&I states:

"In other words, expect 60-70-hour workweeks and compensation in the $200K – $300K range for Associates, eventually rising to the high-six-figure to low-seven-figure level at the top " 
This smells like BS to me. MD's at traditional buyout make $9M+ and MD's at Growth Equity make $800K - $1200K ish? No way. 

Can anyone please help provide clarity on the compensation along the growth equity career path? 

Comments (20)

  • Analyst 1 in IB-M&A
1y 

Also wondering!

  • Analyst 1 in IB-M&A
1y 

Agreed

  • Intern in CorpFin
1y 

I thought he worked at UBS LA for a few years?

1y 
trilluminate, what's your opinion? Comment below:

Not sure where you're getting the idea that MDs are making 9m+. The heidricks and struggles compensation report shows MDs at funds that have 10 bn+ in aum are getting 23 million dollars in carry. If you try converting it into a dollarized figure, it gives you 4.6 million dollars in carry. Add in 1 million dollar in salary and bonus and you're at 5.6 million dollars

989o989o99oiiooo9999kok999kk999koo9o9o
Most Helpful
  • Analyst 1 in IB - Gen
1y 

Yeah, you only really "earn" your carry over the vesting period which is usually 4-6 years.

So you "earn" a total of base, bonus and unrealised carry (/vesting period) per year - once the vesting is over you're not "earning" carry you're just waiting for it to pay out; though typically you'll receive a new carry grant before your old grant fully vests due to new funds being raised so you're likely always "earning" carry. You then only receive the carry about 3-5 years into the fund's life. 

All said, an MF PE Partner would be "earning" a base of about $500k, bonus of about $500k-1.5m and unrealised yearly carry of about $4-6m for a total of $5-7m a year - w/ ~80% of that not being realised as cash flow until a few years later.

You thus have 2 values for income: target total comp for current year (base, bonus, unrealised carry) and realised cash flow for current year (current year base, current year bonus, realised carry from prior years, realised deferred comp - if applicable - from prior years).

1y 
PotatoSalad19, what's your opinion? Comment below:

Hey, my apologies if i've misinterpreted the report. I looked at the 2020 NA PE Compensation Survey. From 4B AUM --> $40B+ AUM, there is an average of $35M in Carry for MD's. That's $7M a year when divided by 5. Then there is around $500K base salary and $1M in bonus, so pretty close to $9M. 

Whatever the compensation for traditional PE MD's is ($5 or $9M, etc) I am more concerned around the compensation at higher levels of the Growth PE career.

  • 1
1y 
italian, what's your opinion? Comment below:

Not entirely accurate but you can run the basic math yourself. Assume a $1Bn fund (not AUM) that nets 1.25x. Means that you have 250MM of carry in that fund to distribue. Assume it gets split between 9 equally paid entites (probably 6 GPs and the equivalent of 3 given to others on the team). Assuming 7 years for life of the fund gives you 250 / (9 * 7) = ~4MM. GPs are probably on 2 to 3 funds at the same time meaning at decent funds you could easily be clearing 10MM a year.

  • 2
1y 
VCMonkey01, what's your opinion? Comment below:

Once you make MD, your comp is going to be largely based on carry. Well carry scales with AUM, and most LBO funds are larger than most growth equity funds. But of course there are very large growth equity firms. An MD at Insight which just raised a $10B+ probably has a lot more carry than an MD at a $3B LBO shop. And then of course, the returns have been stronger in growth equity over the last several years, although it's unclear whether or not that will continue.

At the end of the day, the only ceiling to your earning potential in any investment firm is your ability to generate returns.

Array
  • 3
1y 
ABACUS 2007-AC1, what's your opinion? Comment below:

This forum got a little sidetracked from GE.

Can anyone comment on the pay progression in GE? There is a lot of transparency in that pay will be around $200k as an AS1 (varies on the firm obviously), but how does that scale? I understand carry comes into play but am more curious about salary/bonus structure.

Additionally, has anyone seen pay bumps at their firm following the banking bumps/

  • Analyst 1 in IB - Cov
1y 

Which MFs pay equally between their GE and buyout groups? Would be good to know for those of us researching GE vs buyout for on-cycle recruitment

1y 
VC_associate_13, what's your opinion? Comment below:

At senior levels, GE/VC it's all over the place depending on the shop and performance, both at the fund level and individually (many firms give bonus carry on individual deals). Comp at senior levels is also very lumpy because they're mostly based on carry distributions, which depend on when portfolio companies exit. As a general rule of thumb, a GE/VC partner at a decent shop is probably making at least $5-10M annualized, and likely much more if they're senior and/or markets are good like now. When I was an associate almost 10 years ago, senior partners at my shop were easily making $20-30M annualized. Probably doing much better today.

  • 3
1y 
PotatoSalad19, what's your opinion? Comment below:

In inventore tenetur perspiciatis. Eius excepturi ad molestiae. Dolorem sed rerum eligendi voluptatibus esse. Assumenda nulla at repellendus tempore nemo placeat autem. Cupiditate vel nihil perspiciatis ipsa culpa aut nostrum. Eos quia rem rem architecto neque doloribus voluptatem.

Et a repudiandae aut quam harum esse labore. Qui voluptatum omnis ut eligendi praesentium qui. Nam officia a mollitia vero rerum rerum. Aut dolor quibusdam consequatur placeat. Eos voluptas numquam unde et aliquam voluptatem. Laborum vitae quis rerum voluptas earum.

Et quod doloribus recusandae deserunt. Possimus non sit eos officiis facilis veritatis voluptatem. Ex commodi voluptatem aut ut. Enim praesentium necessitatibus iste aut. Numquam a voluptatem sunt qui laudantium laboriosam. Recusandae id amet molestiae itaque qui perferendis vel sint.

Start Discussion

Popular Content See all

Apollo From Non Target?
+69PEby Analyst 1 in IB - Cov
Dear KKR
+45PEby Intern in IB - Gen
ACT…pointless
+37PEby Associate 1 in PE - LBOs
Rushed into PE Offer
+16PEby Analyst 1 in IB - Cov
Best MF Work Perks
+15PEby Analyst 2 in IB - Cov
Technical Questions
+15PEby Prospect in IB-M&A

Career Advancement Opportunities

February 2023 Private Equity

  • The Riverside Company 99.5%
  • Warburg Pincus 98.9%
  • Blackstone Group 98.4%
  • KKR (Kohlberg Kravis Roberts) 97.9%
  • Bain Capital 97.4%

Overall Employee Satisfaction

February 2023 Private Equity

  • Ardian 99.5%
  • The Riverside Company 98.9%
  • Blackstone Group 98.4%
  • KKR (Kohlberg Kravis Roberts) 97.9%
  • Bain Capital 97.4%

Professional Growth Opportunities

February 2023 Private Equity

  • The Riverside Company 99.5%
  • Bain Capital 98.9%
  • Blackstone Group 98.4%
  • Warburg Pincus 97.9%
  • Ardian 97.4%

Total Avg Compensation

February 2023 Private Equity

  • Principal (8) $676
  • Director/MD (22) $599
  • Vice President (84) $363
  • 3rd+ Year Associate (85) $276
  • 2nd Year Associate (192) $264
  • 1st Year Associate (369) $227
  • 3rd+ Year Analyst (28) $157
  • 2nd Year Analyst (78) $133
  • 1st Year Analyst (224) $122
  • Intern/Summer Associate (30) $80
  • Intern/Summer Analyst (283) $58