LMM PE Senior Comp
Hi everybody, I’m an incoming AN1 in IB that is interested in a long term career in PE. I am very interested in the lifestyle that LMM PE offers and want to learn more about the compensation. What does comp at the principal and partner level look like at a LMM shop with a recent fund size of 250-500M in a LCOL city? Thanks!
Bump. Have you looked at the Heidricks 2024 report? Usually pretty accurate and has data by fund size. Unfortunately no breakdown by fund size and geography simultaneously
My fund fits that criteria and think our principals are in the ~$400-500k range. Not sure on range for partners.
Is this total comp? What does carry look like at that level?
Yes, and no clue.
I also wouldn't assume LMM is notably different in lifestyle. The inherent job is not that different (i.e., not like you're looking at family office or secondaries instead), so the hours can only vary so much versus MM.
Heidrick report has great info on this. Might be a slight haircut for Tier 2 / 3 cities compared to NYC.
At the senior level in LMM (and anywhere else on the buyside), the majority of the comp / upside comes from carry. Assuming the fund performs and you stay long enough for it to vest, of course...
My goal is to work at the same shop for my whole pe career so I’m not worried about leaving before it vests. How often are lmm firms raising funds? Could you explain how often carry is paid out?
That's the goal for most people, but just be warned, it usually doesn't turn out that way. Go into this job with eyes wide open
Most funds try to raise every 3-4 years. Carry payouts are very dependent on how the fund is structured, carry model, vesting schedule, etc. I would just say, it will take longer than you think to start receiving meaningful carry payouts.
I joined a first time fund as an associate 6ish years ago in a non-NYC VHCOL city. We are now on our third fund which is $500M (total AUM right around $1B). Here were the terms of my recent promo (to principal):
1. YOE: 3 years as associate + 3 years as VP
2. Cash: $450-500K total
3. Carry: ~$2.5M DAW based on our current fund. Standard vesting terms
Our lifestyle is definitely pretty good, however. I don't remember the last time I had to move around my weekends or vacations. Probably average 40-50 hours per week when not on a deal, and 60-70 hours on a live deal. We rarely participate in banked processes. I used to push more on comp and accelerated promo when I was an associate and younger, but over the years, I've realized how important WLB is to me especially now with a wife and (hopefully soon) kids so am OK with the relative haircut in pay as a tradeoff.
We don't have any non-founding partners yet, although there are a couple principals more senior than me and it sounds like cash comp doesn't jump up all that more (constrained by fund size) whereas you can probably expect carry allocation to roughly double (but it would be very case by case at that point based on performance).
If you don’t participate in banked processes what do your deals look like?
... like the best ones. It's just you and the target, no competition, all the time you want.
Did you have any carry when you joined at the start of fund 1?
Circling back here as there have been a few changes over the last year. I didn't expect this comment to remain the most fulsome data point, so figured it would be helpful to reflect the latest.
Cash: firmed up to ~$525K average after accounting for nominal bumps every year within-title.
Carry: Given a few fund-specific developments (won't go into details), has increased to ~$6M of DAW
I did not have carry in the first fund. I joined as an associate and was promoted after we had already raised fund 2. Carry was first given at the VP level even back then.
How is your carry + vesting structured? I have an associate role lined up for 2027 and was allocated a small amount of carry (quoted in bps, but roughly equals ~2-3m DAW) which vests on a deal-by-deal basis based on tenure following each investment. Add-ons don’t count into the carry pool so none of the past investments that I help out on will pay me anything. Is this a normal vesting schedule?
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