MM PE Comp - London
Speaking to recruiters, its apparent a lot more MM shops are offering carry to associates, just wondering how much carry is typically offered (and the structure) at this level and also what total comp progression looks like.
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Ah, the London scene! It's a bit of a jungle out there, but let's swing through the vines and see what we can find. Based on the most helpful WSO content, here's the scoop on carry and comp progression in MM PE shops:
Carry for Associates: It's not the norm for Associates to get carry in MM PE firms, but it's becoming more common. When it is offered, it's usually a small percentage, more of a gesture to align interests and retain talent. The range could be around 0.1% to 0.5% as a starting point. It's more likely to be on the table at smaller funds or for Senior Associates as a way to compensate for potentially lower cash compensation.
Carry Structure: The carry could be deal-based or fund-based. Deal-based means you get a slice of the profits from individual deals you work on, while fund-based means your carry is a percentage of the overall fund's profits. The latter is more common as it aligns the team's interests with the fund's performance.
Total Comp Progression: For Associates, total comp typically includes a base salary and a bonus. The base can range from £50k to £80k, with bonuses varying widely based on fund performance and individual contribution. As you climb the ladder, total comp can increase significantly, especially if carry becomes a more substantial part of the package.
Remember, these figures can swing like Tarzan depending on the size of the fund, the success of investments, and the overall market conditions. Always good to have a chat with those recruiters to get the latest gossip from the jungle floor!
Sources: Carried interest for Associates / Senior Associates?, How does MF Carry work?, LMM PE Associate Experience - What is it REALLY like?, MM pe vs MF, Am I missing something about buyside exits?
Whenever you hear the word “carry” just discount it to 0. Believe me, very few people in PE end up with some carry on their bank account
Could you please explain why? Sorry junior IB analyst, just wondering abt the reality of PE
First you need to spend 5-7 years at a PE fund to get meaningful carry (some associate have carry but it will just refund the money they would have made if they stayed in IB)
And then you need to wait another 5-7 years (need to invest and sell the company). And I have seen example of companies that have been held by PE fund for 10+ years and no one wants to buy them
So you will get meaningful carry if you stay 15 years and if the investment goes well. IF IF IF IF IF IF. And most people won’t stay that long (and it’s not just a matter of staying, it’s also a matter of getting promoted (harder in PE than in IB) and not burning out)
Hey - I work LMM, fund size is £250 - 500m (sorry don't want to give precise number) given anon.
I am in third year, so Senior Associate / Investment Manager - £ at work is £1m. All in comp is probably around £150k (low side tbh).
go to a bigger shop lol
It is a fair point.
Pros would be: higher cash comp for sure, and carry - IF one were to make it up
Challenge would be: more layers, more competitive, meaning probability of realising carry is lower
Important to consider where there is a path, ideally at a growing fund
Thanks for the reply.
In terms of the £ at work, how exactly does that work? As in I assume you get a % of the carry pool and that works out to £1m? How does it work in terms of actually realising the carry as well is it a case of only seeing it once the fund has sold everything off or is it vested yearly?
If easier I can PM
Thank you!!
Fund carry - paid out via European waterfall. Would probably be 5 / 7 years before seeing it in bank account.
Vesting is effectively 5 years but has good / bad leaver provisions
Curious what the base/bonus split is
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