PE-Backed Corp Dev Comp Check
Posting this as my first comp review is coming up and I think I'm in a unique situation and could use some guidance.
I'm in a T2/T3 market as head of M&A (title is loose, but only person dealing with M&A on an extremely lean mgmt team where everyone just covers their own function with no help). About 75% of my time is spent on M&A and 25% is spent on ad hoc, one-off projects: integration, weekly KPI reporting, basically whatever needs to get done that the CEO and CFO do not want to or cannot handle. While my title doesn't reflect it -- and I don't really care about my title -- I report directly to the board and present during board meetings, run all meetings with prospective targets, run all diligence streams, sourcing, and post-acquisition integration (nothing like ERP systems, but more of the low hanging fruit to help onboard). Additionally, I'm the first point of contact for anything that comes up for our acquired companies. Basically, if those management teams have a problem, they know me well enough after the deal sprint and trust me enough for me to just solve it.
We're a PE Funds Port Co holding company in a very hot M&A space, and this year I've closed 6 transactions with 3 more under LOI set to close by end of Q1, potentially 4. Prior to this, I was a long tenured Senior Associate at another PE Fund in a similar geographic area.
We're lower middle market -- when I joined at the end of '24, we were ~$9M EBITDA, but after the deals we've completed this year, we're roughly $15-17M and with the other 3 coming on board will be at $20M+ by February/March. I also have 1-2 other targets that could want to re-engage at at moment that are not included in this.
Without giving too much additional detail, what does a reasonable comp ask look like? I know I've done very well this year but constantly am reminded by the board and CEO of the need to keep the Holding Company expenses (where my salary sits) in check.
Currently, I'm at $155k base with a 20% bonus target and what I thought was a healthy amount of equity. For the bonus, it's off of organic EBITDA growth, which I'm not a huge fan of (not to mention the amount is the smallest bonus I will ever receive). Target equity of $750k at exit.
What is a market ask for salary for my role? I've done my ChatGPT HW and looked at Charles Aris reports, but I think I'm in more of a unique role than those data points can provide. Any thoughts on how to try to structure it is helpful.
Finally -- how should I position it? It would be a conversation with the CEO (who would need clearance from the board). Outside of the job offer where I knew I was in a prove-it mode and a bad leverage position, I haven't negotiated anything with this team before.
Any advice is really appreciated.
How was it unclear what multiple your equity payout would be based on? Was that not documented anywhere? If not, then it sounds like they communicated verbally that it was 3.0x. If that was the understanding, then I would bring it up in the meeting along the lines of “w/r/t the target equity payout, just want to confirm that it’s 3.0x. And if there has been any movement on that, would like to understand why. I would not bring up the fact that you gleaned this info from a file that you shouldn’t have received.
Sounds like you’re doing a lot and are underpaid. I’d go into the meeting with a 100 day plan and goals for 2026 - walk the CEO through what you’d like to achieve and ask for feedback on it to make sure you’re aligned with company’s overall mission. Then I would ask for a 25% raise and add an improvement to the target payout (think about what makes sense). I think you have to make an ask here and their response will be telling - if they lowball you, well, then at least you know where you stand.
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You didn't mention your YOE...
7-8
Sounds like you’re well underpaid. I currently have 5.5 YOE and just talked to a headhunter about a Director of M&A role for a ~10M EBITDA portco with all in comp around $325 - $350. With base probably around $250k
Agree. You are underpaid. I am a long tenured PE Sr. Associate thinking about making a similar jump.
Went through a VP, Corporate Development process where target base + bonus was $325k for a $10mm EBITDA PE back portco.
Not only are you underpaid, but if this is an accurate representation of your contributions, you should have a significant amount of leverage. The way this is going to play out in reality is that you're going to talk to your CEO, and they're going to essentially talk to the Partner at the PE firm and say what you're asking for. Ideally you'd actually go out and secure another job offer so that you can say with a straight face that you have an alternative but you'd rather stay here (it will make it easier for the PE firm to justify giving you an increase). The reality is that in a T2 / T3 market (assuming you're in-office), the last thing this PE firm wants to do is spend a bunch of time trying to replace a strong performer that is adding outsized value, and end up having to pay that new person market pay with higher uncertainty than they get keeping you, a known and proven entity... If you've been directly presenting and interacting with the Board aka PE firm Partners / Principals, and they know you're good, they're going to want to figure out how to keep you.
Appreciate the response. What do you think a reasonable ask would be? I have a target in mind, but don't know how unreasonable it is. I'm assuming the pushback is going to be off of what the implied percentage increase is and not based off of value, no matter how bad of an argument that is.
Assuming I will get pushback on it, with the basis being the implied add to SG&A, how would you counter? Have thoughts here as well just not sure if they are best practice.
I think that the ranges others have mentioned seem approximately right (somewhere between $250k - $350k all-in). But I would REALLY recommend having another offer lined up before you broach the topic. Not that they'll fire you or anything, but if you can't credibly say you'll leave they have a lot less reason to actually give you anything more than a very nominal bump. The fact that the company will have doubled in EBITDA (which is obviously post-SG&A) should theoretically give them a bit more latitude. An upper bound that might be in play here is how much the C-Suite is making (if they were acquired at $9m EBITDA, I'd be surprised if they're making more than $400k - $450k in a T2 / T3 market, with the exception of MAYBE the CEO), but my guess is that they have a lot more equity exposure.
It seems like based on some of the other comments, you may have alluded to and subsequently edited out something about your equity payout only vesting if there is a 3.0x MOIC on the investment for the fund? That's.... pretty insane. Every fund does it differently, and I work in the value-add infra space so targets for MOIC are lower, but we typically do a graduated scale of equity payout starting at 1.5x, with the incremental percentage of net proceeds increasing as MOIC improves.
More concretely, they will probably push back on the ask based on % as you suggested, which is part of why I think it would be MUCH better to have an offer in hand. It's one thing to say "I want a 60% pay increase because I'm great" and a very different thing to say "I have an offer that would represent a 60% pay increase, but I really want to stay here, so how can you match it?". The other benefit is that you'll get real data about whether you're underpaid, because the truth is that we're all speculating a little bit based on some generic information, but we don't know you or your market and it's possible that we are wrong.
As far as the SG&A point, I wouldn't exactly SAY it this way, but the actual argument would be that you're a critical piece to the roll-up story, and the extra $150k - $200k is way less of an impact than a potential one year stagnation in M&A-driven growth (which will extend time to exit, reduce IRR that they can ultimately market for future fundraising, etc...) while they try to find and integrate a replacement who can actually keep the engine running (plus the reality is that whoever they find will end up costing close to your ask anyway). If you really wanted to be aggressive, you could also say that if you're supposed to be so focused on the SG&A impact on the entire business, then you should be sharing in more of the upside with an equity structure that isn't so binary. But realistically, I think that would be a dead-end because they aren't going to restructure their entire MIP because of non-C-suite M&A guy... If you wanted to go down that path, I think you'd have to try and rile up your C-suite about the awful structure and get them to fight the battle on behalf of all MIP holders, which probably isn't worth the effort.
Anyway, that's pretty stream of consciousness but hopefully it is helpful.
I'm in a similar role. I think you should shoot for $250K of cash comp (base + bonus). The equity amount seems pretty good (if it's achievable).
I would push for ~$300 all in. You have nearly doubled the size of the business single handedly, and have proven your value. If you don’t get at least $250 all in you should find a new gig asap
All generally good comments in the above. I'll add a data point just because I comp checked this type of role with a recruiter very recently:
I'm just going to copy the raw notes below, hope this helps.
Opportunity 2 – MM PE Benefits & Consulting Platform
Opportunity 3 – Prominent MM Fund Backed Services Roll-Up
Hey - do you mind sharing the recruiter? In market for similar roles and would love to connect with them. Can PM as well. Thank you!
Harvey, thinking of getting out?
Dhshs
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