PE backed Portco compensation - need some insight please!
PE portco opportunity at $500m-$1b revenue manufacturing company. Would be director/vp level on really small team (#2 to cfo).
Not a lot out there would love some help. I am in public company now so am familiar with that comp.
comp expectations for this?
cash 250-275?
trying to understand the compensation piece? equity what should I expect? $500k over 5 years ($100k/year?)
$350-$375k total comp annually?
Or is that understated/overstated.
I’m director level in f500 currently.
thanks for the help!
This varies from Portco to Portco, so take it with a grain of salt. At my portco ($1B+ in revenue), a similar-type role would be ~$200k base + 35% bonus + smaller equity (maybe 50k or so per year structured as p-units, some companies do RSUs - it varies). This is probably 10-15 YOE at my company
They'll give you a target exit valuation based on their investment case (make sure you understand the MOIC hurdle that gets you paid, progress, etc.), but it can go higher or also go to 0 based on how the company performs
I would also ask if you can co-invest (assuming you're liquid)
Hope this helps
Super helpful, thank you!
couple questions if you don’t mind.
1) the 50k is $50k equity value based of valuation? Not 50k shares, right? I was trying to research equity comp but a lot talk in % equity or units PSU etc. realize it’s different everywhere so that’s why the do it but makes it challenging to value in $$$
2) any tips for validating equity worth / risk? Is it just trying to understand what the multiple they are using on MOIC
There’d be a lot more risk in moving to PE (liquidity, less stable environment, etc) so I want to try to ensure that I’m looking at the equity fairly.
What is your current comp at F500?
190 base
35% bonus (always pays out, not unusual to go over 100% payout)
25-40 equity depending on performance (25 guaranteed)
How many hours and how stressful is it?
Probably 45 on average. Stress medium.
Hours/stress pre-director level were probably half.
This would be a definite increase in hours but comp as well. A lot more risk though in job security / career path
I would assume it varies significantly based on what your actual role would be - if you're a CFO analyst doing relatively unexciting things you probably won't get a huge equity component - if you're doing M&A work under the CFO you'll probably get significant upside - do you know what the thesis around the company is at all/ the JD?
It would include leading m&a activity in addition to core fp&a. Senior position.
Thoughts on equity component?
I was in your position very recently and left public for private (my private company is smaller than yours). $200K base, 25% bonus target, plus ~$100K equity (depends on sale price, but that's my base case) as a VP now. I'd say that private comp seems about one rung lower than public equivalent - e.g., my VP level comp was basically my Sr Director comp at Public co. But the RSUs at public company much more liquid/certain too, so I mentally discount the value of my equity stake a bit as well. My benefits at private co are quite a bit less generous as well so I definitely took a discount making the jump.
I'm curious, with $100k in equity comp, over lets say 5 years, what are you targeting for your liquidity event in dollar value? Are you taking a similar strategy to DAW with a 2x, so $1mm return? or greater? $1mm seems a limited upside scenario for mid/sr level tbh...or at least difficult to to rationalize from carry dollars as a VP in a fund.
I'm working for a founder-owned company. I just got a certain # of basis points and will only realize value when the founders decide to sell (but I don't forfeit what's vested if I leave). So my calc is basically equity value * basis points. Certainly not comparable to people with carry in a fund. But PE is much higher paid than corp fin.
Typically equity comp at PE-portco isn't an annual grant outside of promotions for tax purposes. $100k DAW PIUs at 2x would be a $100k payout at sale in Y5 (assuming performance vesting thresholds are hit). At my portcos ($70-220mm revenue) I've seen VP-level positions get between $100-250k total DAW (not annual) depending on YOE so these numbers are all within range.
What are the hours?
Think this really depends on where the valuation stands relative to the expected exit. Based on the revenue you mentioned I'd imagine that it's a big step back from where you are in terms of comp (both cash and LTV of expected comp) and I'd avoid making the move.
Happy to provide more color.
Mind expanding? Feel free to dm.
thought I could spend 3-5 years here and then try to get a cfo position at another portco or if cfo retires… making $1m+/yr
That’s vp level at my company and wouldn’t be for another 10-15 years if everything went right.
Id distinctio omnis nisi quod. Sunt adipisci possimus qui ipsum cupiditate voluptatem quia. Magnam corrupti soluta quisquam minus repellendus quas. Dolore reprehenderit velit quis totam recusandae voluptas sed.
Odit cumque consequuntur aut. Animi debitis facere ipsa quia odit in eum impedit. Et voluptates quasi ipsam corporis repellendus illum. Quos ut tenetur dolorem aut perferendis. Qui hic exercitationem culpa nulla nihil dolorum quo. Distinctio dolorum consequatur temporibus non architecto laboriosam voluptas ut.
Facere aliquam cupiditate et sed sequi. Vitae esse ut quo eum vel. Ea enim facilis saepe numquam dicta optio voluptas. Ipsam rerum perspiciatis id eveniet nobis voluptatem. Cupiditate dolores aut vitae adipisci vel commodi hic.
Modi soluta ut quod quam aut eius pariatur. Enim omnis delectus modi deserunt sunt nostrum. Non odit quae rerum possimus voluptas qui. Nihil repellendus est dicta repellat corporis doloribus impedit. Itaque sed ea iusto magni. Vel ut ratione dolor.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...