PE Bonus Was Horrific...
Trending Content
Career Resources
WSO Free Modeling Series - Now Open Through
April 30, 2024
9 Free Financial Modeling Lessons
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
+Bonus: Get 27 financial modeling templates in swipe file
+Bonus: Get 27 financial modeling templates in swipe file
Have you tried lateraling?
I mean, it's a small PE shop and you took the offer straight out of school. Yea, you're grossly underpaid, but then what were you expecting? The people I've met who went straight to small PE shops (not anything elite) hadn't made the cut for IB as undergrads. If you think you're undervalued, stop complaining and lateral asap.
Pretty much this.
There's usually a reason a PE shop hires out of undergrad -- they' can't afford an BB analyst. Lateral ASAP is what I would advise
Thanks for the advice. Was expecting to not be grossly underpaid to be honest. Had an IB return offer, but was over IB after my SA stint.
sounds like you know what you're doing: best of luck
What was your base like? I have a few friends working at smaller PE shops straight out of undergrad and most of them get 60-70k base with 10-20k bonus. You seem to be in line with the market.
Firm could be testing you with compensation these last couple years, I can see some small sized firms are unlikely to invest a lot into the growth of their juniors in fear of them leaving, so you may need to prove your willingness to stay and move up because your partners want to know you want to fill bigger shoes and they might already get a sense you want to leave.
How big is the fund? What's the fee structure like and how many people work there? You should be able to do the math to see if they are being fair and also how much future upside there is.
Do you not look at your portfolio company's monthly results, seriously? Since you're at a small shop you should be able to answer that question - "Are your portfolio companies performing well?" - for yourself. Pull your head out of the sand and figure out if:
As someone also at a small PE shop I would take the 0 and 14k as a personal slight, and be looking to leave regardless. I also know what our portfolio companies returns are...
BTW how hard would it be for someone like OP to transition to BB IBD?
Not very. BB IBD is no where near as selective as it was a few years ago. He'd have no problem.
Thanks for the candid advice. Portfolio companies are performing well, no issues there. Partners are not bad investors, the issue is that carry is the only pot of honey available to pay incentive comp, and I'm a long way off from carry. Ex: KKR can afford to pay bonuses out of 2% mgnt fee, we can't.
i advise you to lateral to another PE firm, which will be tough, but could work for a lower MM fund that's recruiting off-cycle. or look for a family office role centered around direct pe investments, that could work, and pay you much better.
OP I've been in your shoes and I'd 100% recommend lateraling to either a BB IBD group or another fund that will pay you decent.
I would bet my bonus that your bonus will not improve that much in year 3. It's time to move on. Partners at small firms with this compensation mentality won't increase your pay, they'll wait till you burn out and hire the next smart kid they find who will take the same comp you were tired of.
Thank you for your advice. How bad was your comp situation when you were in my shoes, just out of curiosity?
Lateral...and perhaps work on your PA.
In my shitty bonus years my PA gains more than made up for it. Then again, it might be easier for someone in my situation (buy side in public markets & lots of exposure to mgmt teams).
I would agree that depending on your base, your total comp does not seem out of line with lower mm firms in my region.
Try and stay positive by realizing you're getting more exposure to the M&A process than in any other role you could have (assuming you've gotten to close a few deals). Learn and develop as much as possible and you should be an attractive candidate for other positions if you choose to lateral.
Questions
What state/city? What industry do you all focus on? What are your workload/hours like? What deals did you work on? (Were they big, did they go well, did the company have good flow?)
I could be wrong but these things are important to take into account. You're also an analyst, I am surprised a "small PE shop" has an analyst program that's why I asked for clarity on location and industry.
Shop is in Denver, and we're industry agnostic, hours range from 65-80. We don't really have a formal "analyst program" as I'm one of two analysts.
just a word of advice, you're one of two analysts, you just mentioned the city and AUM and your bonus in a public forum. I'd exercise a little bit of caution if I were you. unless of course, you just lied about the numbers to throw us off...
what's the AUM?
AUM is 350mm
Perception is reality.
You've given out too much information. Please delete specific numbers and details about your fund. If you're one of two analysts, it will not be hard to identify you.
I think it'll be hard to lateral into a decent private equity gig with your experience. I would try, but if that doesn't work consider trying to lateral into IBD.
Was there an annual target bonus in your offer letter/contract? If they've been undershooting that consistently (by a lot), I'd try to lateral.
I'd echo the above. 350mm AUM is decent enough that they should be able to pay you market or at the worst slightly below market rates. You've put in 2 years which is a good amount of time and you should have enough experience to pretty easily make the case that you could be an associate at a MM firm.
If I got those bonus' I would have a sit down and seriously ask why they're compensating you the way they are. If you're getting no bonus is that the same for the associates and VPs? Not enough money is bullshit if they're taking a management fee on 350mm. Maybe they can't pay you a 150k bonus but they should be able to do enough to keep you interested, especially if you're as good as they say you are.
Similar story for associates and VPs, well below market comp. Agree, I'm not asking for the world here, just looking for some semblance of a reasonable bonus.
I feel like this bonus might actually be appropriate. I mean the shop is very small, OP doesn't have a solid skill set from the usual 2 year IBD stint or any PE experience, and has no carry.
Thanks for the input. I don't think market numbers from WSO comp guide, Hendricks, Etc. support $14k as being appropriate. If I suck which is your argument, I would be the only one getting screwed. Instead, everyone VP and below is being screwed indiscriminately.
I wasn't saying that you suck. I'm saying that market comp for first year analysts at megafunds (straight out of college with no IBD experience) is similar to first year IBD. Bonuses are pretty comparable at that level. These are funds that are much, much larger than your fund and have a good amount of income from management fees. How many funds has your firm closed? You say that the only pot of honey that they have available to pay incentive comp is from carry, but if your fund is relatively new or if the more recent funds haven't done terribly well, then you have you answer.
You haven't told us your base, so it's hard to make comparisons, but let's talk bonus numbers. Looking at the Hendrick's report cited above, they don't even have analyst comp numbers. They have associate / senior associate comp which is for some reason lumped together. For a fund your size, between 250 - 499m, the range of associate bonuses for last year is 25k to 125k. Expect toward the lower end for associates compared to senior associates, and expect even lower than that for analysts. Suddenly, your comp doesn't seem so out of market does it? Is 14k too low? Maybe, but if you asked me to guess the bonus of someone in your position working 65-80 hours a week for a firm that size I wouldn't guess more than 25k.
You made a risky play joining a small fund straight out of undergrad. It might pay off if you stick it out and end up getting carry in the fund, but until then I wouldn't expect much comp. If you're getting good experience and think you could keep rising the ranks, maybe you could stick it out. I would personally leave.
Wait so is every mid/junior level employee at your firm dissatisfied with comp? That's really not a good sign if so.
I was in a very similar situation. It really depends on the context. Here are the questions/considerations that served as the basis for my decision:
When I was in your situation, I answered "Yes" to all of the above and stayed put. It's worked out well thus far. The PE industry requires much patience. This is not only true from an investing standpoint but a career standpoint as well.
Aut ad aut vel voluptas. Consequatur magnam sunt dolorum velit. Deserunt voluptatem ratione id et odit.
Magni temporibus at minima voluptas dolor praesentium aperiam. Omnis voluptas omnis odit totam nam facere nostrum voluptatem.
Illo maiores voluptatem quaerat. Quia eos itaque alias consequatur rerum et. Perspiciatis et adipisci quia iusto eligendi reprehenderit quod.
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...
Qui nulla inventore fugiat saepe aut quia. Ea unde perferendis fuga esse. Voluptates similique quo et vel suscipit. Quis fugit pariatur et labore tempora repellendus est voluptates.
Voluptatem atque laboriosam asperiores nisi. Dolores quo impedit ut aliquam culpa delectus debitis.
Voluptate nulla quidem ea eum quia et. Et non et veniam repellendus consectetur unde praesentium. Voluptatem exercitationem atque cupiditate dicta eos. Totam nulla quos quia eum alias. Dolorem aliquam tenetur est enim et et.
Ex consequatur iusto facere cupiditate. Consectetur eos veniam nihil laboriosam. Voluptas ipsam soluta id natus dicta dolores molestiae.