PE Compensation - High level guidance on PE compensation?
Can someone provide high level guidance on PE compensation at a middle market PE fund (~$1-2 Billion AUM) for different positions: ie. Pre-MBA Associates, Sr. Associates, VP, Principal, Managing Director. It would also be helpful to get a sense of the breakout between base, bonus and carry.
1st year pre-MBA: $225k - $275k aka $100k - $140k base + 100-150% bonus (with a few outliers on the top end). If you comp below $225 you are working at a shitty fund..
You sir are an idiot, a 100-150% bonus is not something a pre-mba associate is guaranteed. If the fun is rocking shit and you are pulling your weight that is very possible but the whole point of a bonus is to reward stars and let everyone else know to step their shit up.
Not sure how it works for megafunds taking large classes, but the above view of PE bonuses are wrong at the junior level. From what I've heard, at smaller MM firm (like analyst classes of 3-5), as long as someone is not completely fucking up (which would be hard to do if they've already sealed a PE job to begin with), bonuses at the junior level are tied to the performance of the fund and not so much to individual performance.
The goal is not to create a cutthroat competitive environment akin to banking. Banks tier their analysts because they know that they are recruiting undergrads with no real experience and they know that some will pan out well and others will suck - but they don't really care because it is more important to have bodies to do grunt work vs. hiring 100% quality. With PE firms, supply is much higher than demand and they don't need to hire sub-par analysts/associates.
As for comp, a good realistic number is $200 - 300k all in for 1st year pre-MBA Megafunds and other top funds are closer to the $300k range and smaller MM firms are closer to $200k
I haven't heard of a single place that has guaranteed a bonus for a 1st-year pre-MBA. Some places don't say anything about the number in their offer letters while others will provide a target bonus %. However, from what I've heard, most places keep their comp consistent year-to-year, assuming their fund doesn't have some sort of freak year. So that plus the fact that most analysts will earn the same means you can get a good idea of your comp target. At my place, there was nothing about bonus in the offer letter, but the COO basically told me to ask the 1st years currently working there to get an idea.
The above is way off market
please elaborate?
that's what megafunds are paying these days, not the average $1B mid-market fund.
225k is definitely not "shitty"
Any estimate on on comp for MM analysts out of undergrad? I know this has been addressed before but I just wanted to get an up to date perspective.
interested as well
There was some dude here who had an offer for VP at a good MM PE fund. He said that offer was 400K base and 120 bps carry. Someone else said that that translates over to about a 1MM+ bonus (not sure if this is annual or after 5 years, no clue how carry works.)
1st year pre-MBA at a $1B-$3B fund is probably looking at $200-$225K all-in in their first year. Funds vary how that is split between base and bonus, but typically it's somewhere around $110K base w/ up to 100% bonus.
If you're trying to maximize comp over the next 5 years then stay in banking and you'll end up as a VP pulling in $500K a year before you're 30...and you'll probably be exhausted and somewhat bitter.
The true comp disparity in PE doesn't come in to play until you have significant co-invest and/or grab some carry in a fund that performs well.
BananaStand or anyone else, how common is it that a first year analyst with no BB experience will get over 100K comp all in? I'm about firms with about $1-5B AUM.
Unheard of.
BB's pay their first years 120-145k all in; it's unheard of to pay over 100k all in to those going to MM PE out of undergrad?
It's not unheard of... it's fairly standard (although definitely not a given) for analysts at some mm PE firms (right out of UG analysts with no IBD experience) to get paid a standard IBD analyst salary...
MM PE firms that hire undergrad comp to street (maybe more bonus?) and sell you on the PE experience
I don't have tangible evidence, but it seems like it would be fairly common. I would assume that a 1st year Analyst at a mid-market investment bank or larger would make a minimum of $60K base + $40K bonus and a maximum of $70K base + $80K bonus (depending on the year).
Given the data points above, I would assume an Analyst at a $1-$5B AUM PE fund w/ no investment banking experience would be around $70K base + $60-$80K bonus. Again, I have no way to back that up though.
I did have 2 friends go straight to megafunds out of undergrad and at the time they pulled in about 10% higher than the high-end of 1st years on Wall Street (at the time was about $150K all-in).
yes 100-150% GUARANTEED is bunch of bullshit.
but it is true if you're pulling 225K as a 1st year pre mba associate (did 2 years in banking), you're at a shit fund or your prestigious fund is underperforming
market pay is 250-275k for mega funds + top tier mid market funds (new mountain, cd&r, wcas, etc.)
so unless you're at a top 50 fund, your fund is "shit"?
Guarantees are generally used as a tool to incentivize lateral hires to lead their current position where they have a fair degree of visibility on where their comp will end up and jump to a firm where that is less visible, the guarantee mitigates some of the downside risk. Aside from that its only used in terms of being competitive... so if its standard practice to grant a guarantee for that position at that level, than it will be used.. but this isn't really something I've heard of it in the past.
Its also pretty hard to, at a jr. level negotiate a contract with a specific $ value guaranteed comp... it has happened, but its generally not the norm.
The fund I'm going to said to "expect a bonus starting at ~125% of base". I'm a newb what do I know but I interpreted that as the "base bonus" with upside depending on individual and fund performance. Then again I am going to a top 10% vintage year performer...
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