PE partners keep telling me I’ll “get rich” if I’m patient. Am I being naive?
Hey guys. So, I work at a small private equity fund in my country. When they hired me, they basically told me, “You’re going to get rich here.” I was coming from a place that was absolutely terrible, but paid me very well and had great benefits, so I took the job.
In the end, I was making about 86% of what I was making before, but I accepted it because they offered a larger bonus. They offered me a guaranteed bonus + an extraordinary/discretionary bonus based on certain targets.
I like money. I come from a poor family and have worked my way up. I’m comfortable today, but I want to buy my own apartment and a car. I’ve always been very open about the fact that I care about money, and over time, the partners started getting annoyed by it.
My direct boss actually told me that I’m not mature enough to get rich yet because I’m still very young, and that I need to be patient and stop wanting to get rich quickly.
Honestly, fuck “maturity.” Nobody here is working for a fucking NGO.
Anyway, they keep giving me the same speech: “Be patient, you’re going to get rich.” At this point, it almost feels like I’m an LP rather than an Associate.
Last week, my boss called me in and told me to think about whether I was really in the right place, because they’re looking for people who are willing to be patient and “get rich alongside them” — partners who are already fucking rich.
I didn’t say anything.
So I want your opinion: are all PE funds like this?
One more detail: my extraordinary bonus depends on targets for the portfolio companies that they have never clearly communicated to us. On top of that, there is no defined career path. I’ve asked about it several times, and I always get the same answer: “Be patient.”
To be completely honest, you should probably be looking for a new job. If your partners have to take the time to have multiple conversations with you about your cash comp and view you as being "difficult", they probably already view you as having low EQ / being a poor culture fit. Over time, PE partnerships across the industry tend to not promote, and push out people that they view as being "difficult".
MM/LMM PE funds are never going to pay you the same cash comp as staying in IB. The only way to outearn IB is to work at a well performing fund that offers carry and is deploying and returning capital at a rate well above where the average fund is performing in this industry (at present). If you want to make more money in PE, either move to a better fund with more AUM, or become more valuable to your current firm by sourcing and leading new investments.
The benefit to staying in PE is that as you build a track record as an investor, you'll be able to stay in the game while working less hours and cashing larger carry checks than the average MD in IB where you're only as good as your last year of fees (or at least that's the blueprint). If you're ok with a constant "eat what you kill" mentality on the sellside, you should move back to IB and work for an EB where you can start to carve out a focus vertical as you rise in your career.
That’s a good point. Since the fund is small, I end up wearing a lot of hats. On our last investment, I handled the deal end-to-end and even saved the fund several tens of millions before Closing.
I don’t really have anyone above me for support, since my direct boss is one of the partners. It’s honestly exhausting to handle so many different responsibilities — negotiating price, answering LP questions, dealing with portfolio company issues, etc.
Sometimes my job feels much more like a VP role, just without any carry.
Anyway, I’m going to start looking around and probably move back to IB. I’d rather make more money than work fewer hours.
Being honest with you, your post managed to come off as entitled, yet resentful.
I think I expressed myself poorly. The issue isn’t what I’m making now versus what I think I deserve. It’s the lack of clarity around what the path to good compensation actually looks like.
There’s no clear career path, and nobody has really built a career there long enough for me to have any precedent to look at. I already knew I would be taking a pay cut when I joined. What I’ve been asking for is some visibility into the path forward, and every time I ask, I’m told to be patient.
In reality, I don’t even talk about money that much. What I’m asking for is visibility into what my compensation could realistically look like in 5–10 years, especially since they’re the ones telling me they’re going to make me rich.
There’s no magic exit that’s going to make me rich overnight, and that’s not exactly what I’m looking for. I just want to understand what the path to getting there actually looks like.
From my limited understanding of the situation, it seems like you work for a smaller PE firm. The partners accumulated wealth throughout their careers and early investments with the fund and are now expanding their team. They are probably looking at you as someone to mentor and bring along with them. When you work for a new or smaller fund, they don't have visibility into fundraising and growth because they are unsure of it themselves. They can't give you raises and promotions without more management fees from AUM.
If you want a "clear" path, I'd recommend joining a well-established fund with multiple vintages of growing funds that have layers upon layers of senior associates, VPs, principals, directors, etc. that can show you a path forward. However, with that much bureaucracy comes with more internal politics and more people vying for carry. If you're willing to accept some uncertainty on your career path, staying put and doing your best to make sure each investment is a success will give the firm a better track record to fundraising, you'll be rewarded with carry at some point when you prove your worth, and as the firm grows, you will be promoted and have people working under you.
TLDR: If you need that clarity, find a more established firm but be ok with less wealth creation. Otherwise, stay put and trust the process.
You will probably read this and dismiss it, but you are coming off as arrogant and entitled. You are still young, with lots to learn - you are under the impression you're doing everything when in reality there are lots of subtle things you are likely missing. Things that only come with experience.
I suggest you adjust your attitude to be more humble, more appreciative of what you have and especially more willing to learn and get better. It's possible you've already fully tainted your reputation at your current firm and you need to make a change stat (as others have suggested).
Your goals are meager by PE standards (an apartment and a car are really not that much) although they probably work for your country (guessing India or Eastern Europe?) and you are not seeing the forest for the trees. It's true you can make much more than that if you apply yourself and are patient.
Drives me nuts to see you're also a woman. It reminds me so much of a former colleague of mine who had the exact same attitude (she was an associate who claimed to do the work of a director). Absolutely no one liked her, all her juniors complained about her, and she was a nightmare with externals too - especially the ones she had any power over aka advisors. She was pushed out and now no one will be a good reference for her. I tried and tried to make her understand that the way she was approaching things, as if she's better than anyone, will not work. She dismissed it as you probably will too. She's now without a job for a few years.
Thanks for the comment. It’s actually not a matter of “I deserve more.” What I want is clarity.
Fine, I’m going to get rich and I need to be patient. But I also need some milestones and concrete evidence that I’m actually getting there. And I don’t have that today.
I don’t have a bad reputation or a reputation for being difficult. I have a junior analyst who respects me, my direct boss gave me very positive feedback in my last 1:1, I regularly join the partners in important meetings with funds, and I’ve built strong relationships with advisors and bankers. That really isn’t the issue.
I came from a larger institution where I knew exactly what I needed to do to get to the next level. Here, I don’t even have visibility into what the next steps are.
And if I don’t have that visibility, what incentive do I have to stay when compensation is the most important factor for me, especially considering I made the decision to join this fund knowing I would be taking a pay cut?
The only “visibility” I have right now is that the partners apparently think I’m not ready to make money.
So it's either that the partner are dickhead or you're just not built for the small fund life since you want milestone and concrete evidence. Either way, you should prob start looking for a new job.
Let's start with the compensation point: you said your current job is 86% comp vs your previous one. That is very specific number which tells me you are ultrafocused on it. I will reiterate that in the context of a PE career, while you should never struggle for day-to-day expenses, base comp shouldn't matter that much esp. within the 20-30% band as long as the bonus and esp. carry presents a huge upside. Do not optimize for the money you are making today, optimize for trajectory and learning.
Next up, it's clear that your partners and esp. your direct manager should give you some feedback about milestones. That's a fair ask, but usually these milestones for PE folks are pretty clear: you get to make the big bucks when you lead your own deals. Are you doing everything you can to be on your way to doing that? Coming up with ideas, networking, meeting companies and advisors, sharpening your execution toolbox across multiple workstreams, helping portfolio companies? Be cuttingly honest about where you are and evaluate yourself vs. those that are ahead of you.
The part that's more an art than a science in PE is that you need to also be entrepreneurial and you need to "get" some of it on your own. I worked at an MBB before and their internal systems for promo / eval were very clear and very rigid imho. It's less handholding at a PE firm, as almost no one (incl. the mega funds you see talked about around here) has time to invest into this. The best folks I've seen at firms have tended to pick it up on the fly from their mentors with a bit of help.
To me it sounds like the partners feel you're not "getting it" but feel entitled to more. What exactly is "more" here, I'm not sure - you want a higher base? You want more carry? If you're honestly just wanting a higher base + bonus, that's lame af in my view as I said above. You need to optimize for the long term.
We spell our what people need to get comp increases VERY explicitly.
It sounds like your current employer isn't doing that, which is bad management. At the same time, you're asking for a of rigidity at a small fund...which isn't really a thing. How large is the fund? Have you done the math on ~$ they have to pay out?
But, I guess going back to "getting rich quickly". You are an employee taking no risk. You will never get rich quickly. If you truly want to be rich quicky, quit and do your own thing.
Could you specify some examples/ sample criteria that you specify?
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