Steve here,
How much does everyone think a partner at a PE firm makes over the course of their career? Can someone layout the math? Presumably a partner is making 1-2mm in cash comp and then how many dollars at work in carry per fund? Thoughts? I’d venture to argue that the juice is simply not worth the squeeze here folks
| +89 | Nothing to do at work & bored to hell | 9 | 6h |
| +67 | Do people over-index on 'moats' | 20 | 1d |
| +52 | Predicted Net Worth in Trodden Finance Path by 60? | 20 | 6h |
| +44 | Biggest (avoidable) failures in PE Investments? | 25 | 1h |
| +38 | Why is ROIC never really a topic when looking at companies IRL | 11 | 3d |
| +28 | SGE Final Round (Investment Summer Analyst) - Case Study & Technicals? | 14 | 1h |
| +19 | Senior IR Lifestyle | 3 | 5d |
| +12 | How to approach Buyside Recruiting | 3 | 4d |
| +12 | Honest opinions needed about lateraling | 4 | 1d |
| +12 | NY LMM PE Recruiting | 3 | 1d |
Career Resources
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.
Based on the most helpful WSO content, here's a breakdown of what a partner at a PE firm might make over their career:
Cash Compensation:
Carry Dollars at Work:
Lifetime Earnings:
Challenges:
In summary, while the cash comp is solid, the real wealth in PE comes from carry. However, the timeline for realizing this wealth and the associated challenges might make some question whether the "juice is worth the squeeze."
Sources: Data: Average Private Equity Compensation and Carry from Associate to Managing Partner, Data: Average Private Equity Compensation and Carry from Associate to Managing Partner, Confused about carry at PE Fund, How do carry dollars at work translate into annual compensation?, Comp Breakdown for MF PE Partner?
Somewhere between 20-50mm purely in lifetime pre-tax carry dollars is the “base case” imo if you spend like 10 years as a partner after a traditional path to that seat.
Upside case: 50-100m
Downside case: 0-20m
Would agree with this - if you are a workerbee partner and have a "base case" outcome, you will have probably $25M to $50M in net worth by the time you're 50-55 yo. Not bad at all, but if you want PJ and yacht money, you gotta go start your own fund, or be early at a fund that scales tremendously (Thoma, Apollo, etc).
Uncle is an LMM PE partner in his 40s. 10-20M in NW, probably more with carry and stuff like that. I think the standard partner across all levels of firms is going to be well-off but not FU rich. The only ones who get to FU rich are either those who make their own fund or join one early as it scales up to becoming a UMM/MF name. I am sure the early employees at an NMC are doing phenomenal for themselves right now, or even something younger like Arcline for example.
There is a huge range of what it means to be a “partner” and the economics of a lmm firm versus umm firm are way different. That said, the people who build good careers by being productive profitable deal leads over 10-15 years wind up in 9 figures in my experience. You don’t need to run the firm or start a shop, you just need to be willing to grind it out and not blow up your marriage. That will disappear when trump changes the tax rules on carried interest of course.
You think that will be the case going forward? There will continue to be $100+ million outcomes for your run of the mill, non-founder partners?
Most of the 9 fig PE outcomes I've met are on their 2nd or 3rd marriage, so I don't think blowing up your marriage really matters for your odds of success lmao
look for headhunter reports showing PE compensation figures based on position/fund size/geographies, etc.
not so hard...
Juice not worth the squeeze?
How did you grow up to even say something this privileged?
If you have more than 10 million dollars in net worth, you are absurdly wealthy all things considered.
You are saying that the juice isn’t worth the squeeze when most Americans never even get the chance to see the fruit in question.
Huge distinction between Partners having a stake in the GP ("equity partners") and non-equity partners. Having a stake in a GP requires you to launch your own fund nowadays, as no one is leaving amongst the equity partners at established firms and they all get absurdly rich. In the past (20 years ago) if you were promoted to partner you would get a stake in the GP, not so anymore.
To see why, just consider that the GP (say 10 partners, and that is being generous often times it can be as little as 2-3 individuals) will often get 60-70% of the total carry pool. The rest will be split by the entire firm, sometimes amongst hundreds of people for the larger houses.
Over the course of your career for a large cap fund, conditional on making it to Partner at a great firm (top 5-10% outcome of those starting as PE associates) and staying there, you can expect to make 0-100m of carry (50m being median) in your lifetime. The bulk of it will become liquid in your fifties likely.
Know also that it takes ages for carry to hit your bank account, I know someone Partner (not equity) for well over a decade and has cashed out about 10-20m of carry, with much more accrued or being vested of course (but likely 5-10 years away).
Working in PE is a great way to make your bloodline rich but not really yourself (well, at least not in time when you are young and healthy enough to enjoy it the most).
In the early innings, it’s hard to appreciate the power of compounding capital at above market rates due to fee free coinvest through tax advantaged structures and strong PA returns over long periods at time, but it really adds up. Part of that is obviously the extended bull market, but if you are a good investor at a successful firm the base case is that your net worth far exceeds the sum of your pretax carry
Repellat sit laudantium ea dolorem. Reprehenderit enim veniam omnis sunt id quo fugit. Voluptatem sit voluptate recusandae culpa amet est. Unde sapiente quaerat voluptatem dicta provident autem. Aut quisquam dolor porro autem qui.
Tenetur necessitatibus unde et laborum. Voluptas ea magni repellendus unde ut dolores. Et mollitia tenetur qui iusto. Ratione qui vel quo et. Non nam facilis recusandae deleniti. Amet consequatur eius tempora ea quia. Suscipit in nostrum similique maiores perspiciatis mollitia nisi.
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...