I have an offer at a middle-market private equity firm that is fairly new. They just closed on $1.2bn, trying to get an idea on compensation at the Post-MBA VP level. What are thoughts on $175k base, $175k bonus, 100bps carry?
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Value the carry. Assume $1.2B goes for 2x to $2.4B. Of what you've earned ($1.2B) your firm gets 20% ($240mm). Of that $240mm, you get $2.4mm. Assuming a fund life of 5 years, that's $480k per year.
That's $830 ($175 + $175 + 380) total comp, which, based on my judgment after years of salivating over databases of VP comp, seems like on the higher end for a shop your size.
It's also more than what VPs at my shop make (UMM/MF).
Thanks! What would someone at your shop make as a VP in UMM / MF? I can triangulate around carry from there.
Great calc but I would caution around just assuming the 2.0x. Check the historical fund performance by googling. Often times public LP's will disclose participation in the older vintages/in new fundraises and provide marks for previous funds.
Those returns are post fees u make carry off pre fees 2x super reasonable pre
I'm in this photo and I don't like it.
That is probably market if the fund just raised the $1.2B and it's a step up from the last one. If it's got multiple funds going around the same size then the comp is a little light, more on the cash side.
I also wouldn't calculate carry over 5 years...more like 7+
Disagree with everyone else.. I'd treat carry like I'd treat a stock grant from a tech company: divide the carry over the number of years of vesting and add it to your compensation.
If you think about it, every year you vest your carry is effectively "earning" your carry - it might not actually hit your account until much later in the fund's life but by that point you've already earned all of it and should hopefully have another carry allocation in a new fund that you're "earning".
That cash comp is market and carry is arguably above market, depending on how new the fund is. In my view, generous offer.
Agree. Comp in line and generous carry
Cash comp seems low.... i have no data points for this but it just does. Likley not an apples to apples ocmparison but 1st year associates at EB's will pull more in cash than that???
Again , just a gut thought -- i could be off.
This is standard and in line with an offer I’ve seen at a non nyc fund that was similar sized. Carry a tad high but not meaningfully (expect more 75bps)
You can argue both ways that the comp is slightly above/below average, but the overall message is that the comp package is a good one and shouldn’t be viewed negatively when evaluating the offer. My personal belief is that you should be pleased with the offer and if you like the firm/people, you should accept and not look back.
Good offer. I know a fund that just raised the same size fund in January and their cash comp is in line
Thanks. Any idea what carry was there? Heard from someone that 25-50bps sounds more reasonable.
No idea
25-50 seems low for a post-MBA VP. I’m at a similar size fund and get 40 bps as a senior associate, no MBA. I would think 75-100 bps seems right for post-MBA VP
There's a GoBuySide benchmarking report out there in the ether that has benchmarking by fund size on base + cash bonus + carry if you can find it.
what school? did you have prior exp?
Assume one of the top 3 and yes 2 yrs banking, 2 yrs PE. As an update to this, checked with a bunch of peers 100bps is very high, most of my peers are getting 25-50bps.
Are your peers getting 25-50 bps at similar sized funds, or significantly larger funds? 25 bps on a $1.2B fund is only $600K DAW, which seems really low.
Following. Very helpful thread everyone. Thanks so much!
Bump - interested to hear more on this. Isn’t $350k seen to be pretty low for VP level?
how would both (ie $350k / ~$2.5m Carry) compare to large UMM / MF?
feels like mid level comp is perpetually a mystery to people, we need more info out there. VP2 at a UMM fund (10b+). $800k cash, $7.5m DAW
Curious. What was your comp progression from ASO1 to VP2?
Thanks - much appreciated! In line with the other poster, curious how this evolved? Were you allocated the full $7.5m upon VP promotion or do you have annual allocations instead? Equally, the number sounds decently high - are you aware how this ranks against your peers (higher/lower than comparable)? Sounds definitely juicy!
$800k is salary + bonus? And DAW is at an implied 2x fund value? Seems pretty above market if you’re being honest..
Listen, we are on an anonymous forum here - make of the info what you will...
Yes, the cash comp is salary + bonus (my salary is sub $350K). DAW on an implied 2x on the fund. It's not what I was granted at promotion to VP, I got a bump at end of VP1 given performance.
I'm definitely above market. Part of it is the fund, part of it is personal performance. most of my peers (VP1 - numbers spread out a lot more over the last couple of years) at large funds were somewhere in the 450-550k comp range; smaller funds were $400-500k. Carry all over the place - anywhere from $1.75-2.5m on the lower end, $8m on the high end. I'd say most concentrated between $2.5 - 4m
Comp progression: three years as associate, no carry, low 300s to mid 400s. VP1 at high 500s
We all know you’re gonna accept the offer no matter what is said in this thread, so why fret?
brightstar capital partners?
I don’t get the hype of pe if this is really what you can expect to pull in at a place like this
This person is getting ~$830k in annualized comp as a VP1 (assuming fund gross moic of 2x)...that's pretty good in my books esp. considering he/she is likely under the age of 30.
Don’t forget the carry is tax-advantaged (at least for now)… $500k in carry is more like $750k in cash comp, and if you turn a 3x vs a 2x it now looks more like $1.5MM in cash… which again, is being earned by someone in their 20s (albeit probably not paid until mid-30s)
It’s a pretty stupid amount of comp honestly, literally taxable equivalent of a mil a year - that’s insane
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