Private Credit Endgame
We all know that preeminent reason each of us opts to join "high finance" is it provides a path of lesser resistance (thinking versus entrepreneurship or becoming a C-suite at a F500) to living an upper middle class / upper class lifestyle (if you end up doing really well for yourself and are able to ride out the highs and lows). At the same time, we're looking to maximize income while minimizing workload. I'm no different. Currently, working in private credit at a larger shop (think credit arm of a typical MF like KKR, Bain, Ares, Blackstone, Apollo, etc.) that invests across the capital structure. However, I'd also like to consider what the potential outlook would be if I were to make MD/Partner at said firm. Questions:
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Does anybody know the math on what a MD/Partner could make with carry? Does this carry typically get paid out yearly? What would the annualized income look like including carry + cash base + cash bonus + stock (work for a public company)? Please note, when I say Partner, I'm not referring to a founding partner or a head of the division or region, just a partner that's risen up the ranks.
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Does this vary significantly between firms? For example, does Apollo still pay lights out on the credit side versus other firms (as is the general consensus for Apollo's comp on the equity side)? Does Bain also doing distressed work mean they get a larger carry pool (don't have anything to verify this but heard Bain has a generalist program at the junior levels - dk if that changes as you move up)? Does any company allow you to share in the carry pool on the equity side? Just random thoughts but wanted to determine whether one firm is comp'ing significantly more than its peers and why.
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Are the hours significantly better on the credit vs equity side as an MD/Partner? And I understand that the difference won't be night and day but when you have a family, even an extra 10-15 hours per week is huge (that may be an additional 2-3 hours you could dedicate every day to family which is an important priority for me)
To sum, I'd like to lead a certain lifestyle when I have a family and do plan to be the major breadwinner. Would love some help in understanding whether continuing to work in private credit can help me achieve those financial goals without a side income. And yes, I understand that there is no guarantee that I'll be able to move up the chain or ever make partner/MD. But I do see it as an achievable goal.
Thank you!
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it's going to be different at every fund and a lot of your income is based on the deals that you bring in as you get more senior. Don't waste your time trying to find the future value of earned dollars in FY26 so that your house payment in FY34 is covered... its a stupid waste of time.
Based on deals worked on, rough carry estimates / all in come...
ASO (1-4 years): $300-450
VP: $500-$1mm
Principal: $750 - $1mm+
Partner: $1mm+
If you think about a credit fund MoiC (1.2-1.5x) and fund size you want,you can roughly estimate the total carry pool.
$1bn fund finishes at 1.4x MoiC (good outcome) = $400mm profit. Less ~$80-100mm in fund paying back management fees and expenses. total profit = $300mm. Carry= 20%, so $60mm total carry pool over the life of a $1bn fund (5-10 years for last payout). Partners get fixed % of that pool.
This is super helpful. What’s a typical % of carry for a partner? 2%?
Although helpful - my question was more regards to some of the larger players that raise funds typically in the 10s of billions or atleast high single digits. I'm assuming that $500K to $1MM is probably an adequate estimate for VP comp (probably ~$600Kish on the cash comp side (200 + 400 split) and then additional carry. However, Principal and Partner is where carry really kicks in as a meaningful % of total comp. I'm assuming that a Partner at a $10B fund doesn't make 10x as much as a Partner at a $1B fund, probably due to less % carry allocation. But how much less? What's the DAW over the life of the fund?
My rough math:
$10B fund. Assuming a 1.5x MOIC given the fund dabbles in a lot of junior pieces (mezz, pref) which return 12-13%. $5B profit. Less ~$500MM paying back fees and expenses. Total profit = $4.5B. Carry = 15% (assuming lower than PE). $675MM carry pool. Partner gets 150 bps means $10.1MM DAW. Spread across 7 year life of a fund (on average), that's ~$1.5MM on an annualized basis just from carry. I'm assuming cash comp for these partners would be at least ~$1MM, likely higher. That's roughly around ~$2.5 - $3MM of annualized comp.
^ That seems to make more sense to me. Especially as I see some of the senior partners in the firm who, quite frankly, are loaded (like literally have their names published in architectural digest because of their vacation homes kinda loaded).
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Bump pls
Buddy gets comped pretty similar to his MM PE friends in the mid-upper $100,000s with carry and cash. Works at a large manager current fund around $10bn but not one of the Ares/Golub types. The upshot is that he works maybe 55 a week
What level is he working at? Assuming VP?
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Sounds a lot like GS Hybrid Cap / PC if so pls you could pm. I have a superday this Thursday for analyst offcycle in LDN
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Interested similarly in all points
Bump. Interested
Can anyone please weigh in from an hours/lifestyle perspective? Thanks.
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some funny misinformed figures on this thread. and the partners are still slaves whatever the figure is.
Care to share more informed figures? And you're essentially a slave to any corporation unless you own it but not really the topic being discussed
https://www.heidrick.com/-/media/heidrickcom/publications-and-reports/2…
if wage slavery is not the topic being discussed, why does your final paragraph mention you would like to lead a certain lifestyle? the partners at my shop are glued to their phone 24/7, they have no life. it is pertinent to the question being asked.
your first question - does anyone know the math on what a MD could make carry? senior analysts get carry at my shop. we also do co-invest. up to the manager when they pay but not necessarily annually.
I disagree. The numbers listed above are fairly accurate for my firm (MFPC/Distressed). Also, our partners absolutely are not slaves to their jobs. They probably average like 50 hours/week if I had to put a number to it
yeah what's their names, I'll give them a phone tomorrow to corroborate that? you'd have no problem disclosing that given you are posting anonymously.
The report you linked is for marketing professionals - not investment professionals. Cmon dude lol.
And I don't want to get into a debate but I asked the difference in hours between credit and equity - your comment about everyone still being a slave is literally useless lol. Just comment if you have incremental info man, what's the point of just gaslighting like that lol
Have you heard of Google.com ? https://highyieldharry.beehiiv.com/p/2023-hyh-wall-street-compensation-…
All you need to do is go to google.com and search direct lending compensation survey. it's not difficult. maybe it would prevent you asking unanswerable questions. asking in the difference in hours between two different asset classes omfg, yeah let me amalgamate a global universe of managers, managing different asses, with different AUMs, different geography's, different investors and different strategies to give you the answer to a completely ridiculous question. there is no debate - you're an analyst - I'll tuck you in and kiss you on your forehead - you will never be a partner, you are incapable of using a globally recognised search engine.
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