Private Credit/Debt/DL Comp Variation
Hello everyone,
Saw some threads on here about this but was wondering how much approximately does comp vary in cities like Chicago/Charlotte/Dallas for those in private debt and what does the total comp look like as you get promoted? Have only heard comp about the MF shops in NYC.
Curious as well to others thoughts, but I’ll start. I’m an associate for a leading direct lender in one of these cities and all in at about $160k (110k salary and 50% bonus which will be less this year obviously). VP gets up to 275k, Director 400k, MD 500k with upside for more as equity is involved. I’ve been told frequently these are lower numbers than the industry, which may be due to us not doing the typical IB recruiting (some IB for sure but a lot of analysts out of undergrad and TAS experienced hires as well as credit people from banks), as well as primarily being senior/uni with not a lot of 2L/Mezz. However COL adjusted $150 in my city is pushing 225k in NYC so I dont think it’s really much of a cut. Would also add hours are pretty awesome, usually between 45-60 with only a couple weekends a year. Think most senior oriented funds are similar to this, with the more opportunistic/risky ones paying more. But I could be wrong and don’t have many other data points to go off of for lower COL cities
You’re missing the COL adjustment. NYC is 30%+ more expensive than my city. These numbers are about that much higher and are probably for NYC. Would love to hear more lower COL data points. If those are higher it’s probably because they invest lower on the cap structure
Would you mind elaborating on the equity portion of comp you mentioned earlier? Is that referring to carry? How much carry can an MD expect?
No, unless you’re raising a traditional fund every 3-5 years there’s no carry involved. We have a variety of funding sources via an asset management arm, balance sheet from parent owners, and debt issuances. As you move up the ladder more comp is equity related which takes a while to vest. This aligns incentives and decreases turnover
Couple of harder data points from my experience (both as an employee and talking to HH as someone partially responsible for recruiting)
Firm 1: Smaller DL (~$1Bn AUM) in a lower CoL and no-tax location (think FL or TX)
Associate 1: Something like ~$90k base + 75% bonus (no carry / co-invest)
Associate 2: Something like ~105k base + 75% bonus (no carry / co-invest)
Firm 2: Mid-size DL in NYC (figures likely a bit under "market", particularly as you move up in seniority)
Associate 2: Something like ~$100k base + 100% bonus + Co-invest
Sr.Associate (no MBA): Something like ~$130k base + 100% bonus +Co-Invest
VP: Something like ~$160k base + 100% to 125% bonus + Co-Invest + Carry
Other Data Points
The standard "market" for DL associates w/ IB experience is between $200k - $250k all-in for your normal HCOL cities such as NY. Few years ago the $200k all-in was standard, but that has moved up some in the last few years. As others have noted, it's going to vary widely though by fund size, investment strategy, firm brand name, pure-play shop vs. multi-strategy asset manager, etc. Once you get out of NYC, it really can be all over the place, but it's likely going to be $200k or under on average.
I've seen VP comp all over the map. Have heard some numbers that are more PE-like in nature of ~$600k+ all-in cash comp for some larger firms, but those are likely more "experienced" VPs (i.e. not your 29 or 30 year-old direct promote with no MBA). Standard is probably somewhere in the $400k - $500k cash comp ballpark, with some carry and co-invest economics on top of that.
Generally speaking, you're not going to get PE-rich on the direct lending side. That being said, you're going to still get paid very well and generally live a much better lifestyle than your MF PE peers.