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Definitely too low for MFs
so how much you think for first year associates (i.e. straight out of IB 2yr analyst program)? 200k gbp?
Considering MF PE Associates get $300k in the US, probably. Is there a reason why London wages are significantly lower than NYC's?
It depends per fund but somewhere in the £150-200k is feasible. Average would be closer to ~£170k. Top end I've heard of is ~£250k.
bump
1st year assoc in large cap PE is pretty consistent at $250k - $300k, with 2nd year usually being quite a bump going up to as much as $400k. There are 1-2 outliers that pay some additional non-cash perks on top. Afterwards it gets a bit more blurry as the duration of programmes differs across firms, and might include senior associate vs. VP vs. xx, include or exclude carry etc. VP / principal level usually gets 25-40 bps of carry, depending on the size of the underlying fund (e.g. global fund vs. smaller European vehicle). Afterwards I guess the sky is the limit, but I'd expect the average large cap PE partner to be at mid- to high single digit $m a year (not all cash).
That's the US and not London?
No I am referring to US PE shops in London, who are all paid in US$ - relevant benchmarks from my point of view as those ~10+ funds are what most people shoot for initially anyways. I don't know enough people working in European funds in London to have a proper benchmark on those (probably paid in either £ or € and lower all-in comp).
Could you elaborate which funds those are? $400k for 2nd year strikes me as a bit high unless we’re talking Apollo / Silver Lake.
Also, how would you translate the 25-40bps reference into $, ie what fund size were you thinking? Presumably the bps go down as fund size goes up (between firms / sizes, not talking about fund raises) and it should even out at a certain $ level?
Agree, $400k for 2nd year Assoc rather seems to be an exception.
Bump - any further insights on this? Also curious how VP cash comp would look like for range. Have been seeing around ~£350k, with £400k+ only in few cases - does this resonate? Also, how would the bps convert into $$ (ie what fund size are you thinking of)?
Can you breakdown how you arrived at mid/high single digit mm for a partner (let’s say at US MF)?
This is way too high from an annual comp perspective, but annualising carry gets you to those kinds of numbers.
$300k sounds about right to me for the top end (ex whatever one off things they give you). Not sure about that big bump to 400k for 2nd yr assoc though. Sounds high, but I sure hope you’re right..
Standard in London for UMM / Large Cap is GBP 90 Base + GBP 90 Bonus for first year Associates
That was my understanding too. Depending on fund can remain unchanged for first 2 yrs or maybe +10k. Then for Senior Assoc (ie Y3) should be ~110-120k (probably on the upper end). And VP (Y5) 150-175k. All numbers with 100% bonus.
Happy to be proven wrong if this is below market.
These are about right
This is correct
Any further data for what that looks like in years 3,4,5, i.e Senior Associate and beyond?
People always talk about taking a paycut when exiting from IBD to PE, but from these numbers is the paycut really that big in MF (and UMM)? Maybe be more significant if moving to MM or LMM.
If you take what is mentioned above GBP90k+100% bonus = 180k all in for associate 1, I'd it's a pretty big pay cut considering even HSBC pays 120k base to their associate 1.
Bump
Can you guys comment on the pay increase from Associate to Senior Associate / VP?
Please note that Senior Associate at my firm is the VP equivalent, i.e. not just a short stepping stone to the next level.
It should be a decent chunk then. Look at most recent Heidrick report to gauge.
Probably ~£200k + 100 % bonus at Large cap fund.
Is anyone else slightly fed up / p*ssed off at the lack of uplifts?
The three small banks paying the biggest junior salaries after a year of hikes - Financial News (fnlondon.com)
Even small(er) / boutique banks can afford to pay.
Seriously am considering going on strike like the other half of the country or unionising.
It's not only the lack of uplift which is slightly upsetting:
- There's little leverage in living in London, i.e. your living expenses increase linearly with age (housing, childcare, healthcare, etc.)
- The boomer mentality of your superiors "you should be grateful for a job in private equity"
- The fact that you're living in a high tax country with lacklustre social services (compared to continental Europe)
Especially point #2 gets me every time. I am so tired of senior people comparing their junior salary 25 years ago to mine.
It's particularly funny since those are people dealing with numbers all day and, all of a sudden, they completely ignore concepts like inflation ...
Agreed completely. Particularly on point 1 and 3.
Also benchmarking. They just say can’t compare to banking and carry (agree to an extent). But like what?
How do we change things and push for uplifts?
Any idea about the salary of Wealth Management/Solutions teams at Mega Fund Private Equity shops and how much their all-in is? Any info would be much appreciated!
Push for more data points on Sr Aso comp
2nd year associate at upper MM fund ($25-30bn AUM). Base is GBP 105, with bonus target of 100% (very hard to go above, easy to get below).
Co-invest on your own deals from 3+ year tenure. Carry eligibility only starts from 6+ years and again deal by deal basis.
this sounds like Bridgepoint or Nordic
Nope, US fund
How hard is promotion / what is attrition?
Junior ranks seems mostly a passage of time. Principal/MD gets tougher.
Am I missing something, or working for a US MF in London is the best way to make a save of lot of money? Making US money while working in London (I get COL is not that low, but still lower than NY). Imagine Associate 2, being 27 in London making $400k bruh
The pay difference is not that large except for BX/KKR/APO and H&F. And job security often much lower. Pick your poison
Job security is lower for BX/KKR/APO you mean?
BX / KKR is not 400 USD for Associate 2, but 300-350
What is the yearly $ jump within Asso years ? Seems high compared to AS1 numbers you hear.
Few things to consider:
1. Ability to get promoted - these funds are quite saturated at the senior level, so it’s actually quite hard to move up the ladder and these places can be incredibly political
2. While you may make $400k as a senior associate at these places, it’s looking particularly good right now with where the FX is vs. historical levels
3. Number of these shops are absolute sweatshops vs. their European counterparts
4. And even then sometimes shops outside of that list pay very well but not all cash, I have friends at MMs having a good amount of carry at the associate level - sure it’s deferred but for some of these guys will clip in checks worth millions in 3-5 years if they stick around / the fund delivers and they have very favorable co-invest terms (i.e. levered co-invest at no cost) which is basically free money
Long story short, maximizing cash earnings at the associate level might not be the best way to maximize your income over a longer period of time
Great post. Very balanced perspective.
Thank you, great post!
Could you name some of these shops your friends work at? Thanks!
Echoing what Pan European Monkey is saying
Want to add a few more things, especially for the not-yet-buysiders:
1. It's crazy competitive these days to land something solid in London even if you are from a US BB and speak a Euro language so don't worry if it's not MF money your making. Just getting solid investing experience is worth so much
2. There are some other perks besides money, namely proper board seats for associates and other ways of getting your CV into shape. So what might look like not the best paying shop can evolve into a more suitable role later down the line. Let's face it, we are still young with decades of work in front of us
3. No matter how much you are making, it is many, many times above what most people in the UK make so we gotta be grateful
Would be interested to hear about shops that do offer very attraktive Co-Invest and / or Carry Opportunities at the associate level
Can someone elaborate a bit on different pay structures across funds? I think 100% annual (target) bonus is pretty standard across most large cap funds - mostly interested in the carry and co-invest element.
For instance, CVC is quite well-known for having a very attractive pay structure where you can get deal carry early on. Bain Capital and Carlyle as I understand it also have very attractive co-invest opportunities from the get go.
Any more colour here for other funds? Which other funds are deal carry based? Which have interest free (basically) co-invest?
What is the real benefit of deal by deal Carry anyways? Don’t most have clawback clauses, ie the money might be in escrow (or you’re in the hook) for as long as a fund level Carry would take anyways to pay out? Benefit is obvious if you’re on that 1 20x deal in the fund but otherwise isn’t fund level Carry preferable as the risk is better spread out?
Thanks, I think it is different from fund to fund. Believe in some cases there are benefits in terms of overall magnitude (as well as slightly better timing)
Timing is way better. A good deal takes 2-4 years. Fund level carry easily takes 6-8+. Massive difference especially in late 20s / early 30s
Co-invest is only worth something if the fund performs, and neither of those are. Co-invest in the wrong fund is very painful and even more illiquid
CVC may change from what I hear. They have been altering the structure ahead of IPO - will be more 'phantom carry' type.
Probably similar to what EQT etc. offer.
No idea on numbers.
Bump any updated views?
MM fund analyst 3 and just made 190k all-in after 1st buy side year
So that's basically associate 1? What is the fund size roughly?
Correct. If I'd joined one of the MFs I'd have been associate 1.
Latest vehicle is £2bn. I also received a good carry component from day 1 back when I started last year
Thanks - what fund size?
Latest vehicle is £2bn. I also received a good carry component from day 1 back when I started last year
Did you do 2 years banking or started out at the fund? What are your hours looking like at the MM shop? Any euro languages required?
Currently ramping up recruiting, so would be much appreciated. Depending on hours comp would tick the box
MF VP1
£210k base + 110% cash bonus + 40% deferred. No carry.
How does this compare to market?
Thanks for sharing. Is the 40% deferred 40% on the base? So ~£80k?
I am LMM (Senior Associate). ~£100k base and ~50% bonus, so £150k cash. Carry £ at work is ~£1m.
Interesting thought experiment - would one rather have the cash upfront vs. prospect of more in future (and probably at lower tax rate). Not trying to say one is better than the other, just made me think a bit.
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