Variance of PE Associate Bonuses
Hello Monkeys,
As the title suggests I’m curious of the variance YoY between bonuses as a PE Associate (even senior associate / VP would be helpful). Currently debating recruiting for PE and one point ppl make it that bonuses are normally more consistent in PE vs IB(as a % of your base salary).
Would love to get some data points here especially given the not so great recent PE environment.
Cheers
My target bonus has been 100% of my salary for all 4 years I've been an associate / senior associate (across two different firms). In two of the years I got my exact target bonus and in two I ended up getting 120% as the firm and myself had good years.
Given less volatility in management fees vs. IB deal fees you're not likely to see a dramatic low bonus year unless the firm is collapsing. So even though the deal markets haven't been great the last 2 years that doesn't really reflect into your pay at the junior levels of PE like it could in IB.
Salary / Cash Bonus are pretty standardized in PE, assuming you’re at an established fund vs. a start up fund and you should expect a steady increase in both as you progress towards VP. Remember, you’re an expense line item that is being funded by a 2% management fee. Where you start to see deviations is when you start being allocated carry. This is fund dependent as some funds will give carry at Sr. ASO level and some funds will provide carry at VP level. However, carry has increasingly become standardized as well and you should expect a market-range. Compensation data in PE is readily available to everyone these days.
I would say in the short term, you could likely make more money in banking as bonuses are much more variable. But the obvious caveat being not getting any type of carry and reaping any long term benefit of investment gains, but don’t expect any upside in salary or bonus in PE even if the fund exits 3 companies in a single year at good returns. You only share in the upside through being in the carry pool.
What are some of the better comp data sets lately? I’ve seen CarterPierce for 2023, and Hedrick & Struggles used to be good but their latest report had what appeared to be an incredibly small population size.
Your standard mid-market firm is gonna pay 100% as a floor guaranteed, assuming your base is something between $130-150, with upside with good exit years. At LMM, this can range anywhere from 50-100%. I'd think about it in terms of all-in comp, which is what most firms are targeting - so $250-$325ish for MM, more for MF, and 200-250 for LMM.
As an associate, anything less than your target is a sign you should start looking, because you will be out the door in six months. Most people make 100-110% of target. Very unlikely to make more than 125% of target. Different firms have different targets as a percentage of base.
This really isn’t true… there are cheap PE firms that will nickel and dime you on a bonus even if you’re on track for promotion/get promoted.
Has this actually happened?
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