What is reasonable comp for an Associate at a Fundless Sponsor doing deals at $50m-$500m+ EV?
Found a cool under the radar firm run by a pedigreed founder (Big 3 CO, Wharton/HBS/GSB, top BB, top MF) that's got a pretty wide mandate: equity slugs $30m-$300m+ ($50m-$500m+ EV), minority/majority deals, all kinds of equity/debt structures. Run as a family office setup w/ some other well-known financiers (mostly PE & HF guys) & entrepreneurs backing the investments. Thing is they're technically a fundless sponsor so there's no committed capital/management fees (though when speaking to companies/banks they just say $1b+ fund since there's a discretionary agreement w/ inventors where they can deploy that much in a given year no questions asked), no formalized HR structure, it's literally just an investment team of like 4-5 guys sourcing and executing as a unit.
Should I expect a pay discount to work at a place like this? How much is reasonable to target? The flexibility of the mandate and total lack of bureaucracy seems attractive but the lack of committed fees makes me worry about security. Plus with such a small team and informal structure, I'm not sure what the LT opportunities might look like. The founding GP is easily worth low-mid 9 figs but I'm guessing he's paying the comp out of his own wallet which means he's probably not trying to pay at or above street. My LT goal is to move to a HF and the founding GP is connected with the GPs of multiple top funds in my sector so I feel like even with a paycut doing a good job for him could open some doors.
How would you evaluate an opportunity like this?
My background (4yrs; all sector specific):
- non-target, >3.0 GPA, 2100+ SAT
- 1yr LMM PE Analyst
- 3yrs CorpDev Associate
- 1yr LMM/MM PE Associate
Never been paid over $100k base which is something I'd like to breach.
You should expect a lower base, but… you should definitely be able to negotiate much higher upside in bonus or other transaction specific incentives. Given there is no management fees due to the structure of the group, it's probably hard for them to commit to a large base salary… however they can definitely get comfortable with ways to compensate through the deals since that is where the money is obviously gonna come into play. I worked at a similar situation a few years back and base was almost nothing while bonus/co-invest/carry opportunities were extremely more attractive than traditional funds.Would love to chat more about this/your background/how you came into this opportunity. Could you dm??
Definitely possible. How it was structured for our team (was slightly different because we did Corp Dev for one larger entity affiliated with the group that paid our salaries) was 80k base and 25k bonus per closed deal that we sourced with levered co-invest, carry, and other incentives we negotiated on each deal. This role was out of IB analyst, so your experience is a decent amount more which I think justifies a 100k base. I would just straight up lay out your own package based on your research… something within the lines of 100k base, deal by deal carry on deals you source, and levered co-invest. Here's the downside which you obviously know… the number of deals closed in the fundless sponsor structure is much lower in volume… so while deal carry, co-invest, or deal based bonuses sounds really attractive on paper, you still need to think about the volume of deals this group does… also going into a potential credit crunch. While I was on that team (7 months, left for consulting) I didn't realize one deal bonus as all 5 of my deals were either killed, outbid, or seller got cold feet. That being said… the learning from the experience of leading deals from start to finish was INVALUABLE. Put me years ahead in development of crucial skills needed in PE/investing/working with management of port cos.
I would avoid like the plague. They talk a big game and have pedigree. I did it once and was screwed out of a bonus and half my salary. I know two others who also worked for fundless sponsors and they had awful experiences as well.
They made no money after years. They had success working for a franchise and then no one picks up the phone. I was lied to about dealflow and comp. it’s an awful experience across the board and this is three separate opinions not just myself