Would you work 40 hours a week for 125k (Principal level).
Currently earning around 500k per year through base + bonus, pre carry.
A fund with 100m in AUM reached out to me and offered a base of 125k, bonus of only 20% and guaranty to work 9-6 M-F. I know the guys there and they're super nice and really honest. Carry would be 7%.
Huge change in comp but that WL balance seems amazing. I would effectively be getting paid less than an analyst lol.
Any thoughts?
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Agreed. With 100m in AUM there isn't really much $ to go around to pay higher. It's not a case of thinking I'd be getting underpaid (which I would), but more a case of it being worth it for true work/life balance.
Still low AF. I know people in Tier 3/4 cities working for FOs at the principal level making 400/500K all-in
7% promote is very generous, no?
Considering their fund has assets in the ground and is marked up to a 2x, the partners are diluting their ownership to cut me in and I've done nothing - seems pretty generous for a small fund that I had no part in deploying.
The base and bonus comp is small but I figure I could help grow the business. The partners are taking home 150k per year so it's not like anyone is getting rich here or looking to low ball - seems like it is genuinely just the $ available.
Comparing it to my current job, which is a total sweatshop where I work 80 hours a week, this is interesting. Working with good people is underrated.
Yeah I mean it sounds to me like they’re bringing you in to grow the business and they just simply can’t pay large salaries given AUM. This seems reasonable given the circumstances, just need to be willing to make your bet on this fund performing and being able to raise a follow on with hopefully a larger $ amount. I’d imagine your family situation would play a large part in your decision, can you live with that risk? If so seems like a nice opportunity.
What do you estimate the carry to come out to dollar wise?
At $100m and a 2x that's like $1.4M
Correct. 8 year vest. A 200m fund being raised end of this year.
My initial reaction is that there are a ton of questions. To triangulate a place that guarantees 9-6 M-F, but yet operates in a deal-based industry, would lead me to ask what is the growth roadmap for the firm (and you professionally). As you well know, the deal industry results in volatility in time commitment to get a deal done - yet the 9-6 plus 20% bonus indicates to me as an outsider there isn't much desire or intention to grow the firm. If you are consistently doing deals, your bonus % should be higher. This is totally fine by the partners, do whatever makes you happy, but that's something I would flush out and see if that aligns with your career desires. I have zero insight into their org. structure, but based on comp - it doesn't sound like there will be much junior staff (or consistent junior staff without it being a revolving door).
I say all this being at a LMM PE shop - and that comp # is offensively low - it's so below market, but if it's true about lifestyle and they are somhow growing? Could be an interesting opportunity
Been around for about 5 years. 8 staff. Zero fires and no one left. Salaries were raised during covid (not lowered, like a lot of firms), bonuses consistently paid out.
Been around for about 5 years. 8 staff. Zero fires and no one left. Salaries were raised during covid (not lowered, like a lot of firms), bonuses consistently paid out.
I don't know of any PE firms that lowered salary during Covid
I think you'd be shooting yourself in the foot long-term. I also don't see how that's remotely good for culture at what is effectively a startup.
No issue for me with the base como but I agree the bonus' are low. It mgmt fees are fixed (% of commitment) then there really is no room for large bonuses unless you grow AUM.
Naturally the fear is, to grow the business you need to work longer hours.
How could I get a better share of the upside?
This is an ass backwards assessment which is what leads to people working asinine hours. You don’t need to work longer hours just because you have a larger fund. Just don’t waste time and resources on poor opportunities. I absolutely hate this mentality more than anything as it’s just plain wrong if you work efficiently and it’s what leads to seniors wasting the time of juniors just to justify their fat salary and fat AM fees. Just be better. And better does not mean work more hours.
I was an associate at a shop with $130M AUM in a Tier II city working roughly 8-7 M-F with a couple hours on the weekend and got $120k base and $60k bonus (albeit no carry)... $150k as a principal would be pretty tough to swallow
The 9-5 lifestyle seems like a carrot they’re dangling that won’t actually be given. Just can’t fathom a PE office where that’s guaranteed. How. Many junior resources will be underneath you?
The carry is generous. I think the decision is simply do you believe in the co-founders and your own ability to raise brother funds where your comp will go up your carry % remains the same. If you’re comfortable with your answer to that question than do it. Just realize the 9-5 is something that likely won’t be realized despite their best intentions.
I would say keep looking. Cash is way too low. If you highly value lifestyle, there are a few places out there where you can have your cake and eat it too.
What do you guys think would be a better cash compromise on the low end? 200k base and a 75k bonus?
No. Whether you're in bumblefuck Wyoming, or NYC, not enough on cash in any respect.
What would you consider as true "low end" for it to still be interesting? Just curious.
$250k
How can they guarantee 40 hours, 9 to 5? What happens when you get three sick deals in the pipe and need to go full throttle? Do you just tell the bankers and entrepreneur to wait an extra week to review materials?
Delegate. They have a bunch of analysts and associates.
Realistically, comp variance is likely too great to make it worth it. $125k would be different if you got 50% ownership in a startup or company you thought had a ton of potential. What's the rough math on 7% carry in a $100M fund? ~1.5M? Maybe I'd ever mark it up a bit given the small fund should hopefully outperform, so even at a 3x you're looking at mid to high $2Ms. So maybe annualized over 10 years, you'd make the same comp as you have now with a better lifestyle. But that's not including comp from your current fund, so you end up a little behind. That's best case scenario.
You also have to realize that a $100M fund is a tough place to be. Lots of funds coming down market, search funds are becoming more popular. The businesses you buy are going to be really scrappy and are going to need a lot of hands on work. If you think you have a propensity for LMM work then thats one thing, but having spent some time in that world, you're going to have to get used to a lot of headaches that bigger PE fund professionals take for granted. There's a lot of professionalization that needs to get done and it's not that glamorous.
The other thing that comes to mind and piggybacking off of what another poster said above, there's no way you can guarantee a 9-5 type of lifestyle in any sort of PE work. Anyone who's worked on even a single PE deal knows that the hours for a deal ebb and flow and as a new Principal, you're going to be leading those deals. I'm sure the lifestyle will be way better with less wasted work, but unless you're in some extremely niche part of the market where there is very little competition for deals, you're still going to have to put some time in.
Overall, I'm a strong pass on the opportunity unless you can get a little more money out of them. $125k + 20% bonus is just too little cash, even for a 40/50hour a week cushy job. That's also so severely non-market, that it makes me wonder how the partners can really even justify it. They're probably looking to entice someone who isn't from the industry or who is desperate to break in, to take the role and help them build up the fund. If you had 0 other options, you could consider it, but I'd probably keep looking for a better role.
What would be the end game? If it's a legitimate platform that you could grow with meaningful ownership then it COULD be interesting. I am talking about not only carry but owning a meaningful portion of the management co., which is almost never discussed in the compensation context on here but is ultimately important for senior professionals and that I would certainly want strong visibility on in this context and how much control you would have in the direction of the firm.
I say this because it seems like you would never catch up from a comp perspective on this opportunity without huge upside when considering compounding your current after tax savings. Also not sure what area the firm is located in but you would struggle to be cash flow breakeven on that comp in a HCOL area.
That said, to grow the platform and capitalize on any upside you would probably be back to working the same amount of hours you are now. So overall I'm a pass for all of the reasons mentioned above unless there is some unique opportunity not being described.
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