Can I go to a lower middle market fund and get promote?
1st year analyst at a big shop. Can I go to a lower middle market fund (either debt or equity) and get carry / promote? Or are they very reluctant to hand it out. I guess what I’m asking is how can I get a piece of the pie without doing it solo (if even feasible).
What do you mean my a big shop?
I don't know if any company that gives analysts promote. You are still learning and a commodity, so they don't need to provide long term incentives for you.
Most of the time, you don't see promote anywhere until you are a VP/Director. You might get a crumb as an associate, but that is super rare.
I've seen people who participate in carry at a junior level (associate not analyst) and that does tend to be at smaller shops. Won't be a big piece and how a given company handles it all depends on whether the principals think they get better performance from people by giving them a cut.
Will be fund by fund. A fund I used to work for gave everyone promote. It was their selling point. They also underpaid in cash comp. But they would give 5 bps type of thing and tell you it was the world. That was worth ~$22,000 if it paid out at 100%.
Bro you are an analyst slow down. At associate you MIGHT get a few bps of promote at a small shop.
Don’t understand what’s wrong about asking. Funny how senior folks criminalize young folks for wanting to make more money. You would think we’d want everyone in RE to make more / be better off.
It’s crazy to ask for that at a junior level.
We do want people to succeed and be better off, but you also need to realize that as an analyst you do not add anywhere near enough value to deserve to share in the firms profits in a meaningful way, and further to that you are statistically by far the most likely to jump ship.
This isn't communism, its a profit share incentive to retain talent that creates revenue. As an analyst, you aren't contributing enough to the overall success of a deal for this.
Also. To all the young folks who want promote. Just remember you can’t eat it. Sure it’s cool to have and it can be ‘big money.’ But it also doesn’t pay for 5-10 years. This means you actually need to be at the fund to receive it, unless there is a vesting schedule. Even than, many funds can buy your promote back for Pennie’s on the dollar. Promote is only worth it if you’ll be at the fund for 5-10 years. As an analyst or associate, it’s much less likely you stay for more than 3 years. This is driven by politics, promotion, cash comp etc. I’ve always valued cash comp more because it means I can leave if I want. With promote, it’s a harder discussion.
On the topic of being bought out for Pennies on the dollar - a good example - someone that I worked with at the last fund I was at was at the firm 5 years. Built a vertical for them. When this person left - the founder was pissed at him. So he bought his promote back. To get promote at this fund you needed to invest a small amount. So he got paid back the dollars he invested 5 years prior. So he received a negative return on his money because there was no pref return on that capital..It goes both ways. The promote would’ve been worth mid 6 figures to low 7 figures.
Yes there are and I work for one. I wouldn't reccomend worrying about it, however. Our shop as well as most shops use it as a reason to pay you less and they overestimate how much it's worth and you as an analyst will likely buy into it. It also takes years to pay out at which point you'd already likely be receiving promote at most places as a senior associate/VP.
I took the bait and didn't make much off it until I was a VP at which point my % was higher but the guy my age who came into the company as a VP 1 year before our exits ended up making the same % as me even though I was here for years grinding it out since senior analyst.
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