Small Acquisitions shop CEO salary
Hi everyone,
I have recently started to think about opening my own MF repe/acquisitions shop one day. I have been trying to find some information regarding what CEO/Owners take home earnings are in a MF shop <$1B AUM, but I have not been able to find anything. I'm aware take home compensation entails everything from salary, carry, fees, etc. but I was wondering if anyone here has any insight or knowledge into what a CEO of a small startup acquisitions shop ends up with at the end of the day of a firm size anywhere from $100MM until $1B?
Owner / operator? REIT? Developer? Or REPE?
Each of these businesses make money in slightly different ways. I do this for REPE occasionally and I find it’s best to solve for fees / income generated by a certain dollar amount and then subtract your potential costs / taxes
Owner/CEO of a repe group, thanks for the insight!
Take the dollar amount managed, multiply it by the management fee (1.5%) to get your first piece of the income.
Then take your projected returns and run it through a waterfall. Let’s say $200mm opportunistic fund so 20% IRR or $40mil of income each year over 5 years (it would be more lumpy than this but whatever). Assume a 15% promote over an 8% preferred return.
Assume there’s you, a senior partner (500k base salary plus he gets piece of promote) two mid-level execution guys (400k + smaller piece of promote) and three analysts (150k).
Potential compensation to CEO = management fees + promote - salary costs of employees - promote given to employees - insurance - office rent - benefits to employees etc
If you don’t know how to calculate the promote in excel, then you should prob learn how to do that before you worry about REPE CEO compensation
Why did this get MS? This is how it will be broken down (roughly... its impossible to know without knowing your overhead/staffing and returns...). You'd get a salary from a piece of the asset mgmt fees and a nice chunk of the promote too, on top of whatever returns you get from putting your own money into the deals. So yeah, can't really give a $ amount estimate, but it could be a lot or a little!
It got MS from OP because he is in college and just wants me to tell him “CEO of a $200mm REPE fund should make $x” instead of encouraging him to learn something
I actually did not MS that post, someone else must have. I found your answer insightful and that's what I was expecting, just seeing how different firms might evaluate pay.
There are plenty of small REITs. Their CEO pay are public information.
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