Feedback on Private Credit offer

Hi WSO,

Wanted to get some feedback on an offer I received for a LMM Private Credit Firm. I am currently an ASO1 in Loan Capital Markets with a BB, non-traditional route coming from CB so just over 4 YOE.

Offer:

  • Associate 2/3, 1 year timeline to Senior Associate Promo
  • $140k base, 40-50% bonus
  • Firm has discussed offering carry to Associates and Senior Associates but no concrete decisions yet

Fund:

  • Slightly over $1bn AUM
  • 40 Employees, 25 of which are on the investment side
  • Just finished raising $400mm for Fund 7, starting Fund 8 raise soon
  • Special situations ABL focus with ticket sizes of $10-$50mm (fund 8 will increase ticket size to up to $100mm)
  • 10+ year track record
  • ~15% IRR

Role:

  • Portfolio team handing any follow-on financings (common for most borrowers), workouts (roughly 10% of loans end in workout)
  • Focus on non-sponsored companies and PM team gets very involved in operations of businesses
  • Firm has high focus on PM team given the LMM market they operate in

I feel like the offer is a bit on the lower side. I had originally asked for around $225k all-in. Curious what others thoughts are.  

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Comments (15)

  • Analyst 1 in HF - Other
Aug 24, 2021 - 10:30pm

Working in PC and have lots of friends in the space. For associate 2/3 in NYC, you should be expecting $250k - $340k all-in if at a large fund like Ares/GSO/PIMCO Alts/MS PC. However, if smaller fund I'd assume a slight discount around ~200k - 300k all -in. Assuming you get your 40-50% bonus, you'd definitely be at the lower range around $200K. Your ask of $225 is more than reasonable especially given all the comp raises recently. 

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  • Analyst 1 in HF - Other
Aug 27, 2021 - 2:03pm

Still sounds a little low to me. However if the 50 hours/week is true and consistent then I'd say it's a decent gig. Best of luck!

  • Associate 1 in CorpDev
Aug 27, 2021 - 10:53am

So this is not originations/new money oriented role? I guess the question is are you ok with portfolio management?
 

I would also push back on validity of the point about the team being heavily involved in operations of a portfolio company unless it's part of a workout. Your job as a private debt investor is to allocate capital properly not hep run portfolio companies. The closest you'd get to that scenario is through working in an in-house consulting group at a private equity fund. In either case, you want to empower your operators not help run their companies unless absolutely necessary. 
 

Being involved in operations probably means setting up various reporting streams and expectations with the portfolio companies and not doing for example market entry work.

Most Helpful
  • Associate 1 in IB - DCM
Aug 27, 2021 - 11:04am

Not a new money originations role although this team handles any follow-on financings. This firms a bit different in that they work almost exclusively non-sponsored deals and pair the companies up with sector experts. They only get involved in the operations side when, like you said, there is a workout which is about 1/10 loans. Most of their deals tend to trip covenants at one point or another so there is a fair amount of re-discussing and negotiating deals as they go on. They also take equity kickers in most deals. 

  • Associate 1 in CorpDev
Aug 27, 2021 - 3:55pm

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