How would you structure your PE comp package based on these constraints? What % carry?

rp1990's picture
Rank: Baboon | 105

Hey monkeys,

I recently joined a small private equity shop and have my salary negotiation coming up next week. I'm a little bit confused as to what to expect and how much to ask for.

Some context: this is a very small shop that was started recently. The head partner took on three senior associates as contractors/interns until he was ready to bring us on full time. It seemed like a good opportunity to get my foot in the door so I took him up on the internship offer, and he just expressed to me that he'd like to bring me on full time. I'm receiving the first offer of the three of us, so there's no previous Senior Associate offer to compare to. (Senior Associate means that I had around 3-4 years of consulting experience coming in.)

The partner and I both come from consulting, not finance. He is trying to build the firm as a PE investment + consulting platform - so that our projects will be primarily private equity investments with some consulting/advisory engagements on the side.

As such, he has noted that he will likely offer consulting level base salary and a bonus between consulting and finance levels, so that base + bonus will be in the low end of market rate for PE. However, he'd like to give us higher levels of carry or some sort of piece of the pie of all investments/engagements to create an attractive compensation package and, as he describes it, put us in the top 10-20% for PE.

My guess is that he will come in at around $75-90K for base, and maybe 30-50% bonus. Given the parameters he's set out and his willingness to offer project incentives - how much carry or percent of projects would you recommend asking for to be in PE levels? How would you recommend structuring it? I may want to go to business school in a couple of years - how would you factor that into the package structure that I ask for?

Thanks for your advice, all!

Best,
RP

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Apr 1, 2018
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