IB Associate with PE Offer (package question)
I am currently an Investment Banking Associate (1) at an Elite Boutique in Australia. I have approximately 4 years of Investment Banking experience. My currently base is A$180k and receive a bonus of ~80%.
I received an offer as an Investment Associate at a mid-market Australian private equity firm. The firm has 3 funds. The first returned ~4x net multiple and 40% net IRR.
The second fund (A$170m) is 80% invested and has returned ~50% of capital to investors. It is in year 5 of fund.
The firm last month raised its third fund (A$350m).
They have offered me the following package:
- Base: A$130k
- Carry - Fund 2: 1.00%
- Carry - Fund 3: 1.25%
- Opportunity to co-invest
No bonus or STI.
At the Investment Manager level (~4-5 years away), your carry is closer to 5.00% and you are looking at a ~$250-300k base salary. So it is likely that by time they raise Fund 4, my carry will be closer to that 5.00% mark.
So my question is, what do you think about this offer? It is interesting that they offered carry as a 1st year associate, however its a big step back in salary and with no STI, your immediate loss of income per year is ~A$180k.
So for ~3 years until you start receiving your carry, the opportunity cost of leaving banking would be ~$700k.
I find it quite hard to accept and immediate loss of income per year of ~$200k.