Leave 100k+ bonus for Immediate PE Offer?

knightbanker's picture
Rank: Gorilla | 518

Monkeys,

In a position where I was able to swing a solid PE offer at a fund that I like with solid a work life balance and career progression outlook within the firm. The issue is they want me to start before I get paid my 3rd year analyst bonus (expecting ~$120k+). They want me to start by the end of February, but my bonus is paid out in mid June.

Would you leave the bonus behind for a decent PE job? Should I ask them to pay the bonus out?

Last comment, not really too worried about staying in banking (in terms of busting my a** for the hours etc.) for a few more months as the 3rd year has been relatively chill with easy work hours - so happy to cruise along, collect the checks + bonus and then bounce.

Comments (37)

Feb 20, 2019

Based on your other post, sounds like you've progressed to taking the PE offer. I would think about it like this, in terms of negotiating leverage, do you think you are valuable enough to the PE firm that they really don't want to or can't lose you? My thought would be that they clearly like you, so there is no problem discussing the situation and asking for a stub/signing bonus, but it would be highly unlikely for them to pay you your expected bonus of $120K (congrats btw, that's a sold # for 3rd year analyst). You are still pretty junior on the finance totem pole, so you are still relatively easily replaceable both in IB and PE. If you think the PE offer is really solid (per your other post) - ask for a stub from the PE firm, but regardless of their response I would take the PE offer. Don't get me wrong, money is important...but it seems like there are clearly factors outside $ that have influenced your decision to take the PE offer. As you move up the ladder in IB, PE offers get harder to come by.

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Feb 20, 2019

Why don't you tell them your situation and let them come up with a solution?

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Feb 26, 2019

This is by far the best post in the thread. Make it their problem to solve and I'm sure you'll be happy with the solution.

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Feb 20, 2019

Send PE firm (or HH if you used one) a polite message saying how happy you are to have received an offer and would like to accept. Explain to them your situation regarding your summer IB bonus - you want to reiterate that it's not a deal breaker in terms of you accepting your offer with the PE firm by any means, but it would be nice to not have to leave money on the table for work you've already done at your bank, and if there is any way that they could help alleviate the forgone bonus with a stub/signing. From my experience and from what I've heard from friends who transitioned off cycle, most firms are pretty reasonable and pay you out a little something ($25-$50k).

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Feb 20, 2019

If you tell them it is by no means a deal breaker, meaning even if they say no you'll take the offer, what stops them from saying no because screw it you'll take it anyway

"If you ain't first, you're last!" - GOAT

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Feb 20, 2019

It's called being polite, and it gives you some room to negotiate and potentially meet somewhere in the middle as opposed to giving them an ultimatum. Do you really want your first interaction with your new potential employer as a first year associate on the buy side to be "pay me out or i'll walk"? Do you think they won't call your bluff if they have another kid they liked maybe a little less than you, but isn't a dick about a half year stub bonus? Yea it's a lot of money, but a rounding error in the grand scheme of things if you stay in high finance. If OP has another PE offer that they are deciding between than ignore what I said above, but I don't think that's the situation here.

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Feb 26, 2019

I just stopped reading at "not a deal breaker", and for the second comment "being polite"

Feb 26, 2019

Did you know the timing when you were in the interview process?

Did you bring up your bonus during the interview process?

Its kinda standard practice to leave a bonus on the table when you change jobs, especially for the buyside. If you knew the rough start date (and not sure why that wouldn't have come up) and you never mentioned your bonus timing before - this will likely catch them off guard. Its kinda a retrade. If you bring it up you'd have to be comfortable with there being an element of risk in doing so - you're really just a commodity at this point.

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Feb 26, 2019

120k as a bonus for a 3rd year analyst? How is that even possible?

That sounds like an associate level bonus to me

Feb 26, 2019

That's not surprising, I got 110 as top bucket for my 3rd year so makes sense that it would've gone up since then (or if at an EB that pays more).

Feb 26, 2019

So all in, 3rd year analysts can me around 220k? What would associate level comp be then, 350k?

Don't get me wrong, I believe you if that's what it is, but seems a bit absurd. At that level of comp, you'd make way more as an associate at IB than you would at any non MF PE shop (or perhaps some top upper MMs)

Feb 26, 2019

You'd be giving up less than it would appear at first blush. That's nearly a third of a year you haven't spent at the bank yet, so that knocks out 40k gross right there. Assuming the PE comp is in the same ballpark.

Basically you have ~$80k accrued bonus that you could potentially be giving up. This can be discounted by the chance that you get shorted, especially if they suspect you might not be sticking around. Take 1/4 off the top to account for this possibility and you're looking at $60k gross, $30k EV after taxes.

Not enough to jeopardize an offer you like (hard to find PE shops with decent cultures) or goodwill with the team. My first thought was agreeing with DickFuld, just let them know the situation so they can give you feedback; possibly upside with unlikely downside. But on second thought, I agree with ke18sb, if you knew the start date ahead of time and didn't mention your bonus coming in later, then it could be considered a re-trade.

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Feb 26, 2019

Great comment and perspective, IMO.

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Feb 26, 2019

Another factor to consider is that if you start now at the PE fund, you will get ~9 months worth of a PE stub (assuming payout is based on a CY2019) vs. 5-6 max (assuming you leave immediately after your paid and start right away). By the time you are in a position where you can start to add real value (let's call it 2-3 months), you're looking at a courtesy number not really indicative of your performance if you wait till june / july to start

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Feb 26, 2019

Guys - I'm really not sure what the problem here is. I really can't stress this enough with juniors I am mentoring -- at such young age starting in an apprentice business, money should be the last factor you consider on your checklist. I didn't say it was not important, however. As someone above said, it is extremely hard to find PE firms with good culture and $100k is chump change. Real money comes in when you have carry and co-invest.

Take the job.

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Feb 26, 2019

I'd venture to guess anyone that is advising the opposite approach, ie negotiating, doesn't have the experience or direct line of sight into the business to be making such claims.

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Feb 26, 2019

There's never a reason not to negotiate - it can be done in a very friendly way and if the PE firm is professional in any way they won't hold it against him. There's really not much of a downside to saying "I'd love to join your firm, but I'm giving up a fairly substantial accrued bonus to do so. Would you be able to offer a signing bonus of $XX to help offset that"? If they say no, he can then decide whether he still wants to take the offer. No harm no foul.

Feb 26, 2019

Not sure about you, but a $100K is a lot of fucking money. I would explain it to the PE firm. They can either let you come on board after you've collected your bonus or pay you out on your bonus. In my experience, you would just get paid your full bonus potential, but you may have to produce documentation showing your compensation structure.

I mean, if you're fine with where you are, and this isn't the opportunity to join BX or Apollo or something, just coast until you get your bonus. Then start looking and maybe something even better may present itself.

Good luck my dude.

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Feb 26, 2019

You are certainly entitled to your view, but let me know how that conversation goes when you try to negotiate $100k in a $100m deal. In this case, OP has a ticket to learn the investment business, and this ticket is much more valuable than $100k.

Horrible advice.

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Feb 27, 2019

If PE firms are drowning in cash, then they should have little issue paying a measly $100K. To be clear, it maybe measly to the PE firm, but to the OP, it's likely to be a substantial sum.

Also, if you leave money on the table or you're too afraid to negotiate, you'll suck as a PE investor, plain and simple.

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Feb 27, 2019

This isnt a $100mm deal...

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Feb 27, 2019

You don't just leave $100k to $120k on the table. That's serious cash.

A few things to highlight: they're not the only PE in town; if you recruited successfully with them you could do so elsewhere as well; you're not in a rush to ditch your current gig.

To me it's a no brainer.

You go back to them and make them cover a portion of the bonus. I would start with a 60k ask. Don't accept less than 40k. If they walk away, continue recruiting.

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Mar 1, 2019

This is terrible advice

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Mar 1, 2019

Curious to get your thoughts on the matter. Do you think he won't be successful if he walks away now and continues recruiting? Can't he get the best of both? Hes top bucket.

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Feb 27, 2019

As APAE and other smart people would say, have an "abundance mentality."

Other people have given good advice. Ask kindly but don't be a pushover. It's a fairly common situation

Feb 27, 2019

These comments are very helpful, thank you to everyone! I will keep you guys up to date with what happens next.

Feb 27, 2019

Thanks for keeping us updated. Will be interesting to hear your decision/result

By the way, I think you shared a little too much specific information in your initial post. Assuming you didn't change some dates/numbers/details around, it could be personally identifiable. Maybe one of us saying not to push them for comp is from the PE shop (joking about that last bit)

Mar 1, 2019

Not only can you approach the PE firm and say "I would love to join your firm, but I'm leaving $120k on the table, is there anything you can do to help make my decision easier?" You can also leverage your bank on your way out. I know of several instances in my previous life where top bucket analysts got paid early on their way out. Afterall, you will be involved in decision making that can affect their deal flow in the future. At the end of the day though, if you have to forgo the entire amount and just leave it, that is the right decision to make. You won't care about that bonus in 2 - 3 years time.

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Apr 7, 2019

thanks for the help here guys - as an update, the PE firm ended up extending the start date to allow me to capture my 3rd year bonus in a few months.

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Apr 8, 2019
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