Long term comp outlook in PE
Hey everyone, I'll be joining an UMM PE fund (latest fund size $8-10bn) as an associate. I'll be clearing ~300K next year but wondering what my pay outlook may look like over the next ~5-10 years assuming I get promoted? Curious as to how the base, bonus, and carry all shape out.
Heidrick & Struggles report is your best bet.
20 years? I just hope that I'll be alive and the United States will be around in 20 years. We might be enslaved by our robot overlords by then. You clownin bruh.
First get through the first couple years of being an associate then worry about what your carry structure will look like. Most people don't make it to even having the conversation about having their tenure at the firm extended beyond associate and at that point it becomes much more subjective so I don't think anyone can offer that kind of guidance to you. It's also heavily firm dependent so you can't make a broad strokes statement about your comp that far into the future.
When you say “Most people don't make it to even having the conversation about having their tenure at the firm extended beyond associate” do you mean that most associates end up leaving the industry or that most associates either lateral / go to b school to make the transition to vp?
I mean that most associates won't even be considered for the senior associate spot so they won't be having that talk about their future at the firm. Gotta remember PE is super top-heavy so only the highest performers will be moved along to sr. associate and even less then to VP. And this is assuming the firm isn't a two and out go to B-school or anything else type of place.
Fair point, but my firm actually offers like 80% of people a VP promote. They have a big grow from within culture. Also, it's gonna be tough for me to slog through my associate years without saying I'm doing this for $XXM of lifetime earnings. So, it's helpful to have a sense of how much I could be making.
Wow, that’s incredibly high. Do you think this is an anomaly or do you know of other funds that promote internally that much? Also, do they make you go to b-school first and then bring you back or promote directly?
According to what i've read, the comp looks to be deez nuts.
Got data from 2020 Heidrick & Struggles comp report. All numbers for funds w/ $6-10bn AUM.
Avg Principal total cash comp = $700k
Avg Principal carry $ at work = $10.5mm
Avg MD/Partner total cash comp = $1.6mm
Avg MD/Partner carry $ at work = $27mm
Carry should take like 5-10 years to completely pay out, so principal "total" comp = $1.75mm to $2.8mm, MD/Partner "total" comp = $4.3mm to 7mm, although this "total" comp figure is completely dependent on the life of the fund and it's kind of irrelevant because carry obviously isn't paid out equally per year like this. Just a "figure". So don't come at me for saying a principal makes $2mm a year, that's not what I'm saying. Now ALL OF THAT (principal + partner carry) would probably take somewhere in the neighborhood of 15-20 years to completely pay-out, but by then you would also have carry in new funds that haven't paid out yet, so it's like a never ending cycle.
I would imagine cash comp is a little higher at MFs, and carry is probably at least 2x bigger at MFs, correct? At APO and BX, principals probably have $15-20mm in carry and partners/MDs probably $40-75mm in carry, I would imagine. They deserve it, those guys are workaholics. That is what the report suggests, would appreciate feedback from pros
Sb’d. Just want to point out that your numbers are for firms with 6-10bn AUM, while op is joining a firm with latest FUND SIZE 8-10bn, meaning their AUM must be well over 10 bn.
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