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.

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Comments (12)

Jun 9, 2021 - 11:35pm

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.

  • Analyst 1 in IB - Ind
Jun 10, 2021 - 12:20am

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? 

Jun 10, 2021 - 12:25am

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.

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  • Associate Consultant in Consulting
Jun 10, 2021 - 12:28pm

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. 

  • Intern in IB - Gen
Jun 10, 2021 - 4:04pm

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?

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  • Intern in PE - LBOs
Jun 10, 2021 - 5:57pm

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

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Total Avg Compensation

June 2021 Private Equity

  • Principal (7) $694
  • Director/MD (18) $575
  • Vice President (65) $371
  • 3rd+ Year Associate (66) $270
  • 2nd Year Associate (133) $256
  • 1st Year Associate (273) $223
  • 3rd+ Year Analyst (24) $164
  • 2nd Year Analyst (60) $136
  • 1st Year Analyst (177) $118
  • Intern/Summer Associate (19) $70
  • Intern/Summer Analyst (206) $59