Pay for Sector Focused PE firms vs. Banking

BankOrNotToBank's picture
Rank: Chimp | banana points 12

Pay for Sector Focused PE firms vs. Banking

Hi guys - is it typical for Sector Focused PE firms (mixed bag of growth equity/VC fund making $50-$150M investments) that are NOT BX, TPG, KKR, etc. to pay significantly down compared to banking (all-in)?

One of the key factors I think that drive people to move to PE are not only the lifestyle change (albeit little in the big shops) but also better pay all-in. Another of course if for personal interest in investing space.

If my first point is true, why do majority of the people leave to the buy-side for significantly less pay? Is it an act of learning how to invest and what to look for, and the potential to branch out on your own eventually to make bets on your own later?

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Comments (7)

Jun 24, 2015

bump - anyone?

Jun 25, 2015

From talking to friends, it seems like the pay leaving banking is very similar to these lower MM PE shops. Just less stress and hours. Also options in cheaper cities then SF and NYC

Jun 25, 2015

What's the fund size? That's the most important driver.

Sector focused PE firms can be multi billion dollars (as in energy PE, but even in more "vanilla" sectors they can still be in the billions) but can also be very very small.

Jun 26, 2015

maybe people don't want to be salesmen for the rest of their career?
there are many factors why people are willing to take a paycut to go buyside

focusing on comp alone is extremely short sighted and naive

Jun 26, 2015

Like @CHItizen said, pay varies according to fund size and to what particular fund it is. You can have 2 funds below the MF's (and the funds right below, both of which have pretty similar salary/bonus levels and career progressions), that seem pretty similar from the outside in terms of AUM, sector and strategy but can vary wildly in comp and career progression, especially the latter. I know this personally.

In addition, $50-$150MM growth/VC per investment (that's equity in that world) is pretty big and there aren't a ton of those funds out there. You can probably get info on that particular fund if you want. I can tell you that I can't tell you, so it's not worth PM'ing me asking about it because I can't help.

And like @Whiskey5 said, there are tons of reasons to move to they buyside and just as many to stay on the sell side. I'd search this site for multiple threads on it (although most will be why you should move to the buyside). In the long term, and assuming you've made it on both sides, unless you're an outlier you'll probably make similar money. More in annual salary+bonus in IB (although it's now being held back for a few years) and probably more in carry for PE IF your investments performs well and if you make it to the senior levels.

If you actually have a choice and this isn't a hypothetical, choose what you like to do.

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Jun 27, 2015

Isn't it obvious? The hours/lifestyle in banking isn't sustainable long term. Some people probably figure out their hourly rate, compare the two and say fuck it.

Jun 28, 2015