Private Equity Associate Bonus Guidance
Hi all,
I’m have a little bit of a situation going on and would love to know what you guys think. I am set to start at a new private equity firm soon after finishing up banking. I’m going to a relatively established fund $5bn+ AUM investment professionals with a pretty high base salary even by industry standards.
When I signed I was told that I would also be eligible for a bonus, but did not press them on the estimated range. Should I have asked before signing? How much can I expect in a typical year and does having a fairy high base offset anything? At the time of signing (I was a 1st Analyst right out of school), I didn’t really know to ask and took the offer without getting bonus guidance. What are your guys thoughts on what the general bonus guidance is for first year associates straight out of banking?
Can you provide any additional information on your "situation" that would be relevant here?
To directly answer your question without any potentially useful context: Based on first hand experience and info from buddies in PE, 75% - 125% of base is a pretty common band for a first year associate bonus. Not sure how above-market your base is, but I don't think that would have a meaningful impact on your bonus if you are at a larger, established fund.
I will be based in New York with a base of ~$200K. I think the main thing that concerns me is that the conversation of bonus guidance never came up and was just told / stayed in contract that I will be eligible for a bonus.
A lot of my friends in similar firms got bonus guidance before they signed. Is this something that was just forgotten because I didn’t ask or is it pretty industry standard for it to be 75-125% of base at a fairly established upper middle market / megafund.
Got it. $200k is definitely above market based on the data that I have. If I had to guess today, your all in comp will likely be $300k - $325k - that is approximately market in my view for mid-sized / larger firms.
I wouldn't be concerned about whether or not you are going to get a bonus, if that is what you are worried about. I wouldn't classify a $5bn AUM firm as an upper middle market or megafund, but it is big enough that they wouldn't lack a pretty standard bonus framework.
I was in a somewhat similar situation where my bonus wasn't explicitly stated in my contract or when I got my offer. I just asked the second years what bonuses typically were once I started and they answered pretty matter-of-factly. Not a big deal at all.
Hope that helps.
I'd echo Equiteer.
Typically 80-120% of base from my PE experience. However, you have an above market salary so the bonus will likely be below that market %.
Given that, the ~$325 range sounds appropriate.
This makes sense. Anyone know of any situation where associates at these MFs or well known upper middle market funds have gotten less than 60-70% in bonus?
Not sure if common? Just asking because in banking, it was fairly standardized across the board for bonuses at the 1st and 2nd year Analyst level. This is probably given since most banks have large hr departments and compensation committees.
As other have said, the "typical" way to structure comp is a bonus equal to 75-125% of base (it's usually set out in the offer letter) and from experience, people should expect 100% (that's usually what is budgeted). I know of a handful of people that had a higher base and lower bonus, but it was usually because some unusual circumstances (ie. mostly new funds operating under a fixed budget until first fund is fully closed or SWF type place).
Bump
Does anyone know if the logic above changes if the fund was $10bn+ which is clearly upper mm? Say you went through the recruiting process with no indication on bonus guidance.
$10b fund or AUM
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