Private Equity Compensation

WallStreetOasis.com's picture
Rank: The Pro | 47,161

Guest Post from David Kochanek of JobSearchDigest.com:

Annually JobSearchDigest.com conducts a comprehensive compensation survey to discover insights into the changing landscape of private equity compensation. This is our third year producing the report and, given the turmoil in the financial markets during that time, we have seen many changes.

The 2010 Private Equity Compensation Report is based on data collected directly from hundreds of private equity and venture capital partners and employees in private equity jobs.

Overall, we saw small but positive movement in earnings from 2008 to 2009 and, despite industry rumblings about base salary freezes earlier in the year, the majority of that movement came in the form of increased base compensation. We also saw an increase in dissatisfaction with pay, which typically signals a stronger job market -- good news.

The annual average compensation for private equity and VC professionals was $208,000 USD with an average 3.5 weeks of vacation. On average, bonus levels were reported at 31 percent of total compensation and for those making more than $300,000 the bonus accounts for more than 40 percent of total cash compensation.

Each year we also take a look at earnings calculated on an hourly basis. The 2010 results are interesting but not all that surprising. Taking Associates as a base measure; Directors make twice what an Associate earns and Partners, Managing Directors and CFO's make 3 or more times that amount on a per hour basis.

Keep in mind when benchmarking compensation levels in private equity, common titles such as Manager and Analyst (or Senior Analyst) can mean very different things to different firms. This is especially true at smaller firms, where each person tends to wear more hats than at their counter-parts at larger firms.

So, how many hours are private equity and venture capital professionals working and how does that correlate to earnings?

77 percent reported working between 50-70 hours per week on average and 10 percent work 40-50 hours per week. As a point of interest, VC respondents reported working 55 hours per week and PE or PE/VC respondents reported working slightly longer weeks at 58 hours on average.

Unlike in past years, this year the number of hours worked didn't necessarily correlate to overall compensation levels (with the exception of a small number of people who worked more than 90 hours per week).

About the Private Equity Compensation Report

The report on Private Equity Compensation is based on data collected directly from hundreds of private equity and venture capital partners and employees. Each year the results go deeper into the compensation practices of private investment firms.

Over the years, some of the participating firms included: 3i, Actis, American Capital, Babson Capital Management, Bain Capital, BlackRock, Deutsche Bank, EDC Equity, EdgeStone Capital Partners, Highland Capital Partners, Kaiser Permanente Ventures, North Atlantic Capital, RBS, Safeguard Scientifics, Time Warner Investments, Credit Suisse, Delta Partners Group, Intel Capital, and Soft Bank Capital.

About Job Search Digest

Since 2002, Job Search Digest has helped investment professionals be more effective with their job search. We know how valuable your time is, which is why we do the legwork for you. Every day our team tracks all online job sources (including the specialty niche sites) and captures the best Hedge Fund, Private Equity, Venture Capital and investment banking jobs out there - giving you a competitive advantage in your job search.

Comments (12)

Jul 8, 2010

Do you mean blackstone and not blackrock?

Jul 8, 2010

No, its Blackrock.

Thanks for sharing.

Jul 9, 2010
Marcus_Halberstram:

No, its Blackrock.

Thanks for sharing.

LoL.

-N.

"It's about the game." - Gordon Gekko
"No matter how much money you make, you'll never be rich." - Jacob "Jake" Moore
"'Oh Africa Brave Africa'. It was... a laugh riot." - Patrick Bateman

Jul 8, 2010

thanks good luck getting a college kid to pay $247 for your report

Jul 8, 2010
trackstar2k2:

thanks good luck getting a college kid to pay $247 for your report

The percentage of total PE hires that are college kids are likely in the single digits. And of that 5% of PE hires that are out of undergrad, none have any negotiating power whatsoever. This isn't being offered to college kids.

Jul 8, 2010
Marcus_Halberstram:
trackstar2k2:

thanks good luck getting a college kid to pay $247 for your report

The percentage of total PE hires that are college kids are likely in the single digits. And of that 5% of PE hires that are out of undergrad, none have any negotiating power whatsoever. This isn't being offered to college kids.

yeahh never thought of it that way..bad post. my bad.

Jul 8, 2010
trackstar2k2:

thanks good luck getting a college kid to pay $247 for your report

College kids who want to be informed for potential interviews will happily pay $250. You drop a $100K plus for an education, but balk at something which will make you a more prepared and better informed candidate. Great logic.

FYI - I paid $250 to have my resume professionally redone years ago and think it is some of the best money I every spent.

Jul 8, 2010

who's gonna post this file on rapidshare

Jul 8, 2010

I can't actually read the report but for 2006 I read somewhere that numbers were 250k salary + almost 100% bonus? Sound reasonable to anyone, or are those numbers absurdly out of control for associates.

Jul 9, 2010
WallStreetOasis.com:

Guest Post from David Kochanek of JobSearchDigest.com:

Taking Associates as a base measure; Directors make twice what an Associate earns and Partners, Managing Directors and CFO's make 3 or more times that amount on a per hour basis.

Do these seem like rather small increases to anyone else? An associate at a bank may make ~$300K, but a director pulls in ~$800K and a MD may pull in $1.5M (obviously all this varies).

Whereas it seems like unless you're in a TPG, KKR, etc., you may make $150-200k as an associate at a middle-market PE firm. That would imply the MD's make ~$450-600k. That just seems a little low to me considering a lot of those MDs were former MDs at banks.

I may very well be missing something here, I'm just curious what it is.

Jul 9, 2010
Car Ramrod:
WallStreetOasis.com:

Guest Post from David Kochanek of JobSearchDigest.com:

Taking Associates as a base measure; Directors make twice what an Associate earns and Partners, Managing Directors and CFO's make 3 or more times that amount on a per hour basis.

Do these seem like rather small increases to anyone else? An associate at a bank may make ~$300K, but a director pulls in ~$800K and a MD may pull in $1.5M (obviously all this varies). Or, if you consider banking analysts and PE associates to be more analogous, you can look at MDs comp as a multiple of analyst pay (assuming $150k = 10x analyst salary).

Whereas it seems like unless you're in a TPG, KKR, etc., you may make $150-200k as an associate at a middle-market PE firm. That would imply the MD's make ~$450-600k. That just seems a little low to me considering a lot of those MDs were former MDs at banks.

I may very well be missing something here, I'm just curious what it is.

Jul 9, 2010
Comment