Public versus Private PE Firms

Some PE firms (e.g., BX, KKR, Apollo, Carlyle) have IPO-ed and have publicly traded shares. How does working at a "public" PE firm differ in comp versus private PE firms? Is it harder to get carry? Trying to get a sense of whether there's a difference and, if so, why these firms thought it was a good idea to IPO

Comments (4)

 
  • Intern in IB-M&A
Jul 16, 2020 - 4:46pm

IPO was really good for founding partners and early employees who could finally realize liquidity and have a natural progression with newer people taking over the senior ranks. IPO also is likely going to cause fee compression and more scrutiny as it relates to expenses (no private jet / associates always sitting first class). Also dramatically changes the incentive for the firm; public firms are incentivized to continue to raise larger and larger funds and add new strategies (credit/fund of funds/growth equity) which wasnt part of their skill set advantage

 
  • Intern in IB-M&A
Jul 16, 2020 - 4:48pm

yup. IPOs make the partners at the time of IPO a lot of money but kind of fuck over the firm's future. they're forced to try to grow rather than just sticking to what works, and comp is never going to be the same as what it was pre-IPO because now there's shareholders sticking their fingers in the pot (whereas before, it was only employees who were distributing the firms earnings).

 
Jul 16, 2020 - 5:05pm

Generally speaking, 50% of the carry now goes to investors so it reduces the amount that's available to the investment team. That being said, founders typically tend to get the lion share of carry, especially in situation where there's more than enough to go around (and it's even more pronounced for HF) so I couldn't tell you how it really compares. The people i know how worked at some of these firms are generally happy about comp ;)

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