Hi Gang,
Would anyone know what to ask for regarding comp for a brand new company with some senior folks from a National firm. You have definitely heard of one of the companies that one previously worked for. I would be the first hire in that associate to VP level.
My gut is to ask for equity, but I don't know at this level if it is in the card, but they have yet to acquire a property,(they are like 1-2 months old). I don't know what to ask for I have over 1.5bn of transaction experience on the principal side(not huge, but not small), and 1 brand name on my resume.
Definitely ask for equity. Depending on the MSA and how many years of experience you have, I'd ask for $150k-$200k + 50-100% bonus; plus points on the deals you work on (a couple of percentage points of the carry). That base comp + bonus puts you in the accredited investor range where you can put money in the deals (ask and expect to pay no fees and no carry). You may not get all of that given the newness of the shop, but I'd start there. If you like the folks and believe in the upside of these people/the firm, then maybe work for less in exchange for more upside.
NYC and 7-years. Its not a fund, but you think that is at the associate or vp level?
Equity/carry is definitely market for a role like this where you're taking risk around the company getting off the ground.
Definitely ask for equity. I second the $150-200K base per count's post above.
So, I do think it is appropriate to have an equity/partner type discussion in the process, BUT, I really don't think you have all that great leverage in getting it (unless you are so baller that your name/reputation can move the needle). Really, you should expect market + some form unique ups for the start-up risk (and that's a maybe). The biggest upside to start-up firms is getting bigger levels of responsibilities and titles than you would at "big national firm" with 7+ yrs exp. Aka, the ground floor effect.
TBH, if they are paying you, then them being a start-up doesn't change the calculus from their seat all that much. You have to assesses the risk/reward trade-offs, and can make some requests given the start-up risk, but at the end of the day, an employer-employee relationship is just that.
I don't disagree, and thought the previous posters were high on comp.
What sort of unique comp have you heard of? I essentially would like my interests aligned with theirs vis-a-vie equity, that way I'm incentivized to do deals that outperform and increase the equity multiple.
Also what is comp for an associate/senior associate(I am going to ask for VP title but not comp), in this role?
I think you need to ask for higher comp. You're taking no-name start up risk without any deals under their belt. The $150-$200 base with 100% bonus is high, but for the start up risk, I would expect at least $150 base with a bonus getting me to $225k. You also have 7 years of experience, and in NYC, that should mean a minimum of $200K and I know people at that level approaching $300K. If the firm goes under, you have a no-name firm on your resume and you were chasing the ups, but I think you need to take into account the downs. Just because the two people starting the firm may be known doesn't mean the firm will succeed, or at least succeed to the amount they want it to happen. In 5 years you could make boatloads of cash, but just as easily, the firm could only do 5 deals and you could be treading water. So you need to get paid because you can't really eat the carry. Especially if they aren't offering up or don't want to give away equity in the deals.
So, the "unique" side with "start-ups" is usually around timing, and somewhat size of bonuses. I worked for a form of start-up firm (pre-08 for context) and had a lower than normal base, but a guaranteed bonus that paid out within first year (made base above market then), still had a normal type bonus based on deals closed.
Bottom line, you shouldn't take less to work for any firm, let alone start-up, but some may want to do things to reduce day 1 expenses in exchange for bigger payout in reasonable timeframe. That's a risk trade-off you can then decide if worth it. Better titles and range of responsiblies are also just easier too.
Not sure I agree with most of the folks responding. If you're making 175k then what is your justification for asking for equity? They're already paying you.
Obviously, have the conversation. If you're joining a small startup, then the idea is that in five years you'll have a team and a pathway to carry, at the least. Maybe that takes the form of taking a percentage of net cash flow or something, or the right to co-invest. But your principals, if they're smart, aren't going to give away the store. If they give equity to every early/important hire, they won't be left with much.
Agreed, but then who are the important hires? CFO?
And this is NYC, co-invest sucks. Unless I'm making over 500k, which gets taxed at 40% net effective who has the cash to substantially invest?
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