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Europe's private equity payouts are eye-watering.

Private equity pay in Europe: from Associate to Partner

Everyone knows that private equity is the place to go for bankers seeking a better work life balance and perhaps even a bigger paycheck – but just how much money is at stake here?

Executive search firm Heidrick & Struggles has just put out its latest PE pay survey for Europe, and the results are staggering. Partners at top private equity firms (those managing over $10bn in assets) earning over €1m in cash compensation (defined as base pay + bonus) and nearly €25m in carried interest over a fund's lifecycle (typically five years).

The survey covers private equity firms in Europe and Africa, with over 600 front-office associates, principals and partners responding.

People usually go into private equity for the carried interest payments, and it's easy to see why. The power of carried interest is strong even at associate level, with a range anywhere between €500k to €7m (although most associates report up to around €1.5m carried interest at most) over a five-year period.

Cash compensation  (salaries plus bonuses, excluding carried interest) is lower, but still substantial. For principals, cash compensation ranges from around €200k to around €500k depending on the size of the firm and carried interest ranging from around €2m to around €7m.

Partners, as noted earlier, earn by far the most – with carried interest ranging anywhere between €5m and €25m depending on the size of the firm.

Carried interest is the allotted gain that an employee makes from a private equity firm’s profits, and typically vests after five years.

Although seniority more or less guarantees a bigger compensation package for the first 9 years in the industry, there is a significant plateau for private equity professionals 9 and 14 years of seniority, perhaps reflecting the amount of tie required for someone joining the industry to expect a partner promotion.

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Photo credit: eFinancialCareers/Dall-e

AUTHORZeno Toulon

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