How much are private equity funds paying in 2023?
Private equity funds are the promised land for a lot of bankers. For better work-life balance, a bigger paycheck, and more interesting work (among other reasons), there are many an IB analysts staring wistfully at the ceiling and dreaming about moving to Blackstone, KKR, or their peers.
But when people talk about a bigger paycheck – what do they mean? Well, thanks to information from recruitment consultant Odyssey Search Partners, we can give you an idea.
In short, a lot of money. Private equity funds pay salaries on par with Wall Street investment banks, with associates on the sell-side generally earning a bit more, although the gaps close again when a professional reaches VP (or equivalent). Salaries for managing directors (MDs) are also broadly on par, as are bonuses.
Of course, as everyone in the industry knows, the real money at a private equity fund has nothing to do with the salary – or even the bonus – you’re paid. It’s about a fun little thing called carried interest.
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Interestingly, this took quite a big hit in 2023; according to Odyssey, the estimated value of carried interest decreased by 10% from 2022. That can mean quite a big difference to one’s net worth; this time last year, carried interest at a big PE fund ranged anywhere between €1.6m ($1.7m) and €24m ($26m) depending on seniority.
Odyssey also noted that compensation had declined, from an average satisfaction rate of 57% in 2022 to an average satisfaction rate of 52% in 2023. It also noted the continued persistence of the size factor at private equity funds – associates at mega-funds (over $10bn in AUM) earn more than VPs at smaller funds (under $500m).
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