The Glocap Private Equity Compensation Report analyzes base salaries and bonuses for professionals in the Private Equity, Venture Capital and PE Fund . The Private Equity Compensation Report is the most comprehensive, reliable and affordable benchmark for private equity and venture capital. Interested in firm specific compensation? Use the Wall street Trusted by over 1, aspiring private equity professionals just like you. There is a Glocap report that indicates 95% of post-MBA level professionals receive it.
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I have been negotiating an offer with a PE firm to come on as a VP.
I actually have worked for this same firm before, left for a few years, and now they have roped me back in. Question I have to you is, do VPs typically receive carried interest in the firm and if so how much? Given the high level of risk around the fundraising, I would think this could be something I can push for to make up for the slightly lower than average salary. Certified user TheBigBambino weighs in on carry in a private equity firm at the vice president level.
Yes – virtually all VPs have carry. It is possible it vests as well i.
In all seriousness, I would be extremely hesitant of working at a firm that doesn’t include it’s VPs carry participation. One way to figure out how much to ask for is doing a method one of the users above did by allocating a annual dollar amount. Given the number of variables above, I’ve see people do the calculation a number compenxation ways.
I choose a 5 year period as that’s the active average hold period of a deal and a decent firm should raise a new fund at least every 5 years. Interested in firm specific compensation? Use the Wall street Oasis Company Database to access reviews, interviews, and salaries for thousands of firms. Yes, VP’s typically receive carry. The variance is due to a number of factors, including size of fund, number of professionals at the fund, location, precedent, generosity of the partners, etc.
Given you were already at the fund, I would expect you to have some success negotiating this point.
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They know your work product vs. Most firms will pay up for that. It is available in many university libraries or career centers though. Yes, VPs typically have carried interest. For the record, no MBA but strong business undergrad. Yes you should get carry on top of that, but that cash amount doesn’t seem far off.
The significantly higher cash numbers you hear about are typically at much bigger funds. Plus some pre-mba folks. They likely don’t have capacity to pay much more than the market numbers I referenced above. The rest are outliers.
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Thanks ledgerfor a fund that is small and very much still fundraising, I am ok with it. Great lifestyle, incredibly smart people, I never had to go through the banking slaughterhouse and won’t ever be required to get my MBA So, could be worse. On vesting, great point – I have never seen or heard of a carry award that does not include a vesting schedule.
On translating the carry award into an annual number, I think most people look at it as at least a year timeline. Typically, you have 5 years to invest the capital and 5 years to harvest. If you assume a 5 year hold, you are not getting your first carry check until 5 years after the fund begins investing.
The rest of the checks would likely roll in over the following 5 years I typically take a more conservative approach and spread the carry over 10 years. Moreover, I think a 2x return is an appropriate assumption.
I know some people look at 2. Agree with everything you have said. Is there an explanation for why real estate private equity groups tend to pay less than vanilla pe groups? Real estate compensatiom the Vanilla P. Deals are all the same, and they are easy and replicable. Thus, in high supply. Not to mention boring. Most of all it is safe. Less risk, less reward. But opportunistic real estate investing is on the far end of the risk spectrum, can be reporg complex and, in most cases, needs to be unique and creative in order to be successful.
I guess because RE PE has typically lower returns than plain vanilla private equity. Real Estate is oftentimes less risky and less complex than vanilla corporate PE. Do they have same compensation than any other Real Estate Private Equity? The investments that value added funds make may be more “hands on” but I’m not sure that makes them more complex at least not from a structural or legal perspective.
In conpensation case, in Asset Managementyou’re not really rewarded for doing work that is more complex or rreport on – you are rewarded for two things:. For example, a special sits PE firm that is heavily involved operationally doesn’t get to charge more than a more vanilla PE firm that is hands off. It may be that they generate higher gllcap because of their more-involved efforts similar to how a value added firm ought to return higher than a core fund because they have to lease up buildings or otherwise improve non-prime assets which may in turn create higher pay, but that doesn’t mean that they charge more just for doing more.
You can’t assume that fund makes 2x in 10 years and still gets carry because hurdle rate would not be cleared with those numbers.
The hurdle doesn’t accrue on the entire fund starting day one. It accrues only on called capital. You aren’t getting dinged for the hurdle on the entire fund from day one because LP’s don’t have to put money in until privte call it to make an investment.
So in calculating carry value and consequently your net worth, best to just stay conservative. I think the dollar value at work method is highly subjective and can be pretty misleading.
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Vice President Fund Carry/Equity
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Apr 6, – Apr 7, privzte 4: In any case, in Asset Managementyou’re not really rewarded for doing work that is more complex or hands on – you are rewarded for two things: Managing more capital Making more money equty the capital you manage For example, a special sits PE firm that is heavily involved operationally doesn’t get to charge more than a more vanilla PE firm that is hands off.
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