Private Equity Pay Explained ($ for Analyst to Partner)
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- เผยแพร่เมื่อ 14 พ.ค. 2024
- Entry roles in private equity can pay over $300k and can scale to the point where you are earning over $1mm by your early 30s. There are three primary factors that influence your salary in private equity: 1) your seniority, 2) the size of your fund, and 3) the performance of your fund. In this video, we'll go over data that covers the salary ranges for each role in private equity. The figures in this video refer to what the top private equity firms in North America pay.
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0:00 - Intro
1:10 - Organizational Structure / Seniority
2:42 - Total Compensation by Role
4:46 - Private Equity Fund Size
6:32 - Private Equity Fund Performance
Peak Frameworks is a business career prep service started by Matt Ting and Patrick Fong, who have each spent several years working in investment banking and private equity in New York and Silicon Valley. Matt and Patrick met at Evercore, a top tier investment bank, and over the years have tutored and coached dozens of candidates to land their dream business job.
Matt Ting: / matthewting
Patrick Fong (HBS 2021): / patrick-fong-0b773041
#PrivateEquity #Buyside #Investing
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Private equity sounds like a mechanism that extracts the most amount of value from a business, and transfers that wealth to the few general partners.
Everyone loses - the business, the employees, the local consumers, the tax payers.... except for the general partners
The people you’re claiming don’t benefit wouldn’t have benefited with or without the private equity buyout. The business was failing before private equity came in, they just more efficiently manage the end of the companies life. Most likely allowing most companies to work there longer than they would have been able to do before.
Another Banger man. Loved all your vids
Excellent as always Peak Frameworks!
This is awesome, thanks for posting.
Great video and context. Thank you
Super helpful thanks so muchb
Thanks for your videos :) Is there a public database of PE funds, their sizes and returns?
I love this channel man, I am in school perusing a career in investment banking, and this channel has taught me so much!
why would you want or consider investment banking...
@@Danny2k38 why wouldn’t you?
@@blakeandrews3613 easier and more enjoyable ways to make money....
@@kylemcconnell606 like?
Thanks again all of you
Sir, can u pls make a similar vedio on hedge funds
Great video, though I think it's only applicable to IBD Analysts and PE Associates. This doesn't shed much on VP and up, where carry and fund performance becomes MUCH more significant. I'll tell you that you could make much more at a $500M fund that performs vs. a $2B fund that performs at a mediocre level, as a VP. Burnout is another real consideration -- you won't last long if you're working with people who are toxic, or in a toxic environment in general. Work with good people that will help you grow and become a better investor at the end of the day. Private equity is a long game, your real money will be earned when you're 35+ as a Partner. Better to enjoy the long game than burn yourself out early on where you miss out on the great earning years (i.e., $5M+/year) ahead.
I just started at Deloitte not too long ago in their M&A department. Since I want to make the move to PE (and ideally skipping IB in the process), would u recommend I stay here for two- three years till I get promoted to a more senior role and then apply as an associate at a PE firm or stay maybe a year tops and try to apply and come in as an analyst?
Also, how likely are u to get an interview if you’re applying for a job in NYC but you’re from a HCOL city in the Midwest?
I have like 4 other internships in my resume (which helped me land my job at Deloitte) and come from a non-target, public university.
Thanks! I always look forward to your videos and keep up the awesome work!!
Stay and get your CPA.
Leave if you don't think you can pass it.
I think the highest likelihood path is to go through IB unfortunately. Even then you'd prob have to stay 1 year at least. I only know a few people who did Deloitte FAS / advisory straight into PE and it was smaller firms. I would actually try to move as early as possible, it's hard to break in as an associate or VP.
I worked in PE/ IB from 22 until 32. I burned out. I retired and now live a modest life.
Much respect
Retired at 32? Make enough then?
How much did you make before retirement?
Do more company deep dives
very informative video!! can you please make a video on Hedge Fund Target schools?
Hedge funds hire from a very small number of schools, most are hired out of investment banks. They only really hire out of Harvard and Penn consistently I think. Maybe a few from MIT, Notre Dame, Stanford, Ivey, but it seems to vary per year
@@PeakFrameworks hey! thanks, thank for the informative videos, love and support 💪❤️
Hey Matt, great info here. What can you say for those of us who have worked on the fund admin side of things for 3-4 years? I work for a global fund admin, so I've worked with some of the top PE shops in the world. How likely would it be for someone in my role to transition to an associate role at a mid level firm with the technical experience I've gained through fund admin?
Seems unlikely, I haven't seen the switch. Sounds like you're still not getting direct deal or investing experience, which is what firms care about. You can try going to a smaller fund to start though.
Hey Matt, thanks for your video. I’ve worked for two years in asset management (US high yield) and a year in mbb (Asia office) restructuring unit. Would I have a shot in pe or should look for private credit?
I think you'd have a good chance for both PE or credit, that sounds like a solid resume.
Hey Matt, thanks for the insightful video! Quick question (somewhat unrelated to the video), what are your thoughts on one beginning their career at a PE funds of fund? What are the exit ops like?
Ultimately I would love to work in a direct investing role, but have not received an offer thus far into my job search. Should I take a FoF analyst position offer and then try to make my way into direct? Or would it be substantially harder to transition to direct without MBA if I'm coming from FoF. Thank you!
I think it'll be hard to go direct unfortunately. I don't know many people that were able to make that switch. Still better than nothing though. If you start at a big FoF it might be possible to go to a small regional PE fund.
@@PeakFrameworks understood, thanks for your help!
Thoughts on PE firms in Canada? You should do one of these for Corp Dev too! Thanks for the great content 😊
Onex, Altas, Brookfield are the only really big PE firms in Canada. They're all very sweaty from what I've heard. Altas and Brookfield look like they're taking a step forward while Onex looks like it's taking a step back IMO.
@@PeakFrameworks what do you mean by "sweaty"?
@@TheCowpiie long hours
Hey Matt! Thanks for your videos. I have a bit of a bizarre/nontraditional CV and am interested in pursuing a career in PE. Would love to know your thoughts on how I should go about it!
I studied finance in uni and did 2 internships in VC. I graduated in 2020 and decided to join a tech startup. I resigned a few months ago and picked up the CFA; I'm taking the level III exam in May. I think I have a decent foundation of finance knowledge thanks to the CFA but practically zero transactions experience (VC valuations and DD are completely subjective).
I would prefer to join PE straight (perhaps a smaller fund) but don't mind going through the IB route either. However, I'm in a bit of an awkward position because I'm past the new graduates recruitment window but not experienced enough for any other job postings (usually requiring min. 2-3 years experience).
What would you do if you were in my shoes? Appreciate it
That is an awkward place to be. I would say you should probably target VC / growth funds for now and then think about PE in the longer term. I think IB may be hard because of how rigid processes are. PE straight seems very hard too because most require IB or consulting. I think you should target VC / growth where you might do more of a "cold calling" role initially but then slowly build technical experience, where you can probably move around in 2 years to a great PE fund.
It is possible to get 3.5 million for partner or md ?
Hello, thank you for the video. I wanted to ask with the salary that you mention in other videos also apply to Canada. Or will you be paid less in Canada ?
You'll get similarly at the largest firms like Onex, Altas, Brookfield (and maybe Whitehorse?). But otherwise Canada is going to pay less.
@@PeakFrameworks thank you so much
Any comments on having Career as a Fund Accountant (Private Capital Services) in Royal Bank Of Canada?
or entering Analyst role will have more potentials to explore?
It seems fine, but probably restricted to the accounting side of things. Analyst is vague, but if you mean IB analyst at RBC then yes that is much, much better.
@@PeakFrameworks Actually i am really worried about my career, just graduated in 2019 and started off in Audit, however it doesn't seem quite fit for me. Thus, i entered in Royal Bank of Canada, Investor & Treasury Services in 2020 till now - as a Fund Accountant in (Private Capital Services) team in Malaysia. It's been 1 year at RBC with a day to day role to to ensure proper record of Investment Fund's transactions into accounting system / software and prepare monthly or quarterly NAV value and financial reports to client in Luxembourg.
Can you advise if i should stay longer in this career / industry?
i also understand if i stayed too long in this industry, it will restrict my future progression since my working experience and knowledge will not be able to apply into other industries easily. (kind of a niche Service).
Matt, do you have any idea why Investment Banks are bumping the salaries?
What's the reason the first few firms started this? Are they seeking to set a trend for the industry, or to retain talent?
Or maybe the WallSt pay is just returning to its pre-2008 numbers?
I'm not Matt but I believe that there are a few reasons:
1. They're having trouble retaining talent due to the poor working conditions (see "GS Working Conditions Survey")
2. They're having trouble competing for new graduates with big tech companies. Big tech combines good pay with a decent lifestyle.
3. The pandemic has shifted people's priorities; they're less concerned with making money and more concerned with living life while they can.
@@pattharvey oh yeah, I've seen that survey.
Frankly, just raising wages doesn't solve the issue. I mean, the problem is that people are miserable and overworked, and 'bonus culture' isn't very good at addressing that in the first place. So it was rather odd of them imo to bump wages as opposed to improving the quality of work. Is bumping wages by some 30% somehow cheaper than actually solving the issue? Or is it because they really don't know how?
@PooCloset got the wisdom.
Yes, bumping wages (especially junior wages) is a lot cheaper than having to hire new people or solving the issue. The "issue" is a deep organizational and industry problem that occurs in lots of client-facing industries.
Work conditions were brutal during COVID because of things like crazy amount of SPAC deals. Salary bumps were used to reduce attrition.
Have you heard of the Goldman Sachs AIMS (alternative investment management division)? I have an offer to be an analyst on their FoF team, are FoF analysts paid less than traditional PE analysts in your experience? Love the channel, thanks!
I don't know much about it unfortunately. FoF tends to pay less than traditional yes. It can be harder going from FoF to normal PE as well. I think you'll still be in a good position with GS under your belt though.
Probably a dumb question, but are these salary/bonus figures the ones you would see in New York City? I have some private equity firms where I’m from where the cost of living is much lower, and the salary/bonus figures are like half of what you are listing (at least for the analyst/associate levels)
Yes I'd say these are the bonus figures in the major cities like NY, SF, Chicago, LA but only at the large-cap level. If you're at a smaller PE firm, numbers will be different
Can you make a video on venture capitalism firms??
Maybe eventually... it's a lot harder because I've never worked in VC.
@@PeakFrameworks ight thanks man
I work in M&A tax at a big 4 and PE firms are our clients. Is there any path that could lead to PE firm analyst from where I am now?
I would do try to get into the financial advisory group at a Big 4, then switch to IB or PE directly out of that. Happens relatively often
Probably gonna have to go into actual advisory. Or you could get an MBA and go into IB
Hey Matt, do you think this salary range will be similar in Hong Kong PE firms as well?
I would guess HK is lower, I think NY / US is the highest in the world.
@@PeakFrameworks How about hedge funds. Do you have a chance of making more than wall street if you perform well at a HK hedge fund?
Thoughts of PE firms in London? Any I should aim for? Thanks.
Don't really have an opinion because I never worked there!
Is the Private Equity bonus in the form of stock compensation or cash?
The private equity bonus referred to here is all cash compensation.
Could you make a video on the exit opps that MBA IB Associates have? Could they move on to a PE mega fund (>$15B AUM)? Or are their options a bit more limited than the 23 year old analysts?
I'd appreciate a video on this topic as well. Thanks for all of your other fantastic videos by the way
That's a cool suggestion, I'll see if I can get good data on the topic. Definitely more limited than analysts. I think if you're at a very top bank like GS or MS you can get associate exits, I haven't seen any mega fund exits outside of those firms.
@@PeakFrameworks Another video idea. Not sure if you have done this but could you make a video on the best liberal art schools for IB?
@@PeakFrameworks The barriers are coming down day by day. If you've been following the M&A market over the past 18 months, you'll see that there is incredible demand for both IB analysts and PE Associates, including those coming from nontraditional backgrounds. My advice to OP would be to work through headhunters and position yourself as a compelling candidate, and you can get an interview. If you can get the interview, you can ALWAYS get the job.
4:00
5:44
What do you think about private credit funds?
Good places to be, but skills slightly less transferrable to other industries. I think private equity generally has performed better as an asset class. Private credit tends to hire from restructuring / lev fin more.
Hey Matt nice video! Could you also make an update video or answer below in the comments for the bumped up IB analyst salaries you mentioned? There are people saying that TC is the same (base up, bonus down) while there are also people saying TC went up proportionally with the base raise. I frankly don't know which one's right. :P
It's not easy to say what TC will be until the bonuses are actually paid out tbh, so we'll have to wait.
As a reference, in my second year (2016), they raised bases and bonuses stayed the same. So overall TC increased by the base amount.
👍🏻
Is it possible for a senior md/partner at a megafund to make mid 8 figure salaries in one year?
its possible to make 9 figures in one year...co investment opportunities
Yes definitely. With carry and investment profits at a good fund, it's possible to make that consistently.
Seems like twice the level of compensation of the European market..
Is an mba from rotman a good idea to try to break into ib given the low amount post mba associate roles?
It might be your best bet if you don't currently have any finance experience, but I don't think it's a very likely path. It seems that you need to go to a decent US business school if you want a really good chance of IB.
@@PeakFrameworks Even for the Canadian banks? I go to a non target in Toronto and I doubt I’ll get any ib offer out of undergrad.
@@youtubeman5078 I wanna get into UofA next year is that a target school and also my second question would be how would you get offers?
@@lilziv1219 I don’t really know for sure but I think it’s good for Alberta but not great anywhere else. Probably non target for Toronto/east coast. You get offers by having good grades and networking. GPA matters, so keep that as high as possible and then just try networking with alumni from your school. There’s dozens of videos on TH-cam how to get offers.
Introduce yourself and your channel every single video.
Good tip!