PE funds paying 300k salaries

People working for buyout funds are the best paid in the world of venture capital and private equity. Employees of mezzanine funds are among the worst.

A new survey suggests a handful of partners working in UK-based buyout firms are earning salaries in excess of 300k, and that 44% of all buyout staff are on salaries in excess of 100k. By comparison, 50% of employees working at UK-based mezzanine funds are paid salaries of less than 75k.

The figures are derived from a survey of 160 private equity practitioners by research company mergermarket, on behalf of recruiter Private Equity Recruitment (PER).

"It's difficult to generalise about pay at private equity funds," says Gail McManus, managing director of PER. "There are clear differences in pay by fund size and type."

Predictably, large funds pay the most. In funds with over 500m under management, 25% of the investment team receive salaries in excess of 150k, compared to just 10% of teams at funds managing less than 550m.

Bonuses are also biggest at bigger funds. Funds with more than 1bn under management typically pay bonuses of between 100% and 150% of basic salary, for example, but at funds with less than 100m under management, 60% of staff receive bonuses of 10% or less.

The survey also found that three quarters of private equity and venture capital employees receive carried interest - a long-term payoff based on the success of the fund. Some 53% of junior analysts and associate level staff are paid carry, scotching the notion that it's a privilege reserved for senior staff. And employees of buyout firms are twice as likely to receive carried interest as those at VC funds.

The survey also revealed considerable uncertainty about how much carried interest is worth. "Most people have no idea what the value of their carried interest incentive is," says McManus. "Funds could do a lot more to clarify the issue."