Fund-Raising Drives PE Salaries Higher, Report Says

Fund raising among private equity firms is driving managers' compensation higher, with partners at the largest funds earning an average salary of $568,000 and a bonus $1.93 million.

Reuters is reporting a study found partners at these funds also have between $30 - $60 million in "carry dollars," meaning the share of profits they'd be due once the fund has returned the cost of an investment to its backers. The study considered "partners" to be those with at least seven years of post-MBA experience. It was conducted by the recruiting firm Glocap Search and financial information provider Thomson Financial.

Kohlberg Kravis Roberts and Texas Pacific Group are considered to be among such funds, although the study didn't identify any firms by name.

The pay increases at larger firms impacted compensation at smaller firms, Reuters says. On average, senior associates, earned 16 percent more than they did in 2005, while vice presidents earned 18 percent more and principals received 9 percent more.

PE funds raised record amounts of money during 2006: Estimates range from $365 billion to $400 billion compared to $293 billion on 2005. This fund-raising has driven an increasing demand for staff ranging from associates to partners. Observed one recruiter late last year: "Doing deals is now more difficult and you need more resources to find and transact them."