360k for private equity MDs (and that's at small funds)

21 May 2007

2 minute read

360k for private equity MDs (and that's at small funds)

Prodigious funds pay prodigious packages, but how does the middle market fare?

According to the latest salary survey from recruitment firm EM Finance, associates in middle market private equity funds now command total packages of up to 180k, plus carried interest ('carry').

At the other end of the scale, EM says managing directors in middle-market players are taking home base and bonus packages of up to 360k plus carry.

How much does carry amount to in the middle market? EM doesn't say. But rudimentary maths suggests it's not as much as at mega-funds and the gap between the two is widening.

Carry is based on the profitability of a fund above a pre-defined hurdle rate. Above it, 20% of all profits are typically shared between a fund's senior staff. On a 20bn Goldman-style fund, carry can therefore be huge. On a 200m middle-market fund, it's a lot littler.

Last month, US publication Buyouts News said the middle market is fighting back by upping carry to 25%. EM Finance managing director David Howell says there's no sign of this yet in the UK - and no need for it as mid-market funds have no shortage of candidates to choose from.

"People are happy to work for a private equity fund full stop," he says.

Base salaries and bonuses, middle market private equity 2007

Analyst: Salary: 45k to 55k; Bonus: 40% to 80%

Associate: Salary: 60k to 90k; Bonus: 60% to 100% + carried interest

Vice president: Salary: 75k; Bonus: 80% to 120% + carried interest

Director: Salary: 90k to 150k; Bonus: 100% to 200% + carried interest

Managing director: Salary: 120k; Bonus: 200% + carried interest

AUTHORAnonymous

Insider Comment

So
Somebody
13 August 2007
Thanks Robert, for giving that anonymous risk management dude a well deserved kicking. Nothing gets on my nerves like people who know nothing about banking and private equity who come and say stupid things like that. By the way, Im not joining private equity to make this kind of cr*p money. What can I buy with it?!
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J
J
15 July 2007
Is there any vice presidents, directors or managing directors who could spare some time for a few questions?... would be greatly appreciated.
thankyou.
email: jas.89@hotmail.co.uk
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Ro
Roberts
9 June 2007
your understanding of private equity, like your spelling, is poor. "people that do nothing". isn't risk management just an aggrandised term for health and safety? before you make such comments, try and read something other than the daily mail.
private equity professionals work in partnership with management teams to grow businesses both organically and through acquisition. they add value through the provision of strategic advice at board level, the installation of efficient capital structures, and the introduction of rigorous financial controls. through these methods (to name but a few) they are able to generate spectacular returns for the management team and their investors.
the private equity industry has ballooned in recent years because the returns are superior. if that wasn't the case, then pension funds wouldn't be slashing their exposure to equities.
given the explosion of the private equity asset class (which is patent testament to its returns), these people have certainly been doing a lot of "nothing".
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An
Anonymous
8 June 2007
i think this is an obsurd amount of money to be paying people that do nothing
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