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Bad luck to the junior bankers who fled to private equity

If you left investment banking for the private equity promised land of lower hours and higher pay, then bad luck.  The highest pay in private equity comes from carried interest and with private equity exits at an eight-year low, there isn't going to be much carried interest paid out in 2023.

The chart below from Dealogic illustrates the issue. The first quarter of 2023 has been unusually bad for private equity firms wanting to exit investments. 

This is awkward for any analysts and associates who left banking around five years ago and who were finally hoping to earn carried interest. Carried interest is paid after funds exit investments above a specified hurdle rate. For the moment, it seems exits aren't really happening. 

It's also bad news for financial sponsors bankers. One European headhunter says demand for their skills has fallen off a cliff: "Private equity firms are more interested in creating value from existing investments than running in circles trying to find the next deal and financial sponsors bankers have a lot less to do," he says.

Photo by Jonas Wurster on Unsplash

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AUTHORSarah Butcher Global Editor

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