Private equity, the promised land. Looming like a large carrot in the peripheral vision of the exhausted analyst in the investment bank, PE promises similar pay, more kudos, more interesting work and – most importantly – more ownership. If you work in a private equity fund, you will theoretically have more direct involvement in the outcome of your work – after all you’re investing money long term. And if those investments are profitable everyone in the fund will benefit. It all sounds sort of democratic.
Except new research shows that, actually, juniors in private equity firms are having their pay squeezed while senior people in private equity firms are having their pay hiked. Suddenly, private equity doesn’t look so fun and inclusive after all.
Witness the chart below, prepared by Emolument.com, the ‘real time salary data specialist,’ based upon pay data from 260 private equity professionals working in London.
And witness the accompanying chart, also from Emolument.
Needless to say, the implication is that the MDs at the top of the private equity pile are enriching themselves at the expense of almost everyone below them. PE directors and VPs have done especially badly since 2012 – possibly because MDs assume they will be motivated simply by the tangible prospect of being promoted into the top ranks where things are so much more lucrative.
Junior private equity jobs are notoriously difficult to get. Everyone who’s even sniffed a career in M&A wants one and private equity recruiters say they receive 300 applications per junior job. This skewed supply and demand situation seems to be making itself felt in pay: if you work as a junior in a private equity fund, you’re a dispensable element in a system who’s main purpose is to enrich those at the top. That’s not hugely surprising, but may come as news to analysts expecting PE to be a more caring, sharing sort of place than banking.