Private equity is still the place to be for junior investment bankers. The private equity salary, bonus and (importantly) the big bucks you can earn through carried interest is all part of the buy-side's appeal, but the perceived better hours and more varied work also helps sway sell-side analysts and associates across.
But how much do you really earn? And if you want to make big money in private equity, where in the world should you base yourself? The figures below, provided to us by research firm Preqin, give you an idea of what to expect. They show base private equity salary and total compensation - the discrepancy being down to bonuses, and carried interest. When you're senior in PE, carried interest is where the big money is.
Carried interest is generally only a big deal once you reach the senior ranks in a private equity fund. In the U.S, however, 'carry' hits private equity professionals' wallets before director level. Preqin's figures suggest that even associates and senior associates in the States received an average of $66.2k and $145.9k respectively in carried interest. This isn't bad, particularly when it's added on to respective total cash compensation of $157.3k and $198.4k.
Wherever you are in the world, carried interest accounts for the lion's share of pay when you reach the senior ranks. Managing directors in the U.S. received an average of $1.5m in carry alone last year; chief executives of PE funds received $5m. Managing directors in Europe received an average of nearly $1.6m in carried interest and CEOs pulled in over $2.4m.
Total compensation for private equity professionals is higher in the U.S. than anywhere else across all levels of seniority. Plenty of bankers want to move into private equity in Asia, tand the region now holds its own when it comes to pay. Preqin's figures suggest that the most you will earn on average in Asia is $2.7m, at CEO level. This is lower than an equivalent role CEO role in Europe or Asia, but Preqin's figures show that salaries and bonuses for the lower ranks in Asia are now close to their European peers. Preqin's figures didn't include carry at most levels in Asia due to insufficient data.
Finally, private equity firms are still hiring. 61% of firms surveyed by Preqin said they were hiring - 31% said they would keep headcount flat and just 8% said they would reduce employee numbers. The largest proportion of firms hiring (26%) said they intended to increase headcount by 6-10%.
Demand for junior private equity staff is higher than any other rank. Private equity firms are reportedly targeting investment banks' juniors after just six months' sell-side experience. It's easy to see why - 40% of people Preqin surveyed said analyst and associate roles were the most difficult to fill, while 30% said that mid-level roles (VP and senior associate) were most in demand.
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