Private equity is a sought-after career, especially among investment bankers. Most people who quit banking for private equity do so after 24 to 34 months in IBD. While success certainly isn't guaranteed, there are compelling reasons to make such a move. Ultimately, for many junior investment bankers, it comes down to compensation, because once carried interest starts kicking in – usually at the associate level – PE simply offers more money.
Private equity funds are steadier recruiters than investment banks – PE hiring is fairly consistent even when the markets are down, and even if there’s less M&A going on. More firms – including Terra Firma, Blackstone and KKR – are recruiting graduates directly from university, but competition is notoriously tough, with the top PE shops only making offers to a tiny proportion of applicants.
If you are planning to make a move into private equity, regardless of whether or not you work in investment banking currently, or if you're already a private equity executive, you want to know what the biggest firms in the industry are paying. As you move up the ladder, an increasing percentage of your total compensation will come from your bonus. That said, the following provides insight into private equity pay via base salary figures from three of the heaviest hitters in the PE space, TPG Capital, the Blackstone Group and KKR.
TPG Capital – formerly known as as Texas Pacific Group – has dual headquarters in Fort Worth, Texas, and San Francisco. Its 18 private equity funds have raised more than $50bn from investors.
While very little compensation data is available for managing directors and partners, rest assured that you'll be taken care of financially as you move up the ranks at TPG.
Once you're hired by New York-headquartered Blackstone, you should know that employees are thrown into deals from the get-go. Even more importantly, you’ve got to be liked by the whole team – and this means a rigorous interview process and a highly scrutinized training period. Steve Schwarzman, the CEO of Blackstone, is not shy about handing out career advice, although it is unclear how approachable he is.
At any rate, you can expect to be well-compensated if you are able to fit in and find success at Blackstone.
Initially made famous among a broader segment of the population outside of financial services by the classic book Barbarians at the Gate: The Fall of RJR Nabisco, KKR, also headquartered in New York, continues to be one of the primary private equity players worldwide to this day.
While the base salaries of their junior executives don't appear to blow the competition out of the water, there is no doubt that your overall compensation ceiling at KKR is sky-high if you stay for the long term.
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