As an industry, private equity is perhaps the most sought-after in all of financial services. One PE firm told us it receives 250 applications for every role it posts. Acceptance rates at top investment banks like Goldman Sachs and J.P. Morgan are miniscule yet still dwarf those of even average private equity firms, so why do people even bother with the hassle of applying for PE jobs? It's mostly about the money.
Pay was perceived as a major strong point at eight of the 10 top PE funds in our survey (only at Abu Dhabi and Temasek was pay ranked average or below). In this sense, private equity funds are on par with the top-ranked investment bank, Goldman Sachs, which also scores very highly for its perceived compensation.
Once again, the rankings were led by three of the biggest names in the industry – Blackstone, KKR and The Carlyle Group – which topped the list in the same order a year ago. In fact, the same 10 private equity companies that made the list in 2017 finished in the top 10 this year, though in a slightly different order. This is a significant change from last year, when five PE firms made their first appearance in the rankings.
On the surface, the biggest surprise is the continued love affair respondents appear to have with Sovereign wealth funds (SWFs), which aren’t known for their huge salaries and bonuses. A closer look at the numbers tells the story, however. All three SWFs – Abu Dhabi Investment Authority, Temasak and GIC, the government of Singapore’s sovereign wealth fund – scored much better than their industry competitors in the quality of life categories. The three SWFs led the top 10 in manageable work hours while also having strong reputations for their office environment and flexible working options.
Many of the same things can’t be said about other bigger-name private equity firms that made the list. Fewer than 20% of respondents referred to working hours as a strength at the top three firms. If you want to work at the crème-de-la-crème in private equity, don’t expect to be walking out the door at 5pm. However, non-SWFs generally make up the difference by being known as innovators in their field, offering more challenging and interesting work, and providing employees with greater access to key players in the industry. That, and of course, the money.
Recent compensation figures from research firm Preqin suggest that private equity is indeed one of the best-paying industries in all of financial services, but you need to put in some service time before seeing any real riches.
The average private equity analyst in the U.S. took home a salary of just over $80k in 2017 with a year-end bonus reaching almost $25k. Those numbers are similar to what analysts see at investment banks, depending on the firm and position. But once private equity employees reach the associate level, they are usually eligible for a slice of equity in the form of carried interest. The average senior private equity associate in the U.S. takes home north of $145k in carried interest alone, pushing total compensation upwards of $264k. Associates at investment banks or consulting firms will rarely ever see remuneration totals reach near that level.
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