The surge in movement from investment banking to private equity over the past year hasn’t resulted in an increase in pay for juniors making the switch. However, senior private equity professionals have seen their compensation packages swell and the vast majority of firms are planning on hiring again next year.
83% of private equity firms globally intend to increase headcount next year, according to the annual Private Equity and Employment Review by research firm Preqin. Meanwhile, 22% said that they had implemented layoffs over the last 12 months.
Funds in Asia were most likely to have the highest number of deal-makers dedicated to new fund launches, suggested the research, with ten people on average to each fund. In the US, this figure was six people, while funds in Europe get by with an average of four deal-makers for each fund, it said.
However, Preqin’s figures suggest that 2014 has been kinder to senior employees’ wallets. Last year, average compensation for managing directors in the US was $1.34m – this figure has risen to $1.48m in 2014 – while the mean in Europe went from $857k to $962.9k in 2014.
Director pay went from $521k in the US last year to $611k over the past 12 months, while in Europe this went from $347k to $498k on average.
Preqin's optimism over private equity pay follows that of compensation consultants Johnson Associates, which predicts a 15-20% increase in compensation for private equity professionals on last year.
Perhaps it’s because the top associates at investment banks are now queuing up to get on to the buy-side – think 300 applications for every role – but pay at the junior level has been on the slide, at least in Europe.
Analysts in Europe hauled in an average of $93.7k in 2013, which shrunk to $79.2k this year. Meanwhile, associate pay shrunk across the board, but again particularly in Europe where average compensation went from $152k to $127.3k.
Below is the full breakdown of average compensation for the various private equity roles across Asia, Europe and the US provided to us by Preqin.