Continued Demand for Investment Talent is Driving New Levels of Compensation
The 2018 Private Equity Compensation Report, shows that increased fund raising and billions in funds looking for investments has resulted again this year in increased private equity and venture capital compensation.
Sixty-five percent of professionals reported an increase in cash earnings this year. The average reported cash compensation for private equity and venture capital professionals is $315,000 USD, another increase from the previous year. Private equity and venture capital professionals working in the largest firms continue to out-earn their peers in smaller firms.
North American dry powder levels are now measured in the hundreds of billions of dollars. The report reveals increased demand for investment talent again this year. “We predicted this trend several years ago based on private equity professionals reporting increases in both base and bonus, despite their funds not producing outstanding returns,” said David Kochanek, Publisher of PrivateEquityCompensation.com
The correlation between bonus pay and firm performance continues to diminish. In 2017, it became apparent that the absence of close correlation is the new normal. In this 2018 report, we see that respondents employed in firms whose performance is down by 1 to 9 percent still forecast an average bonus of $161,000.
For private equity job seekers, the Private Equity Compensation Report for 2018 reveals which positions are in demand, what percentage of firms are hiring, and where firms are cutting back – and the career opportunities are increasing across the board. For example, 25 percent of respondents’ firms are hiring in the back office for accounting personnel and 27 percent said they are hiring in operations and portfolio management.
As seen in prior years, when the demand for talent is high, the level of satisfaction with overall compensation is low. Again this year, more than half of respondents described their compensation as unsatisfactory, including some principals, managing directors and senior analysts.
Firms would be wise to tune into their team’s thoughts on compensation levels right now. “Often times, the first indication of a problem is when the employee turns in their 2-week notice and is headed out to join another firm,” Kochanek warns.
About The Report
The 2018 Private Equity and Venture Capital Compensation Report is based on data collected directly from hundreds of private equity and venture capital partners, principals and employees.
The report, in its eleventh year of publication, is widely regarded to be among the most comprehensive benchmarks for private equity and venture capital compensation. It provides independent and impartial data covering a broad range of salary, bonus, carried interest and other compensation related information, sourced directly from professionals working within the industry.
The Private Equity Compensation Report for 2016 Uncovers Disconnect Between Fund Performance and Cash Bonuses
Cash increases slow while the demand for private equity talent increases.
SAN DIEGO, CA, January 20, 2016 — The 2016 Private Equity & Venture Capital Compensation Report, released today, shows that slower industry activity is reflecting in private equity and venture capital pay.
Although 65 percent of professionals reported an increase in expected salaries and bonuses, the growth in cash compensation has slowed. This year’s average compensation for private equity and venture capital professionals was $272,000 USD, a slight decrease from last year.
This marks the second consecutive year of diminished correlation between bonus pay and firm performance. Respondents working in firms that were down 10 percent or more, report anticipated bonuses averaging $43,000 USD. This disconnect continued to surface in firms down 1 to 9 percent, with these survey participants expecting bonuses to average $94,000. In contrast, respondents working in firms that realized gains between 1 to 9 percent were expecting an average $91,000 in bonus pay, $3,000 less than their counterparts in firms that were down by the same range.
The private equity job market, however, continues to shine. “Funds are looking to put their capital to work, that means deal sourcing talent is at a premium,” said David Kochanek, Publisher of PrivateEquityCompensation.com. This year’s report reveals that 45 percent of firms are looking to hire additional investment professionals.
Says Kochanek, “With all the dry powder firms are sitting on, we were not surprised to see increased demand for investment talent again this year. Further, based on the expensive multiples seen in recent strategic exits, we won’t be surprised to see demand increase over the next 12 months for professionals with deep due diligence experience.”
As seen in prior years, when the demand for talent is high, the level of satisfaction with overall compensation is low. Again this year, more than half of respondents described their compensation as unsatisfactory.
About The Report
The 2016 Private Equity and Venture Capital Compensation Report is based on data collected from hundreds of private equity and venture capital partners, principals and employees through direct surveys. The report, in its ninth year of publication, is widely regarded to be among the most comprehensive benchmarks for private equity and venture capital compensation. It opens the door to trusted, independent and impartial data covering a broad range of salary, bonus, carried interest and other compensation related information, sourced from respondents working within the industry.
Some of the participating firms over the years include: Alpinvest Partners, American Capital, Battery Ventures, BlackRock, Carlyle, Century Capital Management, Cerberus, Comcast Ventures, DuPont Capital Management, EdgeStone Capital Partners, GE, Guggenheim Partners, Highland Capital Partners, Hilco Consumer Capital, Intel Capital, Mission Ventures, Mohr Davidow, North Atlantic Capital, RBC Capital Partners, RBS, Safeguard Scientifics, SV Life Sciences, Siemens Venture Capital, TPG, Venrock, and Warburg Pincus.