Private equity pay is increasing and the buy-side has become the de facto vocation for junior investment bankers looking for a more secure career and an opportunity to earn big money as regulators crack down on banking compensation.
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. The big money is in carried interest – namely the percentage of a fund’s profits paid as compensation.
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 $44.4k and $47.1k respectively in carried interest. This isn’t bad, particularly when it’s added on to respective total cash compensation of $179.5k and $213.7k.
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 US received an average of $1.3m in carry alone last year; chief executives of PE funds received $1.6m. Managing directors in Europe received an average of nearly $1.4m in carry and CEOs pulled in over $1.8m.
Total compensation for private equity professionals is higher in the US than anywhere else across all levels of seniority. Meanwhile, despite the accelerated movement of bankers to private equity in Asia, the region lags all others when it comes to pay. Preqin’s figures suggest that the most you will earn on average in Asia is $971.5k – significantly below an equivalent role in Europe or the U.S.
Finally, while more investment banks are cutting headcount, private equity firms are still hiring. 67% of firms surveyed by Preqin said they were hiring – 9% said they would increase headcount by up to 20% – and a further 28% said they would keep headcount the same.
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