Why do so many MBAs aspire to enter private equity? Aside from the fact that the hours are generally better than those in investment banking, the organizations are leaner and the compensation is generally higher, it seems that the compensation is more stable as well. According to the Private Equity Analyst-Holt Compensation Study, released September 1, 2008, private equity compensation rose last year and is expected to remain strong because private equity firms have a consistent revenue stream through management fees (not all revenue is event driven).
A few highlights of the study follow:
“Salaries for North American private equity professionals rose 5.3% to $200,000 from $190,000 year-over-year. Including bonuses, compensation rose by 25% to $375,000 from $300,000. Once carried interest is included, total compensation packages rose by 27.3% to $401,000 from $315,000. That’s an even faster rate of growth than that seen at the time of our last survey.”
“Managing general partners, senior partners and partners at buyout firms posted median compensation including salary, bonus and carried interest distributions of $1.3 million, up 18%. At venture firms, this figure was $956,500, up 37%. The more favorable environment on the buyout side can also be seen for junior investment professionals, who posted median compensation of $272,000 on the buyout side, up 40%, versus $200,000 among VCs, up 22%.”
For more information, on the study, click on the following link: Private Equity Analyst-Holt Compensation Study.