When you enter the negotiation process for your salary and bonus for a private equity job, you want to ensure that you come equipped with all the information required to make a good argument for your salary range. Mistakes made when negotiating salary early in your career can have a long-lasting impact on your total wage growth over time. Here, we've gathered the information you need to make informed negotiation decisions with a range of earnings for comparable positions in the industry.
The principles of thinking about private equity salaries are often similar to other salaries. In addition to experience, education, and performance, many equity firms take into account the cost of living for their area, as well as lifestyle inflation considerations.
For most firms, they will evaluate the industry average, and then adjust based on the firm's incentive structure. While we cannot speak to the specifics, consider the work environment you'll find yourself in, as well as the work style involved. That can be helpful to understand the quality and integrity of an offer.
The positions that are most likely to negotiate their salary based on industry statistics are the ones in the earlier stages of their career path: Analysts and Associates. The Analyst is the entry level position within a firm. Don't let the entry-level nature of the job fool you, usually the best students from the best colleges are often shortlisted for this role, and it does carry a significant amount of responsibility. Analyst responsibilities usually revolve around tasks like:
Associates, on the other hand, usually are the next step up from Analyst. Most banks prefer in-house promotion, so if you get on track and meet your benchmarks, you can work your way up. Analysts are often supporting all three verticals of a bank: Mergers & Acquisitions, Equity Capital, and Debt Capital. However, when promoted to Associate level, people at this position are expected to specialize. The tasks are similar to what an Analyst does, but often Associates supervise Analysts, and perform more complex tasks as well.
Because of their enhanced responsibility and position within a firm, an Associate will, generally speaking, make more than an Analyst.
While an Analyst can make between $100,000 to $150,000 on average (the higher end of this range is the more experienced), we started with the low end of the range for reference to ensure that negotiations start at or above the industry minimum.
The Heidrick Survey is focused on breaking down salary ranges across equity firms based around their total income. This survey is the gold standard for private equity assessments, and it tracks the overall hiring trends and compensation packages, based on responses from 895 North American respondents.
Because this article is devoted to Analyst and Associate compensation, and the Heidrick Survey only reports for Associates in the firm breakdown, this is mostly to give you an idea of Associate pay. Each section is divided into brackets based around the incomes of the firms surveyed.
Depending on experience, Associates earn an average of $216,000: Salaries typically range from $105,000 to $119,000, with bonuses ranging between $48,000 to $137,000, for a total average pay ranging from $171,000 to $256,000.
According to Wall Street Oasis' report, a well-respected wall street journalistic magazine for professionals in investment banking, private equity, asset management, and other corporate finance careers, Analysts earn an annual average of $118,000 and Associates earn an average of $223,000 annually.
These averages are likely a good starting point for anyone negotiating a salary. However, if there's one thing to take away from this article, it's the importance of bonus structures. There is not a lot of available data for bonuses because of how much they vary, but the data that is available averages the amount that professionals make including bonuses.
Sometimes these bonuses take the form of a signing bonus or holiday bonus, but more often than not, these bonuses are tied to the overall success of the fund or the profit margins of the firm itself. Commission bonuses are common as well, but there really isn't a one-size-fits-all rule here. It's important that you make sure that you're informed and updated on what the structure is for your company or firm, and factor that into the negotiation process.