- While raises weren’t as common as they were a year ago, a majority of respondents to Heidrick & Struggles latest survey on private equity compensation say they got a pay bump over their 2019 base salary.
- Associates, even at the smallest funds, averaged nearly $200,000 in base salary and bonus last year.
- Dealmaking has slowed down due to the pandemic, but recruiting for private equity positions is bouncing back — a recent EisnerAmper survey found that a majority of managers surveyed are planning to hire in the next 12 months.
- Visit Business Insider’s homepage for more stories.
Finance executives, on earnings calls and public appearances, have been clear when comparing the current pandemic to the financial crisis more than a decade ago that they are fundamentally different.
One example that that’s the case is the enthusiasm from investors for private equity, an industry with tens of billions of unused capital before the pandemic hit. Dealmaking has slowed, but funds looking to raise capital are optimistic about the industry’s outlook.
A new report from recruiting firm Heidrick & Struggles states that while hiring isn’t at its 2019 levels, ” we are still seeing an active market, notably more active than what we saw during the global financial crisis almost a decade ago.”
“First, the PE industry is much larger now than it was during the financial crisis, and because that crisis was financial in nature, there was an overall paralysis in financial services,” the report reads.
“Now, while there is most definitely uncertainty in the industry, it is not frozen.”
And compensation for these roles are still ticking up. The report found that a majority of the 785 respondents — 57% — got a raise in their base salary from their 2019 pay. The increases were on the modest side though, with the majority reporting raises of less than 10%.
Not that the industry didn’t pay well before the raises. Including bonus and base salary, even associates at the smallest funds made nearly $200,000 on average last year; at funds with more than $2 billion in assets, employees with the title of principal and above pulled in more than half a million, at least, on average last year.
The higher up the individual, the greater proportion of their compensation comes from their bonus. Associates, senior associates, and even vice presidents at some smaller funds get most of their pay from their base salary, while roles above them are dependent on big bonuses — which averaged more than $1 million in 2019 for partners at bigger funds.
The biggest funds naturally produced the biggest paychecks. Vice president compensation at funds with more $6 billion in assets were often more than what partners and managing directors at sub-billion-dollar funds were making, on average, last year.
The top of the top — founders and managing partners of the biggest funds — did not participate in the survey, according to the authors of the report, except for one managing partner at a firm with assets between $20 billion and $39.9 billion. Business Insider decided not to include the single compensation figure in the above graphic, given the other figures were averages, but this individual made $21 million in compensation last year.
While bonuses might be leaner this year — Heidrick’s report states that dealmaking is the first half of the year was roughly 20% than the same stretch in 2019 — the industry isn’t expected to be down for long.
A survey from law firm EisnerAmper found that nearly three out of every four private equity executives believe the deal environment will return to pre-pandemic levels by the end of next year at the latest, with 40% expecting the comeback to happen by the summer of 2021.
More than half of managers surveyed by EisnerAmper said they planned to add to their investment teams over the next 12 months to meet this demand, and an even higher proportion of managers said they were going to beef up operations staff.
“Plans to resume hiring in 2021 is a strong indication that the private-equity industry is recovering from the disruption that the pandemic caused in the first half of the year,” said Peter Cogan, managing partner of EisnerAmper’s Financial Services Industry, in a release on the survey.
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