Private equity staff’s compensation in the US increased for all but the top echelon in 2017. It was fresh talent that attracted the highest rise in base salary, which mirrors the trend seen in Europe.
US-based associates and senior associates have had a 14 percent raise, with average salary now $125,000, according to data from executive search firm Heidrick & Struggles. This is slightly higher than the increase in Europe, which was 13.5 percent. Further up the ranks, a 13 percent rise for vice-presidents took their pay packets to around $198,000.
The growth reflects “private equity’s strength in recent years” including strong fundraising, dealmaking and exit activity, the firm says. Competition from other market sectors including tech, which advertise big ticket jobs to the right entry-level candidates, was also a driver, echoing Europe.
It also says demand for investment professionals over the past 12 months has been at its highest since 2007, with vice-presidents and principals particularly sought after. New funds, existing funds, firms that have not hired for many years, firms doing flexible capital or special situations and international firms growing in the US are all looking.
On the candidate side, potential hires are looking for firms focused on differentiated strategies, cultures and paths to partnerships.
“Due to strong fundraising and performance, candidates are ‘stickier’ and we need to reach out to two to three times the number of investment professionals as we did in recent years to complete assignments,” the firm says.
But while those making the initial foray into the industry, or with a few years’ experience, are raking in the cash, those higher up are not seeing such salary growth. US-based principals, who saw the largest increase in compensation between 2015-16, have been given a smaller 6 percent increase.
“Firms are structured like pyramids and don’t have the opportunity to move up from the mid-level. Even if a firm is doing well it may decide not to grow, to simply maintain its fund size. It leaves principals unable to take the next step, and to increase their compensation,” Jonathan Goldstein, partner at Heidrick & Struggles tells pfm.
Managing partner base salary remained stagnant for a second year in the US, while in Europe these staff only reported a 2.5 percent increase.
“At the senior level firms aren’t changing their compensation models, they’re continuing to pay as they always have,” Goldstein says.
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