Private Equity Salary (2024)

  • Private Equity

Step-by-Step Guide to Understanding Private Equity Compensation

Last Updated March 8, 2024

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What is the Salary in Private Equity?

The Private Equity Salary is a major consideration for candidates, namely investment bankers, considering an exit to the buy side.

The following private equity compensation report contains the most up-to-date salary data as of 2023 pertaining to the earnings of private equity investment professionals starting from the associate level, including comparisons to the salaries received in the investment banking industry.

Private Equity Salary (1)

Table of Contents

  • Private Equity Salary Guide
  • What is the Average Salary in Private Equity?
  • Does Private Equity or Investment Banking Pay More?
  • How Does Carried Interest Work in Private Equity?
  • Private Equity Compensation: Industry Trends and Outlook
  • How are Private Equity Salaries Different by Location?

Private Equity Salary Guide

The private equity associate is often the lowest-ranking position at a private equity firm, albeit certain PE firms hire analysts.

The majority of private equity associates are former investment bankers who completed a one or two-year stint at a bulge bracket or elite boutique bank, or come from a management consulting background at one of the Big 3 firms (MBB).

At the associate level, the compensation structure – much like investment banking – is composed of two parts:

  1. Base Salary → The base salary is the fixed component of the compensation received, i.e. the minimum guaranteed salary, assuming the individual is not laid off.
  2. Bonus → The bonus, on the other hand, is the performance-based component of the compensation structure, with the amount contingent on factors such as individual performance, fund performance, and near-term outlook of the private markets.

For the vast majority of first-year private equity associates, the base salary is around $135k to $155k. Then, based on fund performance, bonuses tend to range from 100% to 150% of the base salary.

The “all-in” combined salary is approximately $275k to $390k at top PE firms, but this figure can be much lower for smaller-sized funds and exceed $400k for firms with reputations for being the highest-paying (e.g. Apollo Global).

The higher up the firm’s hierarchy you go, the more transparency around compensation starts to wane. Hence, our decision to deliberately exclude compensation data on principals and managing directors (MDs).

What is the Average Salary in Private Equity?

The chart below summarizes the average salary ranges for private equity investment professionals in 2023.

Private Equity Salary Data
Position TitleBase SalaryBonusTotal Compensation
1st Year Associate
  • $135k – $155k
  • $140k – $230k
  • $275k – $385k
2nd Year Associate
  • $160k – $180k
  • $170k – $270k
  • $330k – $450k
3rd Year Associate
  • $180k – $200k
  • $180k – $300k
  • $360k – $500k
Senior Associate
  • $200k – $220k
  • $210k – $390k
  • $410k – $610k
Vice President (VP)
  • $230k – $260k
  • $340k – $520k
  • $570k – $780k1

1. The income attributable to the receipt of carried interest (“carry”) is not included here.

The source for our compensation data is a vice president (VP) currently employed at a global alternative investment management firm (i.e. a “mega-fund”).

Therefore, please note that private equity firms operating in the lower middle-market and middle-market will most likely offer salaries on the lower end of the ranges.

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Does Private Equity or Investment Banking Pay More?

Since most private equity associates come with one to two years of investment banking experience, most private equity firms must pay above the average salary in investment banking to offer an incentive.

Besides the marginally reduced hours and being able to work on the buy-side – i.e. an investment role rather than advisory – the higher compensation is one reason many decide to exit to the buy-side and join a private equity firm.

However, there is one notable exception: Centerview Partners, an elite boutique highly regarded for paying its analysts salaries competitive with buy-side opportunities – hence, its industry-leading retention rate.

Given the recent widespread increases in pay for investment banking analysts in 2022, private equity compensation was expected to soon follow suit, which turned out to be right.

However, the mounting dry powder, rising interest rate environment, and the increase in bankruptcies in 2023 are factors contributing to widespread concerns about fewer hirings in the industry.

Therefore, it would be reasonable to expect a slowdown in hiring in the near term, particularly due to the sheer amount of hiring firms have done over the past couple of years, along with the macro issues and the increased cost of debt.

Learn More → Investment Banking Primer

How Does Carried Interest Work in Private Equity?

Carried interest, often referred to as “carry”, is the share of profits that flows to the general partners (GPs) of a private equity firm.

The carried interest component functions as performance-contingent compensation, as it is deliberately intended to incentivize the firm to perform well and generate strong returns.

Unlike management fees, carried interest is typically only paid if the fund’s returns meet a certain minimum threshold.

The standard fee structure in the private equity industry is the “2 and 20” arrangement, which includes a 2% management fee and a 20% performance fee.

The actual payout can become complicated, however, due to factors like the catch-up clause and clawback provision.

The carried interest arrangement is specific to the private equity firm, but in general, members of the investment team should not expect to receive any proceeds until at the very least reaching the senior associate level, which is still uncommon.

Starting at the vice president (VP) level, one can expect to receive some carry, with the amount increasing for senior-level members like managing directors (MDs), as expected.

  • Associate → No Carry
  • Senior Associate → Uncommon
  • Vice Presidents (VP) → Moderate
  • Managing Directors (MD) + Partners → Significant

For mega-funds and larger-sized private equity firms with $1+ billion in assets under management (AUM), receiving carry at the lower levels (e.g. associates) is practically unheard of.

Private Equity Compensation: Industry Trends and Outlook

In the next section, we’ll start by discussing the rising trend of private equity firms recruiting candidates straight out of an undergraduate program.

So, one key factor to consider in the private equity industry’s compensation is the responsibilities of the associate, as not all “associate” positions are the same.

  • Sourcing and Origination Team → If the role of the private equity associate is mostly related to sourcing and origination – i.e. reaching out to potential prospects via email and cold calling – the salary tends to be lower and relatively close to the salaries earned in investment banking.
  • Investment Team→ Conversely, if the associate’s responsibilities mostly pertain to performing investment diligence, the salary can be expected to be on the higher end (and exceed most investment banks).

Obtaining an MBA is often a requirement for most private equity analysts to get promoted. Thus, joining a PE firm post-graduation comes with drawbacks and is not truly a “shortcut” into the buy-side.

On a similar note, non-traditional candidates from a unique background – such as consulting in a highly technical, niche field – can expect higher compensation.

Usually, such candidates will require an MBA to break into the private equity industry, but their technical expertise and network in a specific niche – rather than modeling skills and deal experience – is what causes their candidacy to stand out to a firm.

For instance, a former consultant who specializes in environmental sciences and truly understands the technical side of the products (and systems) could be a valuable addition to the investment team of an industrial technology private equity firm.

Still, the traditional one or two-year stint in investment banking and the subsequent exit into the private equity industry remains the most common pathway.

How are Private Equity Salaries Different by Location?

In conclusion, one influential factor that impacts salaries in private equity is the location of the firm.

At the risk of stating the obvious, U.S. private equity firms with offices located in the “financial hubs” tend to pay a sizeable premium to their employees.

The most notable financial hubs in the U.S. are as follows.

  • New York City (NYC)
  • San Francisco
  • Chicago
  • Los Angeles (LA)
  • Boston

Other cities with either a strong presence or an optimistic outlook in the coming years are the following:

  • Miami
  • Charlotte
  • Atlanta
  • Austin
  • Dallas

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Private Equity Salary (2024)

FAQs

How much do you really make in private equity? ›

Private Equity Salary, Bonus, and Carried Interest Levels: The Full Guide
Position TitleTypical Age RangeBase Salary + Bonus (USD)
Associate24-28$150-$300K
Senior Associate26-32$250-$400K
Vice President (VP)30-35$350-$500K
Director or Principal33-39$500-$800K
2 more rows

Which pays more IB or PE? ›

Analysts at all types of private equity firms earn significantly less than Associates, just as Analysts in IB earn significantly less than Associates. In fact, PE Analysts often earn less than IB Analysts! So, you might initially make less money if you start in private equity.

How much does a VP at a private equity firm make? ›

Vice President Private Equity Salary
Annual SalaryMonthly Pay
Top Earners$244,500$20,375
75th Percentile$190,000$15,833
Average$157,532$13,127
25th Percentile$115,000$9,583

How to negotiate salary in private equity? ›

How to negotiate equity in 9 steps
  1. Research the company. ...
  2. Review the company's financial potential. ...
  3. Research similar companies. ...
  4. Read the offer carefully. ...
  5. Evaluate the terms of the offer. ...
  6. Address your needs and the company's needs. ...
  7. Speak with the employer during negotiations.
  8. Keep your negotiations focused.
Feb 13, 2024

Is private equity a stressful job? ›

but nowhere near as much as in management consulting. While the travel will be less, the work in private equity is very stressful and demanding, so the hours you actually spend working may be more stressful or mentally demanding.

Is private equity a tough career? ›

Private equity professionals work long hours and are highly competitive and must think critically, and have a passion for financial investing deals, not just following the markets. Other requirements to start a career in private equity are: Excellent grades and a notable transcript in school.

Can you make good money in private equity? ›

Private equity is a very lucrative career. As an asset class, private equity has enjoyed tremendous success over the past decade. Investors around the globe continue to pile their money into private equity firms.

What is the highest salary in private equity? ›

Highest salary that a Private Equity Associate can earn is ₹45.0 Lakhs per year (₹3.8L per month). How does Private Equity Associate Salary in India change with experience? An Entry Level Private Equity Associate with less than three years of experience earns an average salary of ₹15.4 Lakhs per year.

How much does a CFO of a private equity firm earn? ›

Cfo Private Equity Salary
Annual SalaryMonthly Pay
Top Earners$257,500$21,458
75th Percentile$182,500$15,208
Average$151,302$12,608
25th Percentile$101,500$8,458

What is the #1 rule of salary negotiation? ›

In the intricate dance of career progression, salary negotiation stands as a pivotal moment, shaping your financial future and professional trajectory. Amidst the myriad of advice circulating the web, one rule emerges as the lodestar guiding successful negotiations: Know Your Worth and Articulate It Confidently.

How do you handle a lowball salary offer? ›

Start by expressing your excitement about the position, as this will indicate to the hiring manager that negotiating is likely to be a good time investment. Then, present your case. Mention the salary research you've done, and suggest a rate of pay higher than your desired salary.

How do you negotiate salary at VP level? ›

How to Negotiate Executive Compensation
  1. Determine your upper and lower salary limits and any must-haves. ...
  2. Consider professional support. ...
  3. Do not negotiate for your compensation until you are ready. ...
  4. Get an offer before you express your limits. ...
  5. Quantify the value you'll deliver to the company.

Do people make a lot of money in private equity? ›

Working at a Private Equity Firm

Given that a PE firm with $1 billion of assets under management (AUM) might have no more than two dozen investment professionals and that 20% of gross profits can generate tens of millions of dollars in fees, it is easy to see why the industry attracts top talent.

Can you make a lot in private equity? ›

In short, if you're at a top mega fund, then you can expect to get paid between $350-$400k per year. These numbers reflect total compensation paid to private equity associates in 2022.

How much do the top private equity earners make? ›

Salaries + Bonuses at private equity funds in the USA by fund size, 2023
Fund Size
Rank< $500m$40bn+
Principal$490k$920k
Partner/Managing Director$550k$1325k
Managing Partner$550k$1763k
2 more rows
Nov 16, 2023

What is the average salary of a CEO private equity? ›

How much does a Private Equity Ceo make? As of Apr 16, 2024, the average annual pay for a Private Equity Ceo in the United States is $82,146 a year. Just in case you need a simple salary calculator, that works out to be approximately $39.49 an hour. This is the equivalent of $1,579/week or $6,845/month.

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