Compensation report provides essential insights into the current compensation expectations and talent overview within Private Equity. This data is invaluable to firms seeking to attract top talent while managing their hiring budgets for the upcoming financial year. We are excited to bring you further insights in 2023.
The 2022- 2023 Private Equity compensation report demonstrates increased compensation expectations among candidates. International Banks and Consulting firms have compounded this situation with aggressive remuneration packages to counter regulatory changes, challenging funds to match these expectations across almost all corporate gradings Over half of the surveyed candidates felt underpaid, indicating less enhanced employee engagement schemes
This trend is partly driven by a cost of living crisis in many areas, which calls for salaries to be seriously readdressed Our research shows that candidates are typically seeking 20-30% increases in their base salaries to maintain similar purchasing power as before. Carry continues to be the most attractive benefit on offer. However, beyond attractive compensation, excellent company culture, active fundraising, and successful leadership distinguish a competitive organisation
For funds to overcome these challenges, they must offer a comprehensive package that includes competitive compensation and benefits Additionally, successful funds can stand out with unique selling points such as a diverse team, an excellent track record, and a strong position on ESG and Sustainability. Ultimately, these elements make up the foundation of a successful fund that will be able to attract the best talent in 2023.
We thank everyone involved – individuals and funds – for participating in this 2023 Private Equity Compensation Survey We look forward to seeing how things evolve in the coming year as the industry adjusts to changing market conditions
The global economic landscape of 2023 has presented several challenges, but the market has started the year on a strong note. Funds that have fundraised in the past two years remain committed to hiring plans, and the most successful hiring will be seen amongst funds that hold compelling compensation structures and diverse workforces.
While funds face pressure to pay more than their peers, there is sometimes a disconnect between what candidates expect and receive. For funds, it is essential to remain mindful of this dynamic and ensure that they are providing a fair compensation package while also meeting the needs of their organisation. 2023 is another competitive year for hiring as funds seek to recruit the best talent available, aligning with investment and organisational objectives
It is encouraging that many funds focus on increasing diversity within their investment and investor relations teams This was the number one trend when hiring in 2022, and it is pleasing to see that the focus remains strong in 2023 The positive results of such initiatives can often be seen quickly and will continue to have a long-term impact across the entire industry
The Private Equity space continues to evolve and with package benchmarks changing quicker than ever, clients need the latest data to ensure talent isn't lost to competitors.
The Altus Partners Private Equity - Investor Relations Compensation report has been collated by collecting data from our network of clients, candidates, and the Altus Partners Salary Survey (carried out in February 2023). The compensation information sought was specific to base salaries, short-term incentives (bonuses), and longterm incentives (carry allocations).
These independent data sets were collected through securely designed online tools, ensuring anonymity to all participants. Ethical considerations were awarded to those who shared personal information by ensuring confidentiality
01
We collected data directly from 102 Private Market funds regarding base salary, bonus and equity components of compensation. In addition, the survey also gathered data on additional benefits such as healthcare and other fringe benefits The survey results were then separated by strategy and fund size
02
The data collected was a comprehensive overview of 892 candidates' remuneration packages. It provided insight into the compensation structures that various firms have employed in the past 3 months The results were further broken down by fund size, indicating trends across different market segments.
03
An analysis of 320 survey candidate responses revealed current compensation based on experience and level. The results were separated by AUM
320 participants (candidates) responded to the following question: Do you feel your current compensation is: Below Market Rate, At Market Rate, or Above Market Rate?
Despite significantly increasing compensation across the industry in the past few years, most employees still feel they earn below the market rate. Of all salaries awarded in 2023, 467% felt they were at market rate, and 507% were below market rate This demonstrates an ongoing disparity between salary levels and expectations The results could also indicate the rise in pressures associated with the cost of living To ensure employees are paid fairly and competitively, reviewing salaries yearly and adjusting accordingly is essential. Companies must also provide pay standards reflecting each job role's current labour markets and allow for nimble adjustments to attract the right talent Market competitive compensation is critical for employee satisfaction, retention, and motivation
320 participants (candidates) responded to the following question: If you were to move, how much of a % increase would you expect to receive in your total compensation? Nothing, Up to 10%, 10 – 20%, 20 – 30%, 30 – 50%, Above 50%
The results of this question have come as a surprise, especially with 65% of respondents expecting to receive a compensation increase of 20% or more This significant rise is likely due to the current economic conditions, such as the rising cost of living, economic uncertainty, and increased competition.
As the market conditions cool, there is an expectation that compensation expectations will follow suit and adjust accordingly We anticipate this realignment to occur over the next few years, culminating at the end of 2024 and the start of 2025. Companies should plan for a transition period as salaries are readjusted to reflect the current conditions of the marketplace It is important to note that compensation packages may look different from what they have in the past, so employers should be prepared to adapt accordingly
320 participants (candidates) responded to the question: What is the most attractive benefit to you when looking to move? Working flexibility, Pension, Flexible benefits taken as cash or in direct benefits, Carry, Bonus potential, Other
Flexibility is increasingly becoming the norm in the industry, and with good reason Not only does it benefit employees, but it also can lead to improved job satisfaction and productivity. However, while flexible working is a significant priority for many employees in the sector, carry allocation remains an essential source of motivation and reward, especially for those who acknowledge the value of longer-term incentives over short-term rewards
Unfortunately, we have found that transparency around carry has diminished over time. This can be particularly problematic at entry-level positions, where there may be little to no information about carry or other incentives that could help motivate employees at this stage As such, there is undoubtedly an opportunity for companies to take a more proactive approach to offering employees access to carry schemes earlier in their careers.
320 participants (candidates) responded to the question: Do current market conditions make you: More likely to leave your current employer? Less likely to leave your current employer? No Change?
Survey results indicate that the current market conditions make 25% of respondents more likely to leave their employer and 3472% less likely to leave 4028% reported that their intentions remained the same. This survey suggests that external economic factors can significantly impact employees' job stability and mobility decisions. Employers must be aware of these trends when developing strategies to recruit, develop, and retain talent in the current climate
Definition:
Professionals who join a fund typically post 2-3 years of experience in Investment Banking, Consulting, and practice.
The role of an Analyst will be multi-faceted, focusing on investor reporting, creating marketing materials, managing investor relationships, and assisting with the end-to-end fundraising process.
Focus: Private Markets (Private Credit, Private Equity, Real Assets)
Region focus: Europe
Denomination: £
Experience
Relevant experience levels:
2 years
3 years
Experience (relevant experience) is based on post-graduate, relevant experience
Corporate titles vary per organisation, and these quantified grades do not account for variations such as early promotions and less hierarchical organisational structures Similar industry titles include:
Analyst Executive
Market observation across fund sizes:
Base salary low: £50,000
Base salary high: £85000
Bonus low: £13750
Bonus high: £85000
Total comp low: £68750
Total comp high: £170000
Carry low: 000
Carry high: 07
Candidates in the Private Markets with 2-3 years of relevant experience Salaries are shown in £0 value.
Carry is shown in the percentage points (2/20) model. Based on a single fund award.
Definition:
Supervising the junior members of the team and coordinating the fund's interactions with its global client base, supporting the firm’s business development and fundraising activities; managing the fund reporting activities, supporting Partners and Directors who account manage the investor relationships
Focus: Private Markets (Private Credit, Private Equity, Real Assets)
Region focus: Europe
Denomination: £
Experience
Relevant experience levels:
4 years
5 years
6 years
Experience (relevant experience) is based on post-graduate, relevant experience
Titles
Corporate titles vary per organization, and these quantified grades do not account for variations such as early promotions and less hierarchical organizational structures Similar industry titles include:
Investor Relations Manager
Market observation across fund sizes:
Base salary low: £70,000
Base salary high: £125,000
Bonus low: £17500
Bonus high: £125,000
Total comp low: £87,500
Total comp high: £250,000
Carry low: 000
Carry high: 12
Candidates in the Private Markets with four years of relevant experience Salaries are shown in £0 value. Carry is shown in the percentage points (2/20) model. Based on a single fund award.
Candidates in the Private Markets with five years of relevant experience
Salaries are shown in £0 value.
Carry is shown in the percentage points (2/20) model. Based on a single fund award.
Candidates in the Private Markets with six years of relevant experience
Salaries are shown in £0 value. Carry is shown in the percentage points (2/20) model. Based on a single fund award.
Definition:
A Vice President is an experienced professional that will focus on project management and ongoing relationship management efforts. They will be fully dedicated to supporting all matters related to investors
Focus: Private Markets (Private Credit, Private Equity, Real Assets)
Region focus: Europe
Denomination: £
Experience
Relevant experience levels:
7 years
8 years
9 years
Experience (relevant experience) is based on post-graduate, relevant experience
Corporate titles vary per organization, and these quantified grades do not account for variations such as early promotions and less hierarchical organizational structures Similar industry titles include:
Associate Director Principal
Market observation across fund sizes:
Base salary low: £80,000
Base salary high: £185,000
Bonus low: £20,000
Bonus high: £210,000
Total comp low: £100,000
Total comp high: £395,000
Carry low: 000
Carry high: 41
Candidates in the Private Markets with seven years of relevant experience Salaries are shown in £0 value.
Carry is shown in the percentage points (2/20) model. Based on a single fund award.
Candidates in the Private Markets with eight years of relevant experience
Salaries are shown in £0 value
Carry is shown in percentage points (2/20) model. Based on a single fund award.
Candidates in Private Markets with nine years of relevant experience
Salaries are shown in £0 value
Carry is shown in the percentage points (2/20) model Based on a single fund award
Definition:
A Director is an experienced executive who is responsible for establishing and maintaining relationships with current and prospective investors as well as communicating the fund’s financial performance and growth strategies They will have a strong network and investor base and excellent product knowledge of the fund's particular strategies
Focus: Private Markets (Private Credit, Private Equity, Real Assets)
Region focus: Europe
Denomination: £
Experience 10 years 11 years 12 years
Relevant experience levels:
Experience (relevant experience) is based on post-graduate, relevant experience
Corporate titles vary per organization, and these quantified grades do not account for variations such as early promotions and less hierarchical organizational structures Similar industry titles include:
Senior Principal Senior VP Head of IR
Market observation across fund sizes:
Base salary low: £95,000
Base salary high: £230,000
Bonus low: £60,000
Bonus high: £250,000
Total comp low: £155,000
Total comp high: £480,000
Carry low: 050
Carry high: 515
Candidates in the Private Markets with ten years of relevant experience Salaries are shown in £0 value.
Carry is shown in the percentage points (2/20) model. Based on a single fund award.
Candidates in the Private Markets with eleven years of relevant experience. Salaries are shown in £0 value
Carry is shown in the percentage points (2/20) model Based on a single fund award
Candidates in the Private Markets with twelve years of relevant experience Salaries are shown in £0 value.
Carry is shown in the percentage points (2/20) model. Based on a single fund award.
Definition: Strategic role and responsible for leading/co-leading the IR function Ownership of fundraising, investor relations, and business development, with oversight of the Marketing and Communications strategy
Focus: Private Markets (Private Credit, Private Equity, Real Assets)
Region focus: Europe
Denomination: £
Experience 13+ years+
Relevant experience levels:
Experience (relevant experience) is based on post-graduate, relevant experience
Titles
Corporate titles vary per organisation, and these quantified grades do not account for variations such as early promotions and less hierarchical organisational structures Similar industry titles include:
Jnr Partner Managing Director Managing Partner
Market observation across fund sizes:
Base salary low: £175,000
Base salary high: £350,000
Bonus low: £80,000
Bonus high: £700,000
Total comp low: £255,000
Total comp high: £1,050,000
Carry low: 200
Carry high: 13
Candidates in the Private Markets with thirteen years to fifteen years of relevant experience
Salaries are shown in £0 value
Carry is shown in the percentage points (2/20) model Based on a single fund award
Candidates in the Private Markets with fifteen years to twenty years of relevant experience
Salaries are shown in £0 value
Carry is shown in the percentage points (2/20) model Based on a single fund award
Candidates in the Private Markets with twenty years+ of relevant experience Salaries are shown in £0 value. Carry is shown in the percentage points (2/20) model. Based on a single fund award.
1,314 participants contributed towards the Private Equity remuneration data for 2022 - 2023. Corporate levels grouped the participants (viz., Analyst, Associate, Vice President, Director, and Partner). Data were sorted according to base salary, bonuses, and carry allocations. This was sorted according to the main fund types within the Private Markets (Private Equity, Private Credit, Real Assets).
Bonus ranges at Analyst generally did not exceed the threshold of 100% At Vice President and Director level, there were examples of this being one or two times base At the Partner level, bonuses varied primarily due to asset-raising success There were examples of no bonus being paid at all, though this is rare
Carry allocations are always subjective to funds, with undisclosed terms and conditions It is, however, clear that carry allocations are awarded as early as the Associate level, with more sizeable distributions being extended to professionals at the higher end of the corporate levels.
Total compensation proportionally increased with an increase in assets under management Distinguished compensations were noted between small- and mid-cap, small- and largecap, and mid- and large-cap funds However, differentiation in total compensation amongst funds within similar AUM ranges was marginal
With the benefit of engaging with a range of sellside and buy-side professionals who represent diversity in seniority and professional and personal circumstances, we have identified common motivations that drive movement to new organisations and considerations toward such.
Commercial/ fund confidence ranks at the top of the list, where candidates who are moving either to or between buy-side firms are strictly assessing the fundraising activity of potential employers. A healthy history of fund-raising and investor returns are strong indicators, alongside the quality of portfolio companies and respective activity Closely associated with this are the ESG and Sustainability agendas of funds, where candidates are encouraged by firms with an established strategy (or intention to develop this where it is absent) and commitment to building a dedicated team who will deliver on this strategy
A lighter consideration, albeit still significant for some candidates, includes learning and development pathways This is critical to candidates demanding that organisations be conscious of the active role they should play in one’s professional advancement Candidates assess this through well-defined L&D plans; involved leaders; and the volume, nature, and quality of investment activity. Working models are the next of such considerations, where professionals greatly favour organisations that adopt a hybrid working model Whilst Investment professionals value the importance of collaboration and inperson engagement, the opportunity to have flexibility in this regard carries a lot of weight
Over the coming financial year, Private Market firms will continue to afford equitable talent acquisition to grow and develop diverse teams and adapt to the changing market needs.
General Partners are increasingly under the microscope for diversified teams Since diversity is not a one-size-fitsall approach, we want to see how organisations will further define what diversity means to them and how this will inform talent acquisition, retention, and development strategies
Considering EU regulations informing responsible investing principles and the United Nations’ SDGs, Limited Partners are raising their demands which means that ESG and Sustainability teams will be scaling up rapidly
Of all the investment strategies, it is said that co-investing will be distinguished as more buoyant with investment activity As a result, we expect that co-investors will showcase most investment professional hires over the next year
Whilst there are encouraging talent acquisition expectations, the likelihood of fundraising facing a degree of headwinds and a lengthier due diligence process depicts instances where non-critical business hires will be approached less aggressively. These non-critical hires may be regarded as those who either do not contribute to the bottom line or could be more influential in the growth of an organisation
It is apparent that having a thoughtful talent acquisition strategy which is attentive to the evolution of the market is critical.
In this case, not only compelling remuneration structures but also exclusive variables which allow organisations to stay ahead of competitors.
Flexible working arrangements should be supported, especially where workforces are addressing gender imbalances.
Skilling and upskilling should remain an ongoing part of talent retention and talent development
The most successful hiring strategies will however be seen in streamlined and efficient hiring processes. This ensures a greater probability of securing talent, especially those who hold unique skills and those who are the aspired employees of many.
Ed Chamberlain, Partner
Patrick Gee, Principal Investor Relations & Distribution
Sam Block, Senior Associate Private Equity
Harvey Von Biel, Senior Associate Private Credit
Gizelle Moodley, Senior Associate Impact Investing/ ESG and Sustainability
Thomas Amos, Senior Associate Infrastructure & Real Assets
