Salaries at Private Equity Firms Increase as Bonuses Rise by Preqin
Strong year for private equity industry sees firm-wide base salaries increase 7% on average from 2014.
Preqin’s 2016 Private Equity Compensation and Employment Review surveyed almost 200 private equity firms to gather key trends and figures in levels of pay and staffing in the industry. It finds that among surveyed firms, 74% of private equity fund managers have made firm-wide increases in base salary from 2014 to 2015. The average increase in salary was 7%, with 14% of firms increasing base salaries by more than 10%. Almost half (46%) of firms increased their performance-related cash bonus pay-outs in 2014, up from 26% of firms that increased bonuses in the previous year. The median bonus pay-out increase in 2014 was 20%, while only 16% of firms reported a decrease in the levels of cash bonuses paid to employees.
Private Equity Firms – Other Key Compensation & Employment Facts:
- Future Salary Increases: From 2015 to 2016, 76% of surveyed firms plan to increase their firm-wide base salary, while 22% predict no change in pay rates. Only 2% of firms anticipate reducing base salaries next year.
- Industry Entrants: 625 new fund managers entered the private equity market with a 2015 vintage fund, the highest number ever. There are now over 7,400 active private equity firms tracked by Preqin, including over 600 private debt firms.
- Employment Levels: Altogether, private equity fund managers employ an estimated 145,000 people worldwide. Buyout, venture capital and real estate firms comprise 68% of that total. Firms with $10bn or more in AUM have an average of 160 staff, while firms with less than $250mn AUM have an average of 14.
- Women in Private Equity: Private equity firms in the Asia-Pacific region have the highest median proportion of women, at 40% of total staff. Women represent a median 35% and 33% of staff respectively at Europe- and US-based firms, while at South America-based firms women comprise a median of only 15% of total staff.
- Global Fundraising: Total fundraising for private equity firms in 2015 YTD stood at $362bn at the end of Q3 and seems broadly on track to match the $552bn raised globally in 2014. The record year for private equity fundraising is still 2008, when funds closed raised an aggregate $688bn in capital commitments.
“2015 seems to have been a good year for employees of private equity firms, with salaries and cash bonuses both increasing. At more senior levels, the largest firms will vie to attract top talent by offering rates of compensation that smaller firms may struggle to match. Similarly, the location, structure and strategy of a firm can all affect the available pool of talent and the number of opportunities available. With many firms planning to increase their staff numbers and base salaries again in 2016, competition for talent looks set to continue, as firms seek to attract new recruits while retaining current staff.”
Selina Sy, Manager – Premium Publications, Preqin