2018 Private Equity Compensation Report Reveals Continued Demand for Investment Talent is Driving Higher Levels of Compensation

Both base and bonus pay are up in the eleventh annual report based on data from industry insiders.

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Dec 19, 2017, 07:40 ET

ANN ARBOR, Mich., Dec. 19, 2017 /PRNewswire/ -- The 2018 Private Equity and Venture Capital Compensation Report, released today, shows that private equity and venture capital compensation is up again this year, at the same time the demand for investment talent has increased.

Private Equity Compensation - Cash Earnings

Private Equity Bonus Calculation Methods

Sixty-five percent of professionals reported an increase in cash earnings this year. The average reported cash compensation for private equity and venture capital professionals is now up to $315,000 USD. Private equity and venture capital professionals working in the largest firms continue to out-earn their peers in smaller firms.

North American dry powder levels (the cash reserves set aside for investment in companies) are now measured in the hundreds of billions of dollars, so the demand for investment talent continues to increase. "We predicted this trend several years ago based on private equity investment professionals reporting increases in both base and bonus, despite their funds not producing outstanding returns," said David Kochanek, Publisher of PrivateEquityCompensation.com.

The correlation between bonus pay and firm performance is down again this year. In the 2018 report, respondents employed in firms whose performance is down by 1 to 9 percent still forecast an average bonus of $161,000 USD.

The research shows that private equity bonus pay is typically calculated based on a combination of several factors: firm performance, fund performance, and individual performance. Bonus payouts for firms with a fund size of under $100 million assets under management are typically divided among a combination of these factors, however, firms with larger fund sizes clearly favor fund performance over all other methods of bonus calculation.

For private equity job seekers, the 2018 Private Equity and Venture Capital Compensation Report provides additional detail such as positions in demand, percentage of firms hiring, where firms are cutting back and where career opportunities are increasing. For example, 25 percent of respondents' firms are hiring in the back office for accounting personnel and 27 percent said they are hiring in operations and portfolio management.

As seen in prior years, when the demand for talent is high, although actual compensation may be up, the level of satisfaction with overall compensation is low. Despite reported gains this year, more than half of respondents described their compensation as unsatisfactory, including some principals, managing directors and senior analysts.

"Firms need to tune into their team's thoughts on compensation levels right now. Otherwise, the first indication of a problem may be when a star employee turns in his or her two-week notice to join another firm," Kochanek warns.

About The Report

The 2018 Private Equity and Venture Capital Compensation Report is based on data collected directly from hundreds of private equity and venture capital partners, principals and employees.

The report, in its eleventh year of publication, is widely regarded to be among the most comprehensive benchmarks for private equity and venture capital compensation. It provides independent and impartial data covering a broad range of salary, bonus, carried interest and other compensation-related information, sourced directly from professionals working within the industry.

The full report is available for purchase at http://www.PrivateEquityCompensation.com and can be downloaded instantly in PDF format.

About Benchmark Compensation

PrivateEquityCompensation.com is published by Benchmark Compensation. Annually, the firm collects compensation data directly from hundreds of private equity and venture capital partners and employees in firms both large and small.

For more information, contact:
David Kochanek, Publisher
Tel: 760-634-4900
E-mail: [email protected]

SOURCE PrivateEquityCompensation.com