Differences Between Firm Types and Fund Size

70 percent of respondents are in groups with less than 10 team members and 93 percent have less than 25. When looking at the firm size, 46 percent reported being part of a firm with less than 10 team members and 71 percent with less than 25.

An additional factor in the lower averages is that this year we had higher representation for professionals who profiled their firm as a pure VC model (29 percent this year vs. 19 percent last). The impact is overall lower averages, as VC firms tend to payout lower levels of cash compensation.

Common titles such as Associate, Director, Managing Director and Principal show different levels of compensation based on the type of firm. There are significant differences in total compensation, especially at the higher levels.

Why? As we’ve reported in previous years, responsibilities and compensation vary significantly depending on the size and type of firm.

When it came to fund performance, about 40 percent stated their fund’s performance was positive, 16 percent said it was even and 21 percent reported negative returns.

Economic conditions had less impact on compensation at the larger funds – where typically the top positions enjoy the lion’s share of the benefit received via economies of scale. Across the board (in terms of fund size) Associates and Sr. Associates made more than in 2008. Additionally, firms with funds over $500 million, double digit increase were expected in 2009.

We believe that, even in tough years, PE firms realize the importance of retaining talent and, as Associate-level professionals represent experienced talent, increases in base compensation are necessary. Each of these titles enjoyed more than 5 percent increases in base comp this year in USA, Canada and UK.

Back to the 2010 Private Equity Compensation Report