SAN DIEGO, CA, December 19, 2011 — A report released today by PrivateEquityCompensation.com indicates the private equity and venture capital markets are continuing to enjoy increases in compensation and that the trend that will extend into 2012.
For the second year in a row, private equity professionals reported a solid increase in total earnings over the previous year, with the average cash earnings coming in at $248,000 USD, coming in the form of both increased base salaries and bonuses. The average expected increase was 6 percent and, again this year, more than 40 percent of professionals expected double digit increases over last year.
2011 brought with it plenty of fund raising activity and, it was clear from the report, the success of that activity was all over the board. The smaller funds continue to do most of the work, yet the larger funds get most of the money. This inequity is partially responsible for over half of respondents indicating they have some job security concerns.
Despite smaller assets under management, employees at smaller firms reported higher earnings and some guaranteed bonuses. “We believe the demand for private equity talent in the larger firms is forcing the smaller firms to keep pace, in order not to lose their most talented players,” says David Kochanek, publisher of PrivateEquityCompensation.com.
Different from past reports, the venture capital firms led the charge in base compensation increases; the downside this year was that their average bonus decreased. “That’s not totally unexpected as last year we reported that VC firms were paying the highest bonus percentages of all the firm types,” said Kochanek.
Last year, 85 percent of those reporting said their fund’s performance was in the black. This year’s expectations are a bit tempered, as 73 percent are projecting a positive year. Unlike last year’s Private Equity Compensation Report, this year there was a disconnect between fund performance and bonuses. If a fund was even or down, good sized bonuses are still expected and some even guaranteed.
Will this positive trend continue? “We believe 2012 will bring with it increased base salaries and healthy bonuses once again,” said Kochanek. “Expect continued demand for investment professionals and talented operationally-focused players to work in portfolio companies — even if the economy continues to show lackluster improvements.”
About The Report
The 2012 Private Equity Compensation Report is based on an industry survey conducted in October and November 2011. Data was collected directly from hundreds of private equity and venture capital partners and employees. The full report can be found at PrivateEquityCompensation.com
The Report has grown to be the most comprehensive benchmark for private equity and venture capital compensation practices. Some of the participating firms over the years include: 3i, Actis, American Capital, AXA Private Equity, Babson Capital Management, Bain Capital, Barclays Capital, BlackRock, Carlyle, Century Capital Management, Clairvest, Comcast Ventures, CPP Investment Board, Deutsche Bank, DuPont Capital Management, EDC Equity, EdgeStone Capital Partners, Global Environment Fund, Highland Capital Partners, Hilco Consumer Capital, Kaiser Permanente Ventures, Kayne Anderson, Mission Ventures, Mohr Davidow Ventures, North Atlantic Capital, Qualcomm, RBS, Safeguard Scientifics, SV Life Sciences, Siemens Venture Capital, Time Warner Investments, and Wellington Partners.
PrivateEquityCompensation.com is a division of Job Search Digest, a web-based career service catering to professionals in private equity, venture capital, hedge fund and investment banking since 2002. Annually, the firm collects compensation data directly from hundreds of private equity and venture capital partners and employees from firms both large and small. The firm also publishes a blog on private equity and VC careers which can be found at InsideTheFirm.com.