SAN DIEGO, CA, January 2, 2013 — The sixth annual Private Equity and Venture Capital 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 2013.
For the third year in a row, private equity professionals reported increases in both base and bonus compensation. The average professional earned $273,000 USD.
The “new normal” in private equity has resulted in a stable, yet competitive market for talent. More than 60 percent expected their cash compensation to increase over last year, and 46 percent of professionals expected double digit increases.
“Unlike in the heyday of financial engineering, the focus of private equity now is putting in place the right capital structure, building a talented team, and creating a culture of growth,” said David Kochanek, Publisher of PrivateEquityCompensation.com. “Focus on long term operational improvement and growth in the portfolio companies is the new normal.”
Bonuses comprised 36 percent of this year’s cash compensation total, with those at the top of the earning scale seeing bonus dollars contributing more than 60 percent of their total earnings.
This year employees at small firms reported both higher base and bonus compensation as these firms are competing for some very talented players. “This seems to be a continuation from last year’s trend of professionals at boutique firms getting recognized for the work they do,” said Kochanek. “Although they may share the same title as their larger firm counterparts, in terms of responsibilities, they wear many additional hats.”
“Thanks to the election, recently there has been quite a bit of discussion about what private equity does and does not do for the U.S. economy,” said Kochanek. “In truth, on the whole, these firms are not looking to dismantle companies for profit. Their focus is on growth, which benefits both the employees and the investors.”
According to last year’s report, the venture capital firms led the charge in base compensation increases but showed weak bonuses. This year, in terms of increases in base and bonuses, VC firms did not keep up with either “pure play” private equity firms or those firms with a hybrid portfolio that includes both private equity and venture capital.
“Last year we predicted that 2012 would bring increased base salaries and healthy bonuses despite a weak economic outlook,” said Kochanek. “All the private equity indicators are pointing to further increases again in 2013.”
About The Report
The 2013 Private Equity Compensation Report is based on an industry survey conducted in October and November 2012. Data was collected directly from hundreds of private equity and venture capital partners and employees. The full report can be found at http://www.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: Actis, American Capital, Bain Capital, Battery Ventures, BlackRock, Carlyle, Century Capital Management, Cerberus, Comcast Ventures, DuPont Capital Management, EdgeStone Capital Partners, GE, Highland Capital Partners, Hilco Consumer Capital, Intel Capital, Mission Ventures, Mohr Davidow Ventures, North Atlantic Capital, RBS, Safeguard Scientifics, SV Life Sciences, Siemens Venture Capital, 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, 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