SAN DIEGO, CA, December 15, 2010 — A report released by PrivateEquityCompensation.com signals improvement in the private equity and venture capital markets and an upward compensation trend that will likely continue in 2011.
In a year where buyout deals heated up and the big players are complaining of being priced out of the market for some deals, private equity professionals reported a solid increase in total earnings over the previous year, with the average cash earnings coming in at $230,000 USD.
As 2010 wraps up, 45 percent expected double-digit increases over last year. The average expected increase was 13 percent.
Private equity investors will be pleased to know that bonus practices are aligned with fund performance for 2010. Last year about half of the firms reported positive fund performance. That number this year is an impressive 85 percent.
“Last year, there was plenty of discussion around the bank bailouts and public scrutiny of financial pay programs, especially bonus payouts,” says David Kochanek, publisher of PrivateEquityCompensation.com. “This year funds performed well and the average expected bonus increase is over 20 percent.”
28 percent of contributors reported having some level of bonus guarantees, although the level of guarantee was all across the board, from 5 percent up to 100 percent. Of those receiving bonuses, only 12 percent were required to invest some amount of their bonus back into the fund.
With plenty of investment reserves at the larger firms and the clock ticking on the time frame to make investments, firms are looking to put that money to work. This means more deals and greater demand for talent from both the investment and operational sides of the business.
Have better times arrived? “We believe this is a sign of improvement in the private equity and VC markets,” said Kochanek. “We expect continued demand for junior level investment professionals and operational improvement players at the senior levels. Add to this that firms are now positioning to keep talented professionals from leaving for greener pastures, and an upward compensation trend will likely continue in 2011, even if overall economic conditions show only minor improvement.”
About The Report
The 2011 Private Equity Compensation Report is based on an industry survey conducted in October and November 2010. 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, Babson Capital Management, Bain Capital, Barclays Capital, BlackRock, Clairvest, 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, North Atlantic Capital, Qualcomm, RBS, Safeguard Scientifics, SV Life Sciences, and Time Warner Investments.
PrivateEquityCompensation.com is a division of Job Search Digest, publishers of Private Equity Jobs Digest, a web-based career service catering to professionals in the private equity industry 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 http://www.jobsearchdigest.com/insidethefirm.