This is your pay as an operating professional in private equity
After the WeWork debacle and the apparent shortcomings of the 'tech whispering team' of Vision Fund operations professionals led by Gerry Lopez, you might be forgiven for wondering whether a career as a private equity operations guy is really worth the pain. A brief look at headhunter Heidrick & Struggles' new salary survey for PE fund operations people suggests that, yes, it probably is.
In your early career as an associate in an operations role with a private equity fund, Heidrick says you can expect to earn $269k a year in combined base and bonus in the U.S.. As a vice president (VP), you can expect $349k. This compares pretty favorably to Heidrick's figures for private equity investment professionals (the most recent of which date back to 2018)...
Heidrick & Struggles defines associates as the 'most junior, entry level' people in PE funds, who are mostly engaged with 'research and analysis'. Vice presidents in operations functions are a notch above and actually get exposure to the companies in the portfolio.
The real money in private equity operations jobs, however, goes to the operating partners and managing directors and most of their money comes in the form of carried interest when deals are exited at a profit. While salaries for operating partners hover between $323k and $571k and bonuses go from $117k to $801k, Heidrick found operating partners whose carried interest was $17m+ last year.
Operating professionals work with investee companies to improve their performance. By comparison, 'investment professionals' at private equity funds spend their time identifying companies for private equity funds to invest in and closing deals. As a rule of thumb, operating professionals are more likely to come from consulting firms, while investment professionals are more likely to be ex-bankers.
The chart below shows average carried interest per deal for operating partners and how long you can expect to wait for it. WeWork excepted, there's still good money to be made as an operating professional in PE.
Carried interest for operating professionals:
Source: Heidrick & Struggles
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