If you are a senior person at a private equity firm, you can earn a tremendous amount of money. Pay varies by company size, but Heidrick & Struggles’ recent compensation report for the industry puts managing partners at $975,000 to $6.4 million in cash compensation (salary plus bonus), plus up to $ 56 million (accumulated over six or years) in accrued interest. Pretty fancy.
The junior pay isn’t that lavish, but it’s not bad either. Heidrick has private equity partners with salaries of $220k to $415k and interest of up to $1.3 million. However, associates are not always carried away by interest. That depends on the background. Some funds are friendlier to their associates than others.
One of the most beneficial funds for associates seems to be CVC Capital Partners. In a semi-revealing article on life inside the European private equity firm yesterday, Bloomberg said CVC sometimes favors its youngsters over its veterans. It is not a common occurrence and requires a specific circumstance where a junior is more instrumental than a partner in landing a big deal that makes a lot of money and where three top executives agree that the junior is more deserving. Bloomberg spoke to more than a dozen people at CVC for the article, so presumably this really does happen.
In exchange for this glimmer of generosity, it seems that the young people, and everyone else, at CVC are expected to work very hard on deals that are unlikely to come to fruition. The fund reportedly has a ‘brutal’ method of weeding out investment cases from its teams, with very few surviving. Once a week, an investment committee of 11 people meets to hear pitches, and the fund only invests if seven or more of them approve. This method filters almost everything. Last year, CVC only did 19 deals.
The generosity of the firm also works in reverse. CVC pays well because it rewards performance and it does so on an individual level: senior staff are not paid simply to collect fees and profits from big deals they didn’t do. However, when a deal isn’t that great and the company loses money, this creates a roadblock for the future: You won’t be paid any more accrued interest until you recover all the money the company lost. If you’re a junior racking up a lot of accrued interest on a deal gone wrong, this could clearly be a problem.
The other potential drawback to life at CVC Capital Partners is its persistent reputation for machismo. German partner and former Goldman Sachs banker, Alexander Dibelius is particularly famous for the following video, in which he bench presses his wife. The firm awards a ‘shark of the year award’ to the person who submits the biggest shark deal. The CEO likes to climb Everest. CVC was spun off from Citigroup in 1993 and only got a human resources department in 2009. It now has someone who looks after diversity, but only one female partner and 33 men. As CVC prepares to go public, it is trying to change, but its “hard-charging” culture may be difficult to change.
On the other hand, if you make $350k a year but have no money left at the end of the month, you’re not alone. A high-earning, $350,000 first-generation single breadwinner wrote to MarketWatch’s financial advice column saying that after monthly payments of $88,000 in student loans, $170,000 in electric car loans, and taxes, bills, and mortgages, there is almost nothing. left.
You are informed that this is the result of ‘Parkinson’s Law’, which states that your expenses will always increase to equal your income. Apparently having a money coach is the only way to avoid this phenomenon.
In the meantime…
Three former Goldman Sachs employees are now representing 2,300 other former employees in a class action court case. The trial could happen next year. Goldman insists the claims, which date back decades, are “baseless”. (Bloombergs)
Among a dozen executives who oversee Goldman’s revenue-generating divisions and leadership, one is a woman, the same number as a decade ago. (Bloombergs)
Hedge fund Millennium Management is expanding its tech team. It has 125 technical positions. Candidates can expect to be interviewed 4-7 times after passing a coding test. (Business Insider)
As Ray Dalio retires, a reminder of his life principles includes the observation that: ‘Reality works like a machine in which everything we find is the result of cause and effect relationships. (water bridge)
Wall Street executives flock to ketamine therapy. “The infusion experience is pleasurable for most people. It’s slightly psychedelic. If you pay attention to warmth, lighting, comfort, you get a better effect.” (New York Post)
Why McKinsey & Co, Bain and BCG pay more than the Big Four: Their per capita income is around $400,000 per person, compared to $140,000 for Deloitte, PWC, EY and KPMG. (Economist)
Adderall is in short supply. (Bloombergs)
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