Does PE pay more than banking?
Those working in private equity can often achieve a higher salary, but their income may be less stable than those working in investment banking.
Private equity roles are typically for individuals who already have work experience, so the jobs are not necessarily entry-level. Many investment bankers graduate to working in private equity, therefore, private equity salaries tend to be higher.
So, if you're interested in finance and deal-making, investment banking is the way to go. If you're more interested in strategy and operations, private equity might be a better fit.
Private Equity Principal Salary + Bonus: Compensation reports indicate highly variable numbers, but the 25th to 75th percentile is in the $500K to $800K range. Carry becomes even more important at this level and may substantially increase total compensation.
While both careers are highly regarded and financially lucrative, the choice is personal. Investment banking is typically viewed as glamorous but also requires longer hours and the sacrifice of a personal life. Private equity is extremely prestigious.
While both are among the most competitive Wall Street careers, investment banking is considered easier to break into than private equity.
Both investment banking and private equity are demanding careers that require long working hours, although private equity firms tend to have a more relaxed work environment and offer a more flexible schedule.
While the travel will be less, the work in private equity is very stressful and demanding, so the hours you actually spend working may be more stressful or mentally demanding.
Private equity is an alluring career goal for those drawn to the financial world. These companies pay big salaries, plus incentives and bonuses. The potential is there to make a lot of money, even in your first year. And, the career carries a lot of prestige in the finance world.
Landing a career in private equity is very difficult because there are few jobs on the market in this profession and so it can be very competitive. Coming into private equity with no experience is impossible, so finding an internship or having previous experience in a related field is highly recommended.
How much does a VP at private equity make?
As of Feb 6, 2024, the average annual pay for a Vice President Private Equity in the United States is $157,532 a year. Just in case you need a simple salary calculator, that works out to be approximately $75.74 an hour. This is the equivalent of $3,029/week or $13,127/month.
Heidrick & Struggle's data suggests that at the top end, a managing partner in a private equity firm with at least $1bn in Assets Under Management (AUM), can expect to earn at least $3.5m in salaries and bonuses, plus around $35m in carried interest over a fund's lifecycle (typically around five years).
The “all-in” combined salary is approximately $275k to $390k at top PE firms, but this figure can be much lower for smaller-sized funds and exceed $400k for firms with reputations for being the highest-paying (e.g. Apollo Global).
Investment bankers want to leave for private equity firms and hedge funds because the money is better and the hours are shorter. Plus, the office environments aren't nearly as stuffy as the ones at investment banks.
On the whole, investment bankers are drawn to private equity for its long-term focus, greater control over investment decisions, higher compensation, entrepreneurial opportunities, and the opportunity to develop a more diverse skill set.
Private Equity Analyst Hours
To be conservative, I'll say the average range is 60 – 80 hours per week, with numbers at the top end of that range (or even above it) when a deal is in its final stages. Weekend work tends to be minimal, but it does come up when deals are in their final stages.
Successfully making the move from investment banking, also known in industry vernacular as the "sell side," to the "buy side" in private equity, was very competitive. From a recruitment perspective, getting into private equity is a very tough process that most people will fail.
The private equity space is one of the most competitive, but also offers some of the most lucrative careers in the world of finance. Private equity is often perceived as offering an exit opportunity for those who have already gained experience working in investment banking or investment management.
Hedge fund compensation is more variable than private equity salaries + bonuses, but at the junior levels, you'll most likely earn a bit more in private equity. At the top levels, a star hedge fund PM who has a great year could easily earn more than an MD in private equity – depending on the fund size and structure.
What are the top 5 highest paying jobs? The top 5 highest paying jobs in finance are investment banking, hedge fund management, CFO roles, private equity, and actuarial positions. These careers typically offer substantial salaries and the potential for significant bonuses.
How can I get into PE without IB?
One potential route to break into private equity without a banking background is via management consulting. It's slightly more difficult than breaking in from investment banking, but it's common enough that you'll still be able to leverage headhunters and participate in standard on-cycle and off-cycle recruiting.
Private equity is a core pillar of BlackRock's alternatives platform. BlackRock's Private Equity teams manage USD$41.9 billion in capital commitments across direct, primary, secondary and co-investments.
Private Equity Career Training
PE firms are small, tight-knit, and full of extremely smart and highly motivated people. As a starting point, the right career background is critical.
Highest salary that a Private Equity Associate can earn is ₹44.0 Lakhs per year (₹3.7L per month).
These odds are similar to or worse than playing any of the professional sports. Less than 1% of the population size pursing any competitive field is likely to compete at the elite level. In the highly competitive world of finance like hedge funds or PE, less than 1% of students break into one of the top 10 firms.
