The 2016 Private Equity & Venture Capital Compensation Report shows that slower industry activity is reflecting in private equity and venture capital pay.
Although 65 per cent of professionals reported an increase in expected salaries and bonuses, the growth in cash compensation has slowed. This year's average compensation for private equity and venture capital professionals was USD272,000 USD, a slight decrease from last year.
This marks the second consecutive year of diminished correlation between bonus pay and firm performance. Respondents working in firms that were down 10 per cent or more, report anticipated bonuses averaging USD43,000 USD. This disconnect continued to surface in firms down 1 to 9 percent, with these survey participants expecting bonuses to average USD94,000. In contrast, respondents working in firms that realised gains between 1 to 9 per cent were expecting an average USD91,000 in bonus pay, USD3,000 less than their counterparts in firms that were down by the same range.
The private equity job market, however, continues to shine. "Funds are looking to put their capital to work, that means deal sourcing talent is at a premium," says David Kochanek, Publisher of PrivateEquityCompensation.com. This year's report reveals that 45 per cent of firms are looking to hire additional investment professionals.
Says Kochanek: "With all the dry powder firms are sitting on, we were not surprised to see increased demand for investment talent again this year. Further, based on the expensive multiples seen in recent strategic exits, we won't be surprised to see demand increase over the next 12 months for professionals with deep due diligence experience."
As seen in prior years, when the demand for talent is high, the level of satisfaction with overall compensation is low. Again this year, more than half of respondents described their compensation as unsatisfactory.