Private equity investment professionals are expected to see a 13% increase in their cash compensation in 2023 over the prior year, despite a climate of slower deal-making and fewer profitable exits, according to the annual Private Equity Compensation Report, issued Oct. 24 by Odyssey Search Partners.
According to the report issued by the executive search firm for alternative investment companies, total cash compensation for analysts at private equity firms is projected, on average, to jump 21% to $230,000 this year from $190,000 in 2022.
Associates will see their pay increase 11% to $300,000 from $270,000, while senior associates will have their paychecks fattened by 14% to $400,000 from $350,000.
Among senior-level employees, the total cash compensation for vice presidents will rise 14% to $500,000 from $440,000, while principals are expected to get 8% richer, as their compensation grows to $700,000 from $650,000.
However, at the very top, total cash compensation for managing directors and partners will remain flat at about $1 million.
"These findings highlight the continued strong demand for these highly trained individuals even in what has been a slow year for the industry," Anthony Keizner, co-managing partner at Odyssey, said in a news release issued with the report. "The largest increases in pay are expected at the junior and midlevels."
Junior and midlevel compensation tends to be fixed by private equity firms that place ranges for each title, Keizner said, while senior-level compensation "correlates more to fees recognized and revenue generated."
Nearly half (47%) of private equity investment professionals already have had either their 2023 bonuses communicated to them by their firms or contractually guaranteed, "which increases the likelihood that these estimated year-end 2023 figures will become realized," Ada Blige, director of operations at Odyssey, said in the release.