In the most competitive labor market in years, large publicly-traded private equity firms paid their employees two and three times more last year than they had previously. Apollo Global Management Inc. reported spending triple what it did in 2020 on compensation and benefits, totaling $3.49 billion. Blackstone Inc. also reported tripling its labor costs, and KKR & Co. and Carlyle Group Inc. more than doubled theirs.
Calculations were made using generally accepted accounting principles (GAAP), including carried interest, or a firm’s profit from successful investments. As such, the reported amounts may exceed actual take-home pay. Nevertheless, the industry’s growth and competition for top-tier talent has driven up compensation, perhaps as much as 40%.
“It’s a talent war out there,” Sasha Jensen told Private Equity News. She is the founder and chief executive of Jensen Partners, a search company that specializes in recruiting private-fund marketing and fundraising executives.
A firm’s size, seniority, and type of role affect pay. Average compensation in 2020, including base salary and bonus, was $262,000 for associates. Managing partners of firms with $10 billion to $20 billion in assets could expect to take home $3.3 million, according to Heidrick & Struggles International Inc. Asset sales produced a record $854.3 billion in cash last year, contributing to expanded product lines and new hires, reported PitchBook Data Inc.
“Frankly, at all levels we have seen a marked increase in activity as well as comp inflation,” said Jonathan Goldstein, who runs Heidrick & Struggles’ private equity practice. “It’s definitely a candidate’s market right now.” Demand for both new hires and veterans is high, Goldstein told Private Equity News, citing numbers that he hasn’t seen in 20 years.
Jenson described a new terrain when it comes to how employees are paid. Firms are offering unheard-of perks, she said. From buying out a potential employee’s carried interest from a current job, to offering guaranteed multi-year cash payments, firms are enticing candidates in extraordinary ways.