Private equity investment professionals are expected to see a 13% increase in their cash compensation in 2023 from the prior year, despite a climate of slower deal-making and fewer profitable exits, according to the annual Private Equity Compensation Report issued on Oct. 24 by Odyssey Search Partners.
According to the report, total cash compensation for analysts at private equity firms are projected, on average, to jump by 21% to $230,000 this year from $190,000 in 2022.
Associates will see their pay increase by 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 by 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 of the totem pole, 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," said Anthony Keizner, co-managing partner at Odyssey in a news release issued in conjunction with the report. "The largest increases in pay are expected at the junior and mid-levels."
Keizner added that junior and mid-level compensation tends to be fixed by private equity firms that place ranges for each title, while senior-level compensation "correlates more to fees recognized and revenue generated."
Nearly half (47%) of private equity investment professionals already have either had 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," said Ada Blige, director of operations at Odyssey, in the release.
Odyssey is an executive search firm for alternative investment companies.