The Untold Private Equity Compensation Story in 2023

A deal slowdown was never going to keep employees from getting raises this year. But the most lucrative parts of compensation packages kept evolving.


Illustration by II

Private equity executives were right to be worried early this year about the impact rising interest rates would have on their firms. Since then, deal volume has slumped and fund raising has slowed. Nevertheless, their employees are expecting raises this year — if they didn’t get one already.

The median total cash compensation for all levels of private equity employees — analysts through managing directors and partners — rose 13 percent in 2023, according to a survey of 1,179 workers across the U.S. by Odyssey Search Partners, a recruiting firm focused on alternative investment professionals. Analysts, the most junior employees, got the biggest bump this year, with a 21 percent increase in total cash compensation. All others expect raises in 2023, except for managing directors and partners, who said theirs would be flat.

The pay increases during a tough year aren’t as counterintuitive as they seem, Anthony Keizner, a partner at Odyssey, said. Unlike other professionals, such as investment bankers that rely on transactions, the most lucrative parts of private equity compensation stem from the performance of funds that span several years. Private equity firms charge investors management fees annually, so they can afford to pay higher salaries and bonuses, and right now they have to do that, according to Keizner.

“There is still strong demand in the private equity industry for trained laterals. Many funds are sitting on dry powder capital that they’ve raised in recent times, it’s yet to be deployed and they need great people to be able to execute on deals and also work with their portfolio companies to help realize the improvements and increase the value of those firms,” Keizner said. “If somebody is disgruntled through compensation issues at the firm, or other reasons, they will find another home.”

Private equity firms aren’t the only ones competing for a small pool of high-achieving, skilled young professionals either. Other types of investment firms prize private-equity trained associates for their deep fundamental research and due diligence skills. Junior private equity employees often also make good business school candidates, so they have the flexibility to walk away from a job, go back to university, and make themselves even more marketable.

For those reasons, the increases in cash compensation this year weren’t surprising to Keizner. There were far more interesting changes to compensation packages in 2023, he said.


The number of junior employees eligible for carried interest — a share of a fund’s profits as compensation — continued to rise. This year, 46 percent of private equity employees surveyed said their firm offered carry to analyst, associate, and senior associate levels, up from 45 percent in 2022 and 41 percent in 2021. The trend is even more prevalent at smaller firms; 51 percent of professionals at firms with less than $3 billion in assets said they offered carry to more junior employees.

For employees, carry is what can make a world of difference in compensation. “You can spend your bonus, but if you get a big carry allocation, that’s your nest egg and second home and everything,” Keizner said.

Even for the most junior employees, carry can be significant. Twenty percent of associates received carry and the median amount was 2.2-times their base salary. Meanwhile, 47 percent of senior associates received a median carry equal to 4-times and 92 percent of vice presidents received a median carry equal to 5.7-times.

For the first time this year, Odyssey also asked survey participants about co-invest opportunities, a topic coming up more with candidates, Keizner said.

The recruiting firm found that 37 percent of analysts, 41 percent of associates and 46 percent of senior associates were now eligible to co-invest at the fund level. Forty-six percent who are eligible to co-invest are offered leverage on the dollars they invest, Odyssey’s survey found.

“It’s certainly come up as more of a feature of what’s important to people,” Keizner said. Like carried interest, co-invest opportunities help “attract and retain, especially more junior and mid-level, talent. They do get paid big cash bonuses, but the danger of that is that you take it, and you bank it, and you walk away.”

Fifty-eight percent of private equity employees said their firm fully paid for their healthcare and dental insurance premiums but only 63 percent said their firm matched their contributions to a 401(k). Almost half of private equity firms catered lunches (48 percent) and company happy hours (51 percent). Forty percent offer employees a car service to and from the office.

Data about other benefits were a bit of a head-scratcher for Keizner and his colleagues.

“It’s pretty surprising that 14 percent, so that’s over 140 private equity professionals, say that they are not getting free snacks or coffee or tea at their place,” Keizner said.