The MM&K-Holt 2021 PE and VC Compensation Report has been published.
November 4, 2021
We are delighted to announce that we have just published our latest MM&K PE/VC Compensation Report which sets out our findings from our 2021 survey of the UK and European private equity, venture capital, infrastructure and real estate fund management industries.
The survey covers both short-term and long-term aspects of pay and incentive practice in the private equity, venture capital and infrastructure fund management space including in the fund-of-funds and secondaries space. The short-term compensation concentrates on cash compensation, covering base salary and annual bonus levels as well as the design features of annual bonus plans in this sector.
The long-term aspect concentrates on the design and structure of the carried interest and co-investment plans, the general partner commitment requirements and equity participation in the fund management entity and/or the parent company. Emphasis is placed on the levels of carry available to the house and the team and how this is split between the partners, the investment executives and the back office.
This year’s survey has over 45 different firms participating in it, providing information on their own investment strategies, their fee income levels and their reward policies as well as detailed compensation data on all their partners and employees comprising nearly 1,400 incumbents, in a mixture of investment and back-office roles.
One of the most interesting overall findings that we can report from the survey is just how buoyant the “Alternatives Sector” continues to be at this time, especially PE, VC and Infrastructure. While they all have clearly been affected by the Covid pandemic this has not stopped the industry from doing deals, managing exits and raising new funds, further increasing its fire power.
In the UK and European market, perhaps not surprisingly given the comments above, we are not seeing any signs of firms reducing head count or cutting pay. Far from it. Indeed, the stats from this year’s survey indicate that some 95% of firms expect to increase the headcount of their investment professionals in 2021. And within that, 100% of buy-out, growth capital and venture capital firms expect to increase the headcount of their investment professionals this calendar year.
And there is no sign of this trend slowing down in 2021, with 80% of our participating firms expecting to see their investment professionals’ headcount increase again next calendar year.
Furthermore, 50% of firms are expecting bonus levels for their investment professionals to increase at the next bonus round (i.e. for 2021 performance in the main) with only around 6% of firms anticipating some reduction in bonus levels.
While speaking recently to a senior figure in the buy-out sector, the feedback was unequivocal. The recruitment market is still buzzing in this industry. It is nigh on impossible to recruit quality talent at the moment at almost any investment professional level below partner without offering seriously generous pay packets!
The survey report is available to participants only, although new participants can purchase the latest edition if they sign up to participate in our 2022 Survey.