Private equity pay has caught up with private credit, for now
Private equity had it pretty rough the last few years. Luckily, things seemed to have turned the corner in 2024. A report by EY, published last month, said that 73% of investors were expecting the increased activity to accelerate further in 2025. Private equity pay appears to have risen as a result, and now exceeds pay for private credit.
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Results to a compensation survey from Instagram account Litquidity showcase the disparity. In 2024, Litquidity says private equity (PE) compensation (salaries plus bonuses) in the US was between 4 and 22% higher than it was for the equivalent ranks within private credit. That’s a complete reversal of what a survey by Selby Jennings showed this time last year.
Interestingly, the biggest discrepancies were for lower-ranked professionals. Analyst in PE were paid 22% more than analysts in private credit. At senior associate level the discrepancy was only 17%. The gap tightened further up the food chain, although PE professionals always out-earned private credit ones. The average private equity professional earned 9% more at VP level, and 3.5% more at SVP/Director level.
The discrepancy was due to fixed compensation. PE professionals were carried to the top by huge salaries, which were up to 31% more than their colleagues in private credit, depending on seniority.
However, bonuses were much more generous for private credit professionals: analyst rank aside, PE professionals consistently earned bonuses that were between 48% and 50% of their salaries. In private credit, the bonus to salary ratio steadily grew from 45% (for associates) to 60% (for SVPs/Directors).
It’s worth noting that the figures do not include carried interest payments. These are, in essence, a few percentage points of profit from a deal allocated to the professionals who worked on said deal. It’s an incentive that exists in both private equity and credit firms, and the sums can be colossal.
US-based recruitment consultant Heidrick & Struggles said back in 2023 that private equity partners & managing directors can earn up to $33m on average in carried interest across a deal’s (usually) five-year life cycle. The sums are nowhere near as high in private credit – although private credit firm Apollo’s then-credit head, Kipp deVeer, earned $200m in bonuses for his work in 2023.
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