The relative flatness of private equity activity over the past couple of years has done little to discourage the crème-de-la-crème of Harvard MBAs from snatching up a record number of job offers from PE firms over the last year. According to the latest job survey from the Harvard Business School, nearly 15% took their MBA sheepskins into the world of private equity and leveraged buyouts. Of course, it we had to pin down a reason for this marked increase over prior years, it may very well be that PE firms were offering higher base salaries than most other fields. Only hedge funds and venture capital firms offered more.
Source: salarycpa.com/mba-cpa-salary
According to the reports data, the average compensation package offered by PE firms came in at about $160,000 with $25,000 signing bonus on top of a $135,000 as base offered to about a third of the graduates. A quarter of those offered jobs received a comp package that guaranteed and additional $120,000 on top of the base.
Hedge funds attracted fewer graduates with only 7% taking up offers that averaged $150,000 of base salary and $20,000 of starting bonuses. Top MBAs were able to land comp packages that averaged $300,000 or more. VC firms brought up the rear with only 1% accepting offers that included a base salary of $142,000.
One explanation for the higher number of grads entering private equity despite the higher offers from hedge funds might be that it is having a much better year than hedge funds which is reflected in the higher optimism over compensation increases. Although the average cash payout of hedge fund employees is expected to be about $311,000, as compared with $248,000 for private equity employees, according to the 2012 Private Equity Report, the expected year-over-year increases in total compensation are much higher in private equity. Coupled with the fact the hedge fund industry has been shrinking while the private equity industry has been growing, and it’s easy to see why there is a higher enrollment for private equity studies. As long as that trend continues the MBA elites will most certainly follow the demand.
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