Operating Partner Salary Report Across Private Equity Firms

November 28, 2024

At A Glance

Operating Partners play a critical role in driving operational improvements within portfolio companies in the Private Equity space. Understanding their compensation is key to navigating recruitment and retaining top-tier talent for your portfolio companies. Here’s a breakdown of the operating partner compensation data based on assets under management (AUM), as outlined by recent surveys.

Compensation Overview

The following chart analyzes the salary and carry (profit-sharing or equity) compensation for operating partners at firms of different AUM levels. It includes data from 88 operating partners across firms with varying sizes:

Firms with AUM under $500M
Firms with AUM between $500M – $5BN
Firms with AUM over $5BN

Key Compensation Insights

- Firms under $500M AUM: The lowest salary for operating partners is $200,000, with the median salary standing at $345,556. The highest salary reaches $600,000.
- Firms between $500M – $5BN AUM: Here, operating partners earn a minimum of $150,000, with a median salary of $377,400 and a top salary of $650,000.
- Firms over $5BN AUM: The lowest salary increases to $225,000, with a median salary of $429,400, and the highest salary staying strong at $900,000.

Carry and Bonus Structures:

- Firms under $500M AUM: A significant 100% of operating partners receive 50% or less in bonuses or profit share. This group also sees 100% participation in carry or profit sharing, which typically includes a percentage of profits generated by the portfolio company.
- Firms between $500M – $5BN AUM: In this group, 85% of operating partners receive 50% or less in bonuses, with 68% receiving carry or profit and partner share.
- Firms over $5BN AUM: In the largest firms, 39% of operating partners get 50% or less in bonuses, and 84% receive carry or profit sharing.

Implications for Talent Acquisition

Smaller Firms (AUM < $500M): While salaries are lower, operating partners are heavily incentivized through carry or profit share. This structure often appeals to individuals who are motivated by long-term success and equity-based rewards.
Mid-sized Firms (AUM $500M – $5BN): The compensation package offers a balance between competitive salaries and a lower percentage of operating partners receiving substantial carry. The median salary in this range offers a healthy compensation package while still offering incentive-based compensation, which can be a draw for potential candidates.
Large Firms (AUM > $5BN): These firms offer the highest base salaries, but even with these larger firms, the compensation package still heavily leans on carry or profit-sharing, with 84% of operating partners receiving such benefits. Operating partners in these firms typically benefit from a combination of high immediate compensation and significant long-term upside through equity participation.

Conclusion

Operating partners across the private equity industry are compensated not just through salaries, but through significant carry and profit-share incentives, which align their interests with the success of the portfolio companies they manage. Understanding these compensation benchmarks is critical for both talent acquisition and retention, particularly when it comes to attracting top-tier professionals who can drive the strategic and operational growth of your portfolio.

For firms of all sizes, ensuring that operating partners are fairly compensated based on these trends can help secure high-level executives who are ready to deliver long-term value.

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