- Transparency between the recruiter and candidate creates vital alignment on expectations and priorities.
- Candidates who focus on the total compensation package as opposed to individual elements tend to achieve superior outcomes.
- Pursuing methods that "increase the pie" often leads to enhanced upside for the candidate and a healthier start to the executive-sponsor relationship.
Compensation negotiations are the final hurdle in securing your next PE-backed role. This delicate process demands collaboration and early alignment between sponsor and candidate.
Candidates who do not conduct extensive diligence tend to be ineffectual negotiators. Before receiving an initial offer, discerning executives will have previously researched the competitive landscape, the sponsor’s priorities, and the depth of challenge and risk associated with the opportunity.
Private equity professionals are often skilled and assertive negotiators, but they are also often fair-minded and expect candidates to negotiate within the spirit of the deal. In fact, neglecting to negotiate often indicates a red flag; if a C-suite candidate cannot effectively negotiate their own compensation, sponsors may question their ability to deliver a compelling exit.
Transformative executives are often willing to assume an enormous amount of risk to bet on themselves. In turn, funds want to maximize the value of their executive talent. Strong compensation packages reflect these dynamics by reinforcing the potential for mutual benefit.
What makes for an ideal compensation package varies based on personal, professional and economic factors. While equity is typically the top priority in any PE-backed role, shifts in market conditions or industry trends can influence the emphasis on base salary or bonus.
A private equity executive compensation package typically includes four key elements: salary, annual performance bonus, equity, and co-investment. Below are several best practices that consistently lead to strong outcomes for all stakeholders.
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