How to become an operating partner at a private equity firm?
Of course, the ideal operating partner candidate will possess management consulting and portfolio company CEO experience; however, former consultants without private equity or portfolio company backgrounds can learn to excel in the operating partner role as long as they have experience as an operational executive; they ...
- Bachelor's degree.
- 5+ years senior-level management experience including managing large teams.
- Ability to develop and execute short and long-term strategic plans; ability to develop and maintain external relations with a wide range of stakeholders and partners.
| Annual Salary | Hourly Wage | |
|---|---|---|
| Top Earners | $136,686 | $66 |
| 75th Percentile | $118,400 | $57 |
| Average | $93,760 | $45 |
| 25th Percentile | $68,100 | $33 |
As the primary liaison between a private equity firm and its portfolio company, an operating partner ensures that the portfolio's executive team has the people, processes, and tools it needs to meet the goals established by the PE firm's investment thesis.
How to Become a Partner. Most people who become Partners do so by starting in private equity at the junior levels and rising through the ranks. Winning a promotion to the Partner level requires a combination of politics, performance, and luck.
| State | Annual Salary | Monthly Pay |
|---|---|---|
| New York | $80,941 | $6,745 |
| Alabama | $80,795 | $6,732 |
| Nevada | $80,199 | $6,683 |
| Ohio | $79,589 | $6,632 |
Operating partners can pursue various career paths. They can become owners/operators, directors, or vice presidents. They can work in food and beverage, operations, finance, or management. They may also become program directors, area directors, construction managers, or regional operation managers.
Highest salary that a Private Equity Associate can earn is ₹45.0 Lakhs per year (₹3.8L per month). How does Private Equity Associate Salary in India change with experience? An Entry Level Private Equity Associate with less than three years of experience earns an average salary of ₹15.4 Lakhs per year.
| Position Title | Typical Age Range | Base Salary + Bonus (USD) |
|---|---|---|
| Senior Associate | 26-32 | $250-$400K |
| Vice President (VP) | 30-35 | $350-$500K |
| Director or Principal | 33-39 | $500-$800K |
| Managing Director (MD) or Partner | 36+ | $700-$2M |
$218K (Median Total Pay)
The average Private Equity Associate base salary at KKR is $146K per year.
What is an example of an operating partner?
Examples of operating partners
Partners experienced in running established organizations can increase profits, thereby ensuring the investment firm of a higher return. After Jack Welch retired from General Electric, he served as an operating partner at Clayton, Dubilier, & Rice, a private equity company.
The venture partner focuses on fund performance and investor returns, while the operating partner drives growth and performance in portfolio companies.
Operational improvements – PE firms can bring new systems, processes, and technologies to the privately owned business, which can improve efficiency, reduce costs, and increase profitability.
Some private equity firms have a structured promotion path and the age range may be between 30 to 40. However, in some cases, individuals can become partners at a younger age if they have exceptional qualifications and experience. Varies widely by the type of firm but generally, late 30's early 40's.
Landing a career in private equity is very difficult because there are few jobs on the market in this profession and so it can be very competitive. Coming into private equity with no experience is impossible, so finding an internship or having previous experience in a related field is highly recommended.
Buyouts, in partnership with Holt Private Equity Consultants and MM&K Ltd conducted its annual Compensation Report. The findings revealed the average time it takes advancing from an MBA degree (or its equivalent in experience) to a partner/managing director is 10.8 years, with the median being 10 years.
Only three of the nine CEOs making over $100 million work at S&P 500 companies: Alphabet's Pichai, Live Nation's Michael Rapino, and Oracle's Safra Catz. Hertz CEO Stephen Scherr, Peloton CEO Barry McCarthy, Sarepta Therapeutics CEO Douglas Ingram, and Pinterest's new CEO Bill Ready round out the list.
US CEO compensation
By company size, base, bonus, and total cash compensation all rise as revenue does, with total median cash compensation coming in at $1,639,000 at companies with revenue above $1 billion. By industry, CEOs at financial services firms are paid the most: $1,013,000 in median total cash compensation.
| Annual Salary | Hourly Wage | |
|---|---|---|
| Top Earners | $244,500 | $118 |
| 75th Percentile | $190,000 | $91 |
| Average | $157,532 | $76 |
| 25th Percentile | $115,000 | $55 |
The operating partner role has evolved into a full-time position drawing a combination of salary, performance bonus, and carried interest similar to an investment partner.
What is an operating vs investing partner?
Generally speaking, there are lots of Investment Partners out there who are looking to invest in good businesses, but they need Operating Partners who want to put in some equity, work the business, and participate in the growth.
Operating partners are independent advisors to private equity groups who actively contribute to the strategic and operational development of portfolio companies.
The potential is there to make a lot of money, even in your first year. And, the career carries a lot of prestige in the finance world. However, private equity is challenging to break into.
Private Equity Career Training
Private equity is a highly competitive and sought-after field.
but nowhere near as much as in management consulting. While the travel will be less, the work in private equity is very stressful and demanding, so the hours you actually spend working may be more stressful or mentally demanding.
