Fellow PMs: has been a minute I have moved firms, but it’s that time. What are current terms (sign on, guarantee, treatment of deferred etc.) for a PM to move across platforms? Hypothetically, GMV 700m, 35m PnL pa over the years.
Thanks for any input, also happy to speak to PBs/headhunters or so who may have the latest trends.
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35m PnL p.a. meaning +5% on GMV on average? Is that all 0 net and tight on factors? And you’re saying current book is 700? Is this a big 4 firm?
If so really solid track record - how long have you been doing that / what is career PnL? Depending on above I think you could get a pretty big guarantee depending on you’re deferred / age / level
20% payout, cover deferred, $1-2m in signons/ incentives to compensate for sit out. Although if you are doing well at a good platform there really isn't a number to incentivize anyone to move..
You're way too low on the sign-on, if he's been putting up $35m consistently, he can easily get $5-10m guarantee, potentially even more.
Oh yeah sorry didn't see that - yeah you can get a 5-10m guarantee. IMO lots of places are hesitant to give you straight cash so they will structure some type of accelerator + credit etc. But honestly if you are putting up 35m/year what's the purpose of leaving and setting up shop somewhere else? Anything you are unhappy with you can probably get at your current firm (unless you are not at a platform)
How are you getting to 5-10m and how would that be structured? Is the current deferred part of it?
$35m PnL “over the years” or each year would impact the guarantee obviously as it based on an avg. Currently MLP are paying all cash, no netting or deferred with a 20% payout - other shops structuring it slightly differently.
If you have deferred then that would have to get bought out and they factor in a build out phase also which is added on top. Sometimes there are also accelerators such as getting paid 100% of your first $5m PnL to incentive deploying risk but these deals are always bespoke to the individual.
can you give us situational examples of what it would take for someone to get a $10-20m guarantee, and how common it is? What $ amount of PnL at previous shop / deferred does it take? Is it structured as "get guaranteed / floor comp of $10-20m after year 1, which is then deducted from year 2 PnL"?
What would it take for someone ages 30-35 to get one? if you could use #s in your example that would be helpful
Simple example would be a PM with $10m in deferred which is non-negotiable in being paid out. Then say they were currently on a 15% pay out and averaged $30m PnL for the last couple of years so the opportunity cost of sitting out the market for 12 months would essentially be $4.5m plus a 3m build out taking it to around $5.6m. Therefore the PM is at minimum guaranteed $15.6m which is when a sweetener would also be added to incentivize the move.
This wouldn’t all be paid cash, let say $10m upfront which is paid within 30 days, then the remaining odd $7m can be structured via a higher payout % on first year PnL or a performance accelerator like 50% of the first $15m PnL you generate which would be added to year end comp.
Difficult to assume the commonality as shops pay up for talent they want desperately or wait for when large portions of deferred are paid out to make it cheaper.
As I wrote per annum. Still not clear, so is there a sign on, guarantee and the deferred? How are the former 2 structured and is the deferred paid instantly or is the schedule being taken over?
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