In today’s episode, Matt and Dan break down compensation structures in private equity, focusing on sourcing professionals and business development (BD) teams. They emphasize aligning base, bonus, and carry structures to drive scalable capital deployment and discuss how discretionary bonuses and performance-based incentives ensure long-term success. The episode also covers salary ranges across experience levels and highlights the growing importance of BD professionals in shaping firm outcomes.

As private equity compensation trends evolve, our hosts outline how aligning incentives with firm goals builds high-performing sourcing teams. From base salary to carry structures, they offer a roadmap for creating competitive, results-driven compensation plans. In today's competitive landscape, firms that implement these strategies will lead in talent acquisition and capital deployment. You can’t afford to miss this must-hear episode packed with crucial insights for thriving in private equity business development.

Episode Highlights:

00:00 Understand Differences in Private Equity Compensation Structures

01:22 Break Down Base, Bonus, and Carry for Sourcing Roles

02:31 Identify Standard Compensation for BD Professionals

03:40 Review Base Salary Ranges for Sourcing Professionals

05:48 Balance Base Salary and Bonus for Maximum Performance

06:49 Differentiate Between Junior, Mid-Level, and Senior Tiers

07:18 Adjust Bonus Structures Based on Experience

09:00 Set Clear Expectations for Base Salary and Bonus

10:50 Structure Discretionary and Performance-Based Bonuses

11:09 Implement Common Bonus Structures

12:42 Tie Discretionary Bonuses to Firm Performance

14:54 Incentivize Sourcing Teams

16:50 Adopt Performance-Based Bonuses for Larger Teams

18:01 Use Common Performance Metrics to Drive Compensation

19:06 Decide on Flat or Percentage-Based Bonuses

21:12 Distinguish Proprietary vs Banker-Sourced Deal Compensation

23:20 Clarify Add-On vs Platform Deal Bonuses

25:50 Align Sourcing Compensation with Lehman Fees and Buy-Side Origination

27:50 Embrace the Evolution of BD Compensation in Private Equity

29:04 Bridge the Gap Between BD and Deal Team Compensation

31:00 Offer Carry Compensation for BD Professionals

35:15 Use Equity in Sourced Companies as an Incentive

37:37 Incorporate Team Bonuses into BD Compensation Plans

40:29 Tailor Carry Packages to Attract Top Talent

44:10 Plan for Long-Term Carry and Vesting

48:08 Adapt Sourcing Compensation to Firm Goals

50:44 Prepare for the Future of BD Compensation in Private Equity

52:59 Structure Compensation to Build a High-Performing BD Team

59:51 Apply Best Practices for Performance-Based BD Compensation

01:02:57 Negotiate and Maximize Your Compensation in BD Roles

Key Takeaways:

"Not every private equity firm is the same. Maybe they're value-focused, or maybe they're a bit more patient. All of that influences compensation structure."

"In years where folks have success, the bonus can far surpass their base salary."

"The three main pieces of private equity compensation are base salary, bonus, and carried interest or equity."

"In years where folks have success, the bonus can far surpass their base salary."

"The BD function is maturing. Compensation is growing, and the gap is narrowing between BD professionals and their deal team counterparts."

Links:

Dan Herr: https://www.linkedin.com/in/danielherr/

Matt Rooney:

Kate Hopkins, Founder and CEO of OneGuide, joins hosts Matt Rooney and Dan Herr here today to explore the pivotal role of portfolio operations in private equity. Kate shares valuable insights into how portfolio ops teams not only enhance value for portfolio companies but also generate new deal flow and sourcing opportunities. By leveraging network content, building automated tech stacks, and hosting impactful events, private equity firms can optimize their portfolio operations to fuel growth and outperform competitors.

The discussion emphasizes key strategies like using content and events to drive engagement, building efficient sourcing tech stacks, and training business development teams with portfolio data to gain a competitive edge. Kate also stresses that portfolio operations can help firms differentiate themselves by showcasing value beyond capital, which is crucial in winning competitive deals. Whether through virtual events or leveraging advisory networks, the conversation provides practical advice on how private equity firms can maximize portfolio growth without significantly increasing full-time headcount. Today’s episode offers a detailed roadmap for integrating portfolio operations into sourcing processes, highlighting the evolving importance of advisory boards and network utilization in private equity.

Episode Highlights:

00:00 Portfolio Apps: Choosing Efficiency Over Heaviness

01:07 Use Content and Events to Drive Better Deal Flow

01:27 Scale Portfolio Ops as Portfolios Expand

02:27 Efficient Portfolio Ops: Using Non-FTEs and Experts

04:35 Implement Best Practices in Portfolio Operations

05:17 Navigating Portfolio Growth Amidst Increasing Competition

07:47 Portfolio Ops: Key to Winning Competitive Deals

12:07 Leverage Portfolio Data to Engage Prospective Companies

16:14 Apply Sales Enablement Tactics to Boost Sourcing

19:50 Train Sourcing Teams with Portfolio Insights for Impactful Outreach

20:46 Engage Prospects with Events Powered by Portfolio Ops

24:05 Merge Product Marketing Strategies with Portfolio Ops for Sourcing

25:29 Tap Into Your Portfolio Network for Strategic Deal Sourcing

30:07 Build Community Around Your Portfolio to Attract Prospects

34:11 Host Regional Dinners to Connect Portfolios and Prospects

36:30 Virtual Events: Rotate Through Functions to Engage Portfolio Companies

38:10 Use Portfolio Ops Leaders as Anchors for Regional Events

42:11 Plan Events Thoughtfully for Maximum Impact

46:55 Repurpose In-Depth Content into Digestible Data Snacks

48:14 Use Benchmarking Reports to Showcase Portfolio Success

52:06 Break Through Prospecting Noise with Personalized Insights

Key Takeaways:

"Portfolio ops is becoming table stakes, but there's the expensive, people-heavy way and the efficient way to do it."

"Strategies to effectively integrate ops teams with business development."

"The competition for interesting investments is getting more intense."

"Utilize network content and events to supercharge deal flow."

"A lot of firms are starting to document really interesting IP for their portfolio companies."

"We help firms do more efficient, higher leverage portfolio ops by tapping into non-FTEs, advisors, and a network of experts."

Links:

Dan Herr: https://www.linkedin.com/in/danielherr/

Matt Rooney: https://www.linkedin.com/in/matt-rooney-coastalpartners/

Kate Hopkins: https://www.linkedin.com/in/katelhopkins/

OneGuide:...

Welcome to the Deal Sourcery podcast, where hosts Dan Herr and Matt Rooney engage in a captivating discussion with Karl Rectanus, the former CEO and Founder of LearnPlatform. Founded in 2014, LearnPlatform is an edtech company dedicated to creating meaningful impact through data-driven decision-making. The company quickly gained traction, particularly with the launch of the Edtech Top 40, an innovative initiative that highlighted the most engaged tools in the sector, drawing significant attention from private equity and strategic investors.

In this episode, Karl shares how LearnPlatform’s mission-driven approach not only fueled rapid growth but also led to a successful acquisition. By aligning their business model with impact goals, the company attracted investment that went beyond financial backing, providing strategic support that accelerated their success. Today’s fascinating conversation documents the strategies and insights that propelled LearnPlatform to the forefront of the edtech industry, and showcases the formidable power of impact-driven growth.

Episode Highlights

00:00 The Importance of Impact Centered Decision Making

00:10 Engaging EdTech Founders for Proprietary Transactions

00:41 The Concept of Fail Tests in Entrepreneurship

00:47 Building Authentic Relationships with CEOs

01:00 The Future of Impact Centered Companies in Private Equity

01:12 Key Questions for Engaging and Qualifying Founders

01:41 The Journey from Founding to Exiting LearnPlatform

02:25 The Origins and Launch of LearnPlatform

06:34 Private Equity Interest Sparked by the EdTech Top 40

09:44 The Power of Data Driven Market Insights

11:11 Increasing Inbound Interest from Private Equity Firms

13:38 Screening and Qualifying Potential Investors

16:12 Strategic Partnerships with Private Equity Firms

18:24 Evaluating Outreach Based on Role and Experience

21:01 Aligning Success with Clear Private Equity Strategies

25:07 Setting Expectations and Building Trust with Investors

28:20 Long Term Relationship Building in Private Equity

31:27 Deciding the Right Time to Sell or Raise Funds

34:30 Managing Multiple Potential Buyers in the Exit Process

36:58 The Advantage of Long Term Engagements

42:00 Decision Framework for Choosing the Right Buyer

46:46 Post Exit Focus on Advisory and Board Roles

50:27 Ideal Roles and Contributions in Private Equity Partnerships

52:35 Characteristics of an Ideal Private Equity Partner

56:35 The Next Wave of Capitalism: Impact Driven Organizations

59:34 Defining Impact and Its Business Benefits

01:00:16 Private Equity’s Role as an Impactful Force

"The impact we were trying to drive drove our decision making and helped accelerate the scale of the business."

"Set expectations and then go beat or exceed those expectations."

"I believe in fail tests, setting up not what success looks like, but what absolute failure looks like."

"The best way to build authentic, long-term relationships with CEOs is to be consistent and trustworthy."

"Diversity on the partner level was a benefit for us. We were named one of the most innovative companies in the world."

"The winners in the next 50 years will be those who make the world a better place, not just those with the best financial returns."

"Impact is not just ethically correct, it's good for business."

Links:

Dan Herr: https://www.linkedin.com/in/danielherr/

Matt Rooney: https://www.linkedin.com/in/matt-rooney-coastalpartners/

Karl Rectanus: