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Money | Toks
The Wall Street Skinny
January 16, 2025
This Week on The Floor
It’s comp season, so we’re breaking down how — and how much — everyone on Wall Street gets paid.
Plus, with the TikTok sale-or-ban deadline just three days away, what will happen to the app that started it all?
TikTok’s final hours? Or will an Investment Bank be collecting big fees on a sale?
Money talk: pay brackets, bonus season, and how it all really works
What You’ll Learn:
How to value a company from a 10,000 foot level
Comps Analysis: What is it? How is it used in practice?
Discounted Cash Flow Analysis Basics: Learn the foundations you must be prepared for in an interview
Equity Value vs. Enterprise Value: Learn the difference and why it matters
Private Equity and Leveraged Buyout Basics
Master these essential technical concepts every top IB candidate needs to know
Learn how to apply these concepts in real-life scenarios and interviews
Insider tips that will help you stand out in a competitive pool of candidates
When: Thursday, January 23rd at 12:00pm EST
Cost: FREE
Replay: Available for 48h
Markets Recap / Deal News
Interviewing this week? Here’s some content for your conversation.
We launched our first TikTok reel in April of 2023.
A year later, in April of 2024, the U.S. government put together a bill saying TikTok must either be sold by January 19th, 2025 (three days from now) or face a ban.
Why ban TikTok? The U.S. government fears that the Chinese government is using TikTok to spy on American users.
TikTok’s owner, Chinese tech company ByteDance, has been arguing in the Supreme Court that this bill violates their First Amendment rights. But they seem unlikely to win their challenge.
According to various statistics I’ve read, there are somewhere between 120-170 million users of TikTok in the U.S. Can their beloved platform be saved by some deus ex machina?
Our first TikTok reel below, for kicks 😂😂😂
@thewallstreetskinny Want to learn more about the financial services industry and world of Wall Street and Investment Banking? Let us know what you’re interest... See more
Joe Nocera speculated in The Free Press this week that Trump might intervene at the last second, possibly passing a temporary bill on his first day in office to buy time.
Buy time for what? Well, for someone else to buy it who might make its continued existence palatable to the U.S. government.
Some of the names mentioned by Nocera in his article and others elsewhere:
Fellow Bostonian and billionaire Frank McCourt and Kevin O’Leary teaming up together
Bobby Kotick, billionaire and former video game CEO Bobby Kotick, who previously tried in 2020 with Oracle
Doug McMillon — the CEO of Walmart who also tried with Oracle to purchase the company at one point
Elon Musk
Donald Trump himself under the Truth Social Parent Company
Amazon
The video sharing platform Rumble, which made rumblings (!) of an offer back in March
Mr. Beast — a.k.a., Jimmy Donaldson — who says countless billionaires have offered to back him
Microsoft — whose CEO Satya Natella called their 2021 attempt to purchase TikTok “the strangest thing I’ve ever worked on”
…and by the time I got to this point in my research, I decided the list was long enough!
Interestingly enough, there’s no mention of TikTok’s biggest competitors: Meta, Snap, Reddit, or Pinterest.
We know Meta’s fighting the old FTC lawsuit alleging that its purchase of Instagram in 2012 and WhatsApp in 2014 violated antitrust laws, and they are constantly living in peril of being broken up.
What about some of these smaller names though?
What about the private equity firms like Susquehanna, Carlyle, and General Atlantic that already own some 60% of ByteDance?
What would a new purchaser actually buy if the algorithm and global operations are not for sale, as China has consistently indicated?
And how much are the U.S. operations even worth? I’ve seen estimates ranging from $20bn to $100bn. Forbes released an article saying they got 9 wildly different answers from 9 respected analysts all asked the same question.
Would a purchase or carve out “break” the app by dismantling its unique user experience of global virality?
And how can you value a company that may or may not actually be profitable given the billions of dollars its CEO admitted they’ve spent in recent years trying to silo their U.S. and European operations from China to appease politicians?
I have more questions than answers. But I will say this:
I was afraid of TikTok two years ago and never thought I’d ever download the app.
I feared what my former Princeton classmate Mike Gallagher said in the Free Press, that “China’s children get spinach, and America’s get digital fentanyl”.
We launched our account @TheWallStreetSkinny to try to serve up digital spinach.
And as two creators who proudly launched our business with the tongue in cheek tagline “a finance education for the TikTok generation”, we are grateful to have been able to make our early start reaching so many curious, bright minds through the platform.
And since your interviewer might just ask you “how would you value TikTok?” this week, some questions you might want to think about:
What are the three primary valuation methodologies?
What comes to mind as a good precedent transaction?
What types of multiples would you think about, regardless of whether you’re an expert on the industry?
Money Talks
Let’s talk money.
January and February are what we often call “comp season”: where employees at Investment Banks find out their total compensation for the prior year’s work.
We want to break it down using numbers that have been pretty steady over the past few years to give you a framework within which to understand how compensation works on Wall Street.
A few basics:
Annual compensation for most front office roles is comprised of a base salary plus bonus.
Base Salary is the pay you are all but guaranteed each year, just as long as you do not get fired with cause. It’s paid out monthly like a normal paycheck.
Bonus is your performance based compensation. “Bonus” is a misnomer — it’s not a surprise gift because the bank is feeling generous.
It is a component of your compensation that the bank will distribute in a year of excellent performance or withhold in the event of poor performance. And while it may change year to year, it still needs to broadly keep up with the market so banks can stay competitive for talent.
And a few caveats:
These numbers are fairly typical for bulge bracket US investment banks in NYC.
Due to regulatory requirements in other countries, pay structure and outright levels for non-US banks in NYC can be wildly different. EU banks for example (thanks to the bonus cap), often have dramatically higher base salaries and lower bonuses. https://www.ft.com/content/d55fe18c-0ea0-438c-9d4d-1776d0c03c6f
We are specifically talking about the most highly coveted roles in Investment Banking and Sales & Trading.
These numbers are based off a combination of public filings, confidential surveys, voluntary reporting, and good old fashioned gossip.
And seriously, if your numbers fall outside of these brackets, don’t despair (or celebrate) unnecessarily. MUCH depends on the specific firm, the specific desk, and the specific year.
Analyst (first year out of undergrad, 1-3 years to promotion)
$100-125k base salary
$0-75k bonus
All cash
Note: Analysts typically get paid on a summer cycle, NOT in the winter!
Associate (first year out of business school or promoted from Analyst, 1-3 years to promotion)
$150-250k base salary
$0-225k bonus
As early as first year (almost certainly by second year Associate), part of your bonus shifts to some deferred cash and/or restricted stock
Vice President (another 1-3 years to promotion)
$250-300k base salary
$0-400k bonus
Bonus will be more heavily skewed towards deferred cash and restricted stock with a vesting schedule of 1-3 years
Director/Senior Vice President/Executive Director (different banks have different names; this can be 1-10 years to promotion, and some people simply never make M.D.)
$300-400k base salary
$0-$800k bonus
Note: $0-400k bonus range more typical for IBD; upper end typically reserved for traders with exceptional years
Bonus will be more heavily skewed towards deferred cash and restricted stock with a vesting schedule of 1-3 years
Managing Director/Partner
$400-500k base salary
$0-$1mm+ bonus
The sky isn’t really the limit here, and tends to be capped in the 7 figures unless you’re head of a top producing desk at one of the world’s biggest banks, head of an entire division, or a C-level executive
So the vast majority of MD’s are getting paid $1-2mm, but we know several who make more like $5-10mm
Bonus will be more heavily skewed towards deferred cash and restricted stock with a vesting schedule of 1-5 years
Good luck with your year-end comp conversations, and feel free to submit anonymous comp data to [email protected]!