Buyout firms are beginning to think the unthinkable: their pay is about to take a big hit. Private equity compensation has been relatively strong compared with the rest of the financial services sector over the past few years. But that is coming to an end thanks to the impact of coronavirus on the economy, which is set to hit the performance of portfolio companies hard.

Private equity industry pay could drop by 15% this year, says Alan Johnson, a compensation consultant and founder of Johnson Associates. The most dramatic shift will be in carried interest, which has “evaporated” in the wake of the economic downturn, he added.