How difficult or easy is it to lateral into Acquisitions from Asset Management? (Real Estate Private Equity)

Thank you very much. This was exactly the kind of reply I was hoping for.

As I mentioned in my first post, the firm has an opportunistic/value-add investment strategy, and from my discussions with the firm's MDs it seems that the Acquisitions and Asset Management groups have a lot of overlap and essentially work as one group fulfilling two functions (I assume this is so the Acquisitions analysts can more accurately underwrite value-add and ground-up development transactions, as you mentioned).

My main concerns regarding the position are that 1) the firm is relatively small and doesn't have a very recognizable name, which may hurt me when I apply for a Master's program, 2) it's an AM role when I know I'm qualified for an Acquisitions role, and 3) it's in a city that I'm not particularly interested in moving to.

I guess I could always do AM for a couple of years, then get a few years of Acquisitions experience before applying to grad school, but, as I've mentioned, I'd rather go straight into Acquisitions. And it seems like an Acquisitions position in a group like the one I've been offered a position for would be ideal, but, of course, I've been offered an AM spot.

I think I may decline this offer and focus on Acquisitions jobs. I'm just concerned that if the summer comes before I'm able to secure an offer with an Acquisitions group, then the job market may slow down for a few months.

Thanks again for your response.

NealCaffrey:

I've checked almost all of the previous threads on this topic before and understand the differences between the two.

What I don't understand is the apparent notion that it isn't very likely to transition from AM to acquisitions. Is this even true?

I mean it seems like it's almost a natural progression. In AM you actually execute the whole investment plan that acquisitions dreamed up. You have a far better grasp on all of the assumptions than any candidate from REIB or a purely acquisitions background. Assuming you are just as financially adept as the people with IB/acquistions backgrounds this should be a no contest.

So why is it difficult to switch?

It depends on the firm culture. At many REPE firms, guys on the acquisitions teams often have done work in AM, and even research as well. Some firms, compartmentalize ACQ and as such look for pure transaction guys.

bump for more info

Asset Management and Acquisitions are sometimes in the same department (in smaller firms), or separate (in the case of larger firms).

I agree that having AM experience is helpful in acquisitions as it should help you make better assumptions within your investment model. On this same train of thought it would seem that having property management, property accounting and leasing experience would all aid an acquisitions individual in his ability to do the job well.

The most important skills needed in acquisitions are financial modeling, due diligence and transactions (dealing with lawyers, structuring the deal, negotiating purchase agreements etc.). The other departments such as AM/leasing will help to derive your inputs. Most firms will have checks and balances so the AM and leasing employees will sign off on the inputs into the acquisition model assumptions prior to the end of due diligence.

Where is the best place to get financial modeling and transactions experience? IB, investment brokerage, etc.

As such, many people do make the jump from AM to acquisitions, but the more transferrable skills come from other roles.

Generally speaking, I believe that people in acquisitions are much different than those in AM. Usually much more financially inclined and enjoy the hard pace of a deal.

I agree, it's baffling as to why am guys aren't more sought after for acquisition roles for all the reasons the op mentioned (knowledge of what bp will really work, how to structure management agreements etc to get the most out of the partner). I think what happens is that AM people come to be seen as less deal focused and fast moving as they get more senior. It's ridiculous really as you have a danger of having people who do deals because they love doing deals and so performance suffers. A good shop though will have a lot of integration between the two teams at the DD stage.

It's not impossible to switch though, especially at the junior level. I've actually just left one fund where I was an AM analyst for 2 years and will be moving into a role with much more of an acquisitions focus for a different fund. I've known people who made the switch much later as well though.

I think it also depends on what kind of AM you do. For example: most reits (and I'm based in Europe so this is what I've seen) class AM as negotiating leases, doing refurbs etc. really hands on property stuff basically. The problem with this is that your knowledge and thought processes become quite micro focused not to mention you don't come across financing and so on. The shop I was at, having a large number of investments and a small team, outsourced all the day to day and so we made the final decisions, came up with the overall strategy and also kept a handle on what the decisions did in terms of impact on financing. These skills I think are much more transferable to acquisitions as you know how to look at the whole picture.

Basically AM is a very good place to learn, I've picked up a huge amount of knowledge of assets and markets that I wouldn't have in a pure acquisition role. If while you're doing that you also keep an eye on the macro level side in terms of investment strategy then it shouldn't be too hard to switch as all you're lacking is to have completed a purchase and that's just a process that can be taught quickly...

I think this might have been touched on in old threads, so check that out, but my suggestion is not to worry too much about pigeonholing yourself that way. If you spent several years in brokerage then you probably already know this: reality is there isn't a ton of acquisition activity or construction going on now or any time soon. It is possible to transition from asset mgmt to the deal team. I just would try to do it sooner than later, even if you have to step down to a smaller shop.

Don't take my word for it, though. There are some other good guys on here that can talk about this.

Thanks Prospie. Anyone else have any thoughts?

If the firm you are at has an acquisition group, you offer to support their deals and slowly make the transition/learn the business.

How many years have you been doing this? Core funds are not generally regarded as extremely intellectual Asset Management jobs (core properties by definition do not require a ton of strategic asset management, more mundane lease rollovers, basic building improvements, low leverage). If you're an analyst, cool. People view this on par with banking if you are at a big shop. If you are older, it may be tough and business school may be the route. I think you should speak with the regular head hunters and see if they think you are in a good position for the Normandy / Savannas of the world.

Could you provide a little more clarity on your background? Did you go to a target, semi target, or other for undergrad, & how strong was your GPA? Is this your first job out of undergrad & how many years at your current firm? Are you targeting only primary markets (NYC, SF, LA, & as well Chicago) or are you open to secondary / tertiary markets?

Good points from megawatt and DB. If you're looking to transition from AM to ACQ, then try to make the switch internally. It can be challenging otherwise and other firms will ask you why you don't make the switch internally and no matter how you respond they will assume that your firm doesn't like you enough to facilitate that transfer (sorry - sounds harsh but it's true). It tends to be easier for folks to transition externally from ACQ from AM. Good luck.

My shop is smaller than the ones you mentioned but in the same peer set. We have an analyst and associate who both switched from AM to Acquisitions within the past year.