Switching from Equity to Debt
Hi all! I have 6 years experience on the equity AM side. I have a strong job opportunity on the debt AM side. I like the firm, comp, culture, etc. If I switch to debt and then decide in 2 or 3 years I want to switch back to equity.. would it be difficult to do so?
I've also been trying to relocate from SF back to LA.. and this position would get me there. I've been applying to equity positions for about a year now with no luck.
Thanks!
Switching from equity to debt asset management can be a strategic move, especially if the firm, compensation, and culture align with your goals. Based on the most helpful WSO content, here are some insights:
Switching Back to Equity: Transitioning back to equity after a stint in debt AM is possible but may depend on how you position your experience. Debt AM often involves a focus on downside risk and loan performance, which differs from the upside-driven nature of equity. However, if you maintain strong networking ties and can articulate transferable skills (e.g., underwriting, financial analysis, or portfolio management), the switch back to equity could be feasible.
Relocation Advantage: If this debt AM role helps you relocate to LA, it could be a significant advantage. Being in your target market might open up more opportunities in equity AM down the line, as proximity often plays a role in networking and job availability.
Market Realities: Given that you've been applying to equity roles for a year without success, this debt AM opportunity could serve as a strategic pivot. It allows you to stay active in the real estate finance space while potentially broadening your skill set.
Long-Term Considerations: Debt AM can offer unique exposure to different aspects of real estate finance, such as loan servicing, origination, and risk management. These experiences could make you a more well-rounded candidate for future roles, whether in equity or other areas of real estate.
Ultimately, if the role aligns with your immediate goals (relocation, strong firm, good culture), it could be a smart move. Just ensure you keep networking and stay connected to the equity side to keep your options open for the future.
Sources: Q&A: 3rd Year PE Associate ($10bn+ AUM, MBO/LBO, equity, mezz, distressed debt), Private Debt/Direct Lending Exit Opps?, Moving from Asset Management into IB / PE, https://www.wallstreetoasis.com/forum/asset-management/transition-from-data-science-to-asset-management?customgpt=1, Moving from Real Estate Acquisitions/Asset Management to RE Debt?
I started on the debt side, at a bridge lender that originated and serviced all of their deals. I was there 4.5 years, but it took me almost 2 years to move into equity. This wasn’t because the market was slow, this was 2017/2018, but because I had to convince people my skills were transferable. I had deep Argus and financial analysis experience, but it was often seen as “lender-specific,” and I risked getting pigeonholed.
You’re going the other way ( equity to debt) and that gives you some built-in advantages. Six years on the equity side means you’ve seen deals from the principal perspective, understand the underwriting assumptions, and know how sponsors think. That’s valuable context for a lender. The main question you might get: especially if you’ll be on the debt side for 3+ years, is why do you want to move to back to equity in...2028? It’s less of a concern if it's a shorter stint. You could frame it as wanting to gain asset management experience during a turbulent market, working on distressed or transitional loans, and broadening your exposure to different deal structures.
Related to a relocation question, it is always easier to break into the local market while there. I say go for it. You'll probably get more leads while in LA than you are seeing in SF. Just make the time to network, attend HH, and get out from behind the desk.
I hope this helps.
Depends entirely on the shop and what the actual description of “Debt AM” is. Some shops it’s basically another name for Loan AM and other more strategy and PM based. The latter is a much more reasonable move compared to the former which would be taking a step backwards and way less rewarding work. Basically, forming fund/account strategy, input on deals working with originations, etc. vs dealing with administrative borrower asks and spending hours a day formulating a memo as to why the DY/DSCR moved .0001bps and is now at 9.99999%.
And just to be clear, Loan AM is not necessarily a bad career path. It’s crucial work and these guys probably know loan docs better than anyone in the industry which is pivotal. But, it’s mundane work and can be a significant shift from equity AM.
Really just depends what firm and what kind of work you are doing. If you are at a high yield shop and end up taking back properties or working on heavily distressed workouts, it will be way more transferable back to equity because your viewpoint will be that of a lender protecting downside + if you get a property back an equity owner trying to recover/build value.
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