2018 | Thinking about Acquisitions or Debt at this point in the cycle

How do you all view going into acquisitions at this point into the cycle or going into a private debt fund?

Do you have reservations making a move? Or are you content going into either or if it's a big enough shop?

17 Comments
 

Be mindful of where you go - but no need to avoid acquisitions altogether. Companies that have been piling on leverage and relying on speculative rent growth/leasing assumptions might be a risky move, but that doesn't describe everyone. Lot of shops have a lot of dry powder and are waiting for a pullback to deploy- definitely wouldn't expect mass layoffs across the board.

Haven't worked on debt side, but I have heard that space is getting more competitive. If you are convinced on an impending downturn, wouldn't rule out AM side if the funds start taking buildings back.

 

AM hiring is up across the board for this reason. A lot of firms are pulling back on acquisitions and focusing on preserving capital and asset managing their existing portfolio. That said, there are also still plenty of active groups out there with lots of money to put out and groups that are conservative and diligent with their acquisitions even the current environment. As others have alluded to, it all depends on the group, but I would definitely be cautious about which one you are joining since acquisitions folks seem to usually be the first to go when the music stops.

 

When there's a dip the returns also become more attractive, so as some alluded to above if a firm/fund is well positioned they may actually look to increase acquisitions headcount, especially if the firm's profile is an all-cash transaction basis. I for one would welcome a tempered downturn since I could actually get some decent returns for a change.

"Who am I? I'm the guy that does his job. You must be the other guy."
 

If companies are leaning toward hiring more AM personnel, does that mean they get paid more of a bonus at year end since their expertise would be more valued at this point in the cycle?

 

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