Acquisitions DD/modeling - side gig?
Hi y’all,
This is not really in my wheelhouse so was hoping to get thoughts on this. I’m looking into a side gig (that may grow into a full time role) with a small shop. Really small family office focusing on multifamily. It’s a 1099 contractor role. Not sure to charge hourly or a flat/fixed fee per deal? I would be the only acquisition guy and would be the lead on underwriting deals, due diligence, and sourcing debt and helping line up investor equity.
What is a reasonable amount to charge? Does it make sense to charge hourly or by deal?
Thank you!
Based on previous WSO threads, here are some insights that might help you decide on your compensation structure for a side gig in acquisitions due diligence and modeling:
Compensation Structure:
Hourly Rate vs. Flat Fee:
Factors to Consider:
Example from WSO Context:
Recommendations:
Conclusion:
Ultimately, the best approach depends on your comfort level with estimating the workload and your preference for predictable income versus potential upside. Open communication with the family office about their expectations and your compensation needs will be crucial.
I'm sorry, but it looks like this may be out of my ability to answer... maybe some of the links below might help?
Sources: The Truth about "Hours" at the Analyst Level, 6 months on the job in PWM: 3 things I noticed, MSF -->> Big 4 Valuation Q&A, Does not seem fair how much money we are making compared to other industries, What is reasonable comp for an Associate at a Fundless Sponsor doing deals at $50m-$500m+ EV?
I started out doing this. Here is how I did it, results may vary / you may need to do more cold out reach to people to pitch your services.
> Started on upwork.com / $30 USD an hour > got first few good reviews > increased rate $60 / hour > 1 or 2 more reviews > raised rate to 125 an hour > brought clients off of upwork to do direct billing after that. Upwork great for initial boost to build your sample work (very important as you use this later).
> Start your own site, post your sample work on there (you can actually do this step 1). Cold outreach to people you want to sell to. Easiest are transaction based people because you just slide into the deal fee and they're less cheap than owners. Middle market also good opportunity. Retired or older folks also good opportunity as they heavy into relationships and don't know how to create OMs or excel models.
> Charge per project, not per hour
> collect 25-50% deposit upfront, deliver watermarked work in PDF, ask for final payment > deliver final product.
> start a wine bar in portugal
Deleted Unrelated Tangent
How long did it take to get the initial Upwork gigs?
Did you specialize in a specific niche or asset class? Like I only do Multifamily acquisitions?
Is that too narrow? Do I need to learn retail, office? Or even underwriting development Multifamily deals?
Been trying to get this going but having difficulties
Upwork has gotten a lot more competitive. Keep in mind my upwork period was during the crazy hot markets of last few years.
There is more international talent bidding rates at 10-25 usd an hour. Hard to compete now. Don't focus all in on upwork, check it once a day or every few days max and just set up your profile to public if you're comfortable.
Your main focus has to be about reaching out to potential customers. Create a fake sample presentation, pitch deck, excel deal analysis, etc. and start sending it out to players in the industry trying to set up calls, add value, etc. You're essentially an agency at this point so you can research how agencies find clients.
To answer your question, unless the deliverable is very clear, I'd charge per hour. That role in your write up sounds way too general and I could see the scope always increasing if you do a project based fee. Scope creep.
You could charge 75 per hour on the low end, 150 on the high end.
another idea is to take a % of the acquisition fee your firm charges. You could do 20-40% of the overall acq. fee as a starting point in negotiation.
I've done this in the past and by the hour is necessary. a lot of the people looking to outsource modeling are relatively unsophisticated and uncertain on exactly what they want. I would've blown my brains out with some of the requested edits if it wasn't by the hour.
I was $80/hr but suspected I could've gotten more. I only requested payment at completion of the model, that made the relationship run smoother and I never got screwed but it is a risk.
This is also your value-add over someone thats $15 an hour over seas, you can (or should be able to) explain how the model is functioning and interpret their requests.
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