Should I switch from IB to RE acquisiton / development?

Hi, I'm currently 4 years into IB (joined out of undergrad) and currently an associate at a BB. I'm contemplating switching over to a RE acquisiton and development role. 

From my perspective, the pros and cons for me are:

Pros

  • I enjoy being entrepreneurial and think that fits better with acq / dev longer term 
  • Out of all the buyside roles, I'm most interested in RE
  • Not really a pro, but I imagine this is probably the last chance I get to switch roles before locking myself into banking for another couple years (I don't see myself in banking for the long term though) 
  • Lifestyle is probably better 

Cons:

  •  "step back" and starting as a fresh associate again 
  • All in comp is lower by about 45% (this is probably the one I'm hung on most about) 

Would really appreciate any advice or if anyone had been in a similar situation of switching from banking or from a different industry. 

Comments (4)

Aug 11, 2022 - 1:25pm
Steam, what's your opinion? Comment below:

Why are you "most hung up" about all in comp being 45% lower? You said it yourself, you enjoy being entrepreneurial - what does that even mean? You think you're gonna become entrepreneurial and double your IB salary immediately at the same time? You've done 4 years in IB, you shouldn't need someone to explain to you at this point that the benefit comes down the road…but alas, here we are.

Array
  • Analyst 1 in IB-M&A
Aug 11, 2022 - 1:36pm

My belief having interned in an acquisitions role at a dev shop before switching over to M&A was...

- if you're going to go over to RE, either target MF/UMM repe where the all-in drop off in comp isn't as severe (maybe closer to 20%), or target a fast-growing smaller development shop in an acquisitions/finance role where you can be healthily rewarded with some carry in the one-off deals 

- IB with the recent pay increases has become very attractive and unless you are considering those two options, may not be worth it to make the jump

Most Helpful
Aug 11, 2022 - 2:16pm
CapRate_Compression, what's your opinion? Comment below:

Hey man - I made the switch over from IB to RE acquisitions (on the GP side vs LP side). I did banking for 2 years in the southeast. Here are my thoughts / takeaways:

  • Re: Comp
    • 2020 was the first full year I had but 2020 was a weird year with COVID and being less acquisitive given the shitshow the market was. I definitely made less than I did in banking by a good bit but I attribute this to COVID. I was associate (reported directly to CIO) and received carry on a few deals. I'm not applying any value to this. 
    • 2021 - promoted to director. Cash wise, made more than I did in banking and continued to receive carried interest.
    • The comp drop might feel bigger to you given you stuck it out longer but the other perks of leaving may mean more to you.
  • WLB
    • Significantly better. I probably averaged 50 hours a week with no weekend work. I think I worked till midnight less than 5 times. This part was huge as I got to start living a real life and do things during the weekdays (i.e. date)
    • I could also travel and unless we had a live deal under contract, my time off was real time off. Also, I could work in a market I covered and not have to go in the office.
    • I had a ton of autonomy which I valued.
  • Coming from Banking - made a huge difference. Allowed me to rise the ranks faster and I was "smarter" from a financial and equity side. Had to learn the actual RE side despite coming from RE IB.
  • GP vs LP side
    • If you joined the LP side - you can make more cash and should be able to come in as a associate or senior associate and possibly make $2-300k+ easily a year. Trade off is you'll work more and may not get carry as soon.
    • GP - you learn the business side a bit more if you wanted to start your own fund / company. LP - you're a bit more hands off operations at most funds.
Aug 11, 2022 - 2:23pm
crerepe21, what's your opinion? Comment below:

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