A broker I used to work under called me about a deal he was working on where the lender was potentially thinking about selling. This is a high-er profile asset and he said he only had permission to go to 2-3 groups as the lender didn’t want anyone getting word they were shopping the deal. Before he would even tell me any info on the deal he had me confirm that we would keep this deal internal and not talk to any operating partners about it just yet, he just needs and internal yes or no before we could progress to signing a CA to get more DD and have conversations with our GP. I worked with this guy for 3+ years so I actually trust what he is saying to be true here. I vocalized the deal with our CIO and briefed him on the confidentiality and my relationship with the broker. As soon as I walked out I immediately heard him on the phone with our operating partner giving him all the details I just asked to keep internal. I fully could be getting played by the broker here, but I kinda feel disrespected and pissed off that my CIO would completely disregard what I just said. Should I be pissed or is this a nothing burger?
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Yes, you have a right to be pissed. If you really trust the broker, it can definitely lead them to losing trust in you. Which can affect you in your current role and also chances for you at other shops down the road. Maybe a few days down the road explain it could risk seeing deals in the future, reputational risk, etc. In my limited experience the higher ups are always concerned about reputational risk and value being seen as stand up guys that follow through with stated intentions and confidentiality.
You could also be getting played, and it turns out to be a nothing burger that you laugh about the next time you grab drinks with the broker. I would just prefer that the broker codes the ask in a way where you pick up on his/her true intentions while still giving them plausible deniability on the confidentiality front.
Zero experience in brokerage fwiw.
This was exactly my line of thinking. Thanks for being a sounding board.
You should be pissed at both the broker and your CIO. It's a breach of trust from your CIO and a shitty move in general from the broker. What does he expect you to do? Raise the capital yourself? It's not like he's giving you an exclusive look at this - he's marketing the deal, he just doesn't have an exclusive himself so he's looking out for his own interests ahead of yours.
There is never a good reason to keep your word to a broker. They won't do it for you, and they need you more than you need them.
Should have mentioned we’re a SFO, there’s no shortage of capital here. Can’t say I agree on your assessment of brokers, while they do have their own interests in mind, there are some good ones out there who are straight shooters.
The broker asked you for confidentiality before you signed anything, but had already sent this deal to at least 2 other groups that he told you about. He's asking you to prioritize his interests over your own. In other words, hardly a "straight shooter".
Brokers can be trusted to do what is in their interest. If it aligns with yours, great. The second it doesn't, you get thrown under the bus. If there was such a thing as a "straight shooter" in the brokerage community, they'd be making representations to you, in writing, that they'll act as a fiduciary.
Go ahead, ask the brokers you trust to sign something to that effect. Cue the laugh track.
Look maybe since it's off market and a well known asset him and the partners know the owner or have discussed the deal before. You can't control what people do and a broker doing that going to 2-3 guys doesn't have real control over it. If they wanted to sell and there wasn't a major issue that they wanted to keep private, there's no reason the broker shouldn't want it out there.
Sounds like the owner said sure I'll sell bring it to 2-3 guys and get me a number, then I'll decide if I'm interested. In other words doesn't seem like a real deal or a real seller. People on the ownership side use brokers all the time for information, etc without really meaning to follow through.
Also, you did what you told your friend. You only went internal, you can't control what other people do so if he brings it up and asks just say I told my CIO and mentioned to keep it quiet. I'm sorry he didn't do that, but if he doesn't bring it up then don't mention it.
There could be 5 other brokers shopping this off market to 2-3 guys you never know.
Call your friend and say you ran it by the CIO and expressly told him to keep it confidential. When it eventually gets back to the broker you just shrug and roll that shit on to the CIO. He is the one who ran his mouth.
With that said, I agree with others in saying that this is not a real deal. The owner is likely ghost shopping the deal to figure out what the market thinks it is worth to decide if they will take next steps on a refinance. It is basically free to get market sentiment on value rather than paying for a formal appraisal during a refinance process to get your legs cut out from under you by the bank.
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