Hardest time I have ever seen to be a GP
Just here to vent. I run a small investment shop as a GP and normally bring on a sole LP, usually smaller/mid market funds or a HNW family office, etc. This is by far the hardest time in my 15+ years of being in this business to do deals.
The returns these LP's promised to their investors is too high, and LP's still expect off market deals with insane returns and zero risk. Along with that, they'll hem and haw on fees/promote even though you haven't done a deal in a year because it's impossible to find anything that checks the right box. And God forbid you bring an on market deal that you can execute on. Half the time I can't even get an answer/feedback after there's initial interest, i've spent weeks putting together comps, a business plan and a way to get the deal done.
How are GP's expected to keep the lights on? Oh, and also sign on guarantees, and pay for DD costs, put down a deposit, etc.
SUCH a tough time.
Bull market from March 2009 till early 2020.. some 11 years incl. QE / free money.. then covid madness with stimulus and other catalysts subject to sector (2y), then another bull market from October 22 till .. what.. SaaSpocalypse perhaps.. rounds to ~17 years with some disruptions, doesn’t it? Guess that a lot of GPs share this fate. But indeed a lot more challenging to get stuff done these days…
This needs to get moved back to the RE forum not PE
"Hey friend listen, I know the world is scary right now but it's gonna get way worse"
You messed up not being born into generational wealth and to a real estate father with deep market connections.
(Also, bump, now that this is back in RE where it belongs.)
“We need a 20% net IRR with full downside protection and asymmetric upside” - every LP right now
can you blame them?
In my opinion, LP return requirements are not the bottleneck on the market. Its seller expectations combined with the abundance of very very stupid capital out there.
Also GPs continuing to tie deals up at pricing the LPs don't want it at instead of just letting the bottom fall out
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