Help Evaluating Development Job Offer
Current situation:
Development Manager at ~1BB AMU shop: ~150MM in Developments under construction, the rest in existing acquisitions. The company currently has a GP fund dev fund that would allow for up to ~six projects (two under construction, one site that has been bought and entitled that we are sitting on waiting for capital. I'm the only full-time employee staffed on development projects, virtually no outbound acquisition activity, and just let a good site fall out of contract. The company seems to be heading in a pure acquisition direction, hiring multiple director-level staff to raise and deploy a 100M acquisition fund. It feels like they are basically "optioning" me to give them time to decide if they want to continue with development projects, giving me lip service of a potential promotion, and hiring a team to staff and build a standalone development division. We are understaffed by 4-5 people, compared to other shops doing similar volume of work. There is disagreement at the partner level on whether to continue to pursue development, and it appears the acquisition side is winning the argument. If I had to guess, I'd say there is a greater than 50% chance we do not continue to develop in the future and will just finish our current projects.
Salary: $140K
Bonus: undetermined (best guess is 20-30%)
Carry: 1% of promote from all investments, 2-year vesting. The likely payout would be $150K starting 5-7+ years from now.
New offer:
Genuine Family office (all equity investments without leverage or outside capital) with a backlog of roughly 15 sites, the full org chart is hired out, with me being the last of two hires to fill out the team. It equates to being a lateral based on responsibilities, and the total and deferred comp looks about the same (more reliable comp, but less upside compared to current position).
Salary: $130K
Bonus: 50%
Stock Grants: $100-150K dividend (5-year vesting, payout beginning at vest).
Pros of the new offer:
- Family office with a backlog - little to no risk of being laid off or stopping development in the near term.
- Full team and support staff in place. My current employer has messy books due to a lack of qualified accounting staff, zero IT support, and no process.
- Mentorship opportunities from MD/C-suites. Currently, no mentorship unless they hire MD to run dev team.
- Not required to deal with banks or capital partners, compared to current employer, which operates off of a JV/debt model.
- Potentially more pride in work due to better organization
- No need to scale the team
Con's:
- 5 days in the office with a moderate commute, formal dress attire (not opposed to this as I see this as the only way actually to be mentored), the office is located in a suburban office campus (no lunch spots/bars nearby). This is compared to full remote and my current job.
- Very formal environment, not a lot of flexibility in office hours. Compared to the current employer with complete flexibility, progressive environment, and lack of standards for work product (think A-/B+ work vs. C- at current job)
- Frequent travel (all projects are out of state). This would be 2-4 day trips a month vs. 1-day trip/month at my current employer.
- Would be leaving current employer after only ~2 years. My resume already has a lot of shorter employment stints, so I think I will be locked into this job for the medium term.
- Would not be able to finish current projects. I have a gap on my resume for a cradle-to-grave ground-up development (I've seen all sides in my career just have not finished on cradle-to-grave)
There are a lot of qualitative things here (remote vs. in-office), that I know you all will say is a personal decision, but I would genuinely like to hear everyone's thoughts about this (and the why), but I'd like to hear everyone's thoughts as if they had to make the decision personally.
Thanks in advance for all the advice.
If you want to do development, then it is hard to argue that you shouldn't take the new job given that you know the future projects at your current place are limited.
That said, with a true family office, you are one family member's death away from a full scale change in investment thesis. If the Matriarch/Patriarch passes away, there is nothing to say that the kids don't liquidate everything and go on a shopping spree.
If it were me, the biggest question is always one of capital. Who has access to more and if/will things change.
Do you think this is inherit to all family offices or is the risk higher at shops? What kind of questions would you ask to try and assess the politics and dynamics of the board?
The family office has more access to capital - they find there projects with all equity by pull money from existing assets. Good advice here.
Inherent to any family office. In theory, family offices are setup to keep the heirs from having to do too much and still stay wealthy, but when mom/dad/aunt/uncle dies things change.
I would be looking at the employee structure. Does the family's next generation work there/have any involvement? What are their passions (are they philanthropic, do they spend their time being playboys/trophy wives, do they work in a very different field?). If the rest of the family are doctors and lawyers, but the family made the money in farming, then I would want to make sure that the company that made the money is headed by a good CEO (an heir would be great, but at least not still founder led without an heir apparent) and that the leadership of the family office has the long term support of the family.
I work at a debt fund inside of a family office, but the one I'm at has been around for 20+ years with a very robust employee/investment structure with hundreds of employees. Yes, a specific group could go out of favor (and has in the past), but the whole company isn't going anywhere. If you told me it was a 4 person office, I would want assurances/to talk it through with leadership.
My understanding is the patriarch to the family passed away 20-30 years ago and wrapped the money up into the company and issued shares to his descendants. The company has been operating for 50+ years, I don't believe any members of the family actually works there.
So of the patriarch already passed away and the shares were split up, there should be less concern that the company would dissolve because usually what happens is those kids have kids (grand kids to the patriarch) and shares would be divided among them.
Since the capital seems solid, I'm not sure why you wouldn't take the job or at least see if you could negotiate the offer to match your current gig. 10k isn't going to break this family.
What city is this in and what markets/food groups do you primarily operate in now, and would at the new company?
Large west cost city. Both operate across the entire cost and Mountain West. My current company develops both garden and mid rise product, but we can’t make anything pencil for new projects and have shelved one site entitled.
New company is building self storage and has 16 sites banked, they own a large portfolio of core industrial as well. They plan to continue developing light industrial once deals start to make sense again.
How many projects is the current firm working on? Are they bringing in any fees? What about land, did they take down the land and are paying for some debt/pref, or is it an option deal and your firm isn’t at that much risk?
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