How do you make it starting out as a broker?
Currently working as with a private investment firm, but we keep hiring senior level candidates to partner level titles which gives me hesitancy that my mobility upward, as well as the feeling that receiving meaningful carry will be limited in the next 5 years.
Recently I received an offer to hop on with an team at a startup D/E broker who splits profit 90/10 with their company. They have 60 deals in the pipeline between two people on the team, and are working on big deals (multiple $250M+ deals). Some of these are contractually agreed upon 2-3% fees for equity raises which would equate to ~$1M in fees and my contract agreed if I joined on we would split 50% of the fee. I have never worked on the brokerage side, but closing on any of these big deals would result in much more than I'm making now. I am not required to bring in deals, and a client and D/E partners database is already established so the need to bring in new partners also isn't a priority.
As brokerage jobs are commission only, I get no benefits or salary. I was just curious how people working in IS or D/E as a broker starting out deal with no money? I don't have the ability to take a draw either, so I'll just be burning through my savings until we close a deal. Any insight how your experience went starting out?
Most younger people seem to rely on their parents. My former boss worked at a restaurant part time and had help from his parents. He did that for 3 years before feeling comfortable enough to do brokerage full time. All the younger guys either had wives who worked or lived with their parents + worked part time. There was no draw at my former shop either and it was a total grind with not much mentorship. As a new grad with only internship experience it was a mistake and I failed out after a couple months. Just couldn’t handle it further financially. So I’d have a plan in place because it can take a while for deals to close. Make sure it’s a good plan too not like mine where I was like, “nah it’ll be fine.” It wasn’t fine at all lmao.
I think the benefit for this role is essentially me being a tag along for the time being as the team I'd be joining already has to many deals in the pipeline to manage. I wouldn't have to bring in deals and I have two deals that if they close by the end of the deal I'd get $500k+ for each. I've never worked at a brokerage, and the thought of being a contractor with no real scheduled salary is not something I'm super keen on, but the money is enticing.
I got offered a broker role at the big 4 brokers on the commercial side, but hesitated as I needed to build a rolodex of clients, here I feel the clients are there, the deals are there, I am just taking it from post-origination to close.
I’m a failed broker so take what I say with a grain of salt, I also recently graduated so make it two grains. The money is super enticing and that’s why I took my first role as well, deals fall apart though and then you’ll be shit out of luck. If you have the savings to get by for 8+ months then go for it or if you have some other way to get by.
Again, brokerage is hard so just make sure you actually want to do it. If you don’t get paid will you put in the work for weeks at a time without any guarantee of seeing a reward? I’m going to give brokerage another shot in the near future but I’ll be better prepared and know what to expect second time around. I’m not going to tell you to do it or not to do it. You know the nuances of the situation but just think about it don’t focus on the money alone because it’s not guaranteed.
Another point, you can keep looking and maybe find a firm willing to give you a draw. That‘ll be much better you won’t have to rely solely on your savings and can have a little bit of money coming in to keep you going. Don’t just go after the first “good” offer.
Brokerage is high risk and high reward. Be extremely thoughtful if you plan to make the jump to brokerage.
If you join a team, know if the top dog will take a cut of your pie on the first few deals you source or if they will pay you a portion of their fee. Are there any non-competes if you decide to jump to another brokerage, etc. All these things matter more than the $$$ amount you can (POTENTIALLY) make!
If all you get is a desk and a phone, I would stay the hell away. If the team gives you a stipend to take potential prospects or clients out for coffee, drinks, dinner, etc. and they give you a small sallary, $50-100K so you aren't spooked the f**k out the first year or two, then it might be worth it.
Knowing pay out structure is critical. I know guys who are directors at the big 4 who are directors, VPs who still give the MD on their team a cut of the commission. On a $100K fee assignment at 50/50 split, they might only take only $30-40K because they have to pay the MD, chairman or top dog $10-15K of their split, sometimes higher and might only take home $20-25K.
Also, know the culture of the team. Are you walking on egg-shells everyday because MD can yank a deal from you, or will you be fired if you don't generate $100K in commission after the first year? Brokerage is all about patience and staying in front of clients and prospects! Do you have what it takes to do this? Can you bro out with dudes and chicks? End of the day, the big shops are all the same, comes down to relationships to win assignments. If I change the logo and colors, BOVs from the two top shops might as well be the same. Eastdil is on a whole different level on the sale side but CB, JLL, etc also have big swinging dicks.
Also, if you are on the sales side, depending on the shop, are you making your OMs, running your own proformas or do you have analysts that do this for you? Lots of moving part and it's team and shop specific.
I personally think it's best to be on a team to understand how senior guys pitch, you can use their quals that your team did millions or billions in transactions so you can speak to the market than just use costar. Having "listings" to pitch clients makes it easier to win business or have a conversation about strategy.
If you want to be a one man shop on the private capital side, go to M&M, you will learn how to sell but get ready from junior, peers and senior potentially stealing your deal! You won't sleep or make money because there are 5 other associates making calls and you will be assigned to a micro market vs a dynamic shop with a couple of associates making calls for seniors and taking clients of seniors on tours, etc. Maybe less money but you will sleep better at night your first 2-3 years as you ramp up!!
This sounds like total horseshit.
The two brokers who sourced these deals have agreed to give YOU, who did nothing, 50% of their hard earned fees just for joining?? And you won't be sourcing at all, just running Excels? I'm sure you're intelligent but that's one expensive calculator lmao. I could see you getting 50% of the fee split for deals you sourced, but these are deals they've contractually completed before you joined - why should you get a penny?
They are either completely lying or you made this story up. If it's true and you are going to get paid $1 MM guaranteed for free, then obviously do it what a stupid question.
Gotta be a troll or just a total dumbass.
No, this is not how it is laid out. I probably did not lay it out very well in the OP.
They are saying I am leading the equity side, in which I get 50% of the fee (The two others on the team get 25% each), I don't work on the debt side of the deal, but get 10% of that fee (They get 45% each). I won't be sourcing, but if successful I am making them a lot of money. I am sourcing capital for the deal just like them, but on the equity side, the only difference is I am not sourcing the deals themselves, and they already have a database of LP investors that just hasn't been utilized yet.
Essentially I do the work of actually getting the equity lined up, but the foundation is already set with groups I can reach out to, and I don't have to bring in deals myself. I haven't even left my job, I am doing this on the side at the moment.
Raising equity in capital markets brokerage is a massive lift compared to debt so IMO this makes a lot more sense.
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