IB offer vs PERE offer
I’m looking for some insights from the community. I’m a graduating senior with an IB SA offer for a smaller balance sheet bank doing Levfin and an offer to do PERE at a smaller startup full time. The bank apparently converts really well for summer analyst and pays just below street and is in a LCOL city. The RE opportunity is low pay considering the industry, HCOL City, but offers carry, which is rare to find directly out of school. The founder has billions in RE transactions as well from past companies. Just curious to see where others heads would be at in a situation like this?
Choosing between an IB offer and a PERE offer depends on your long-term career goals and risk tolerance. Here's a breakdown based on the most helpful WSO content:
Investment Banking (IB) Offer:
Pros:
Cons:
Private Equity Real Estate (PERE) Offer:
Pros:
Cons:
Key Considerations:
WSO Insights:
Ultimately, it comes down to your personal goals and risk appetite. If you’re unsure, IB might provide a more versatile starting point, while the PERE role could be a high-risk, high-reward play.
Sources: Early IB Offer with exploding deadline - months before normal recruiting, Rising Junior Losing Hope and In Need of Advice, New Graduate Offer Decision: Forbes 40 Corporate Development vs BB IBD (ECM) vs BIG4 Corporate Finance, Intern Return Offer Rate, Canada IB vs PE Comp Megathread
Has the founder been successful capitalizing deals at his new shop? What are the conditions to the carry? If you end up hating the job and quitting early, that carry might not be worth anything.
Shop is sub 6 months and founder has gone underway on a few deals, nothing closed. Carry takes a few years to vest. So yeah could end up worthless.
Is the shop focused on multi and based in Miami?
Would take IB offer. Provides the most optionality going forward which is important unless you are 1000% sure you want to do RE. And even then IB on your resume will open doors you wouldn't be able to otherwise.
Would take IB offer, probably offers the least risk for you in your early career given the all the diff career paths that’ll open for you after that experience. You can 100% do RE after that experience, and go for pretty much any other field in finance. I’d try to still have a close relationship with that RE startup because it can very well be a great opportunity and working with a small team can offer tons of opp to grow and learn about the business.
As someone in REPE, I'd suggest taking the IB offer. These small real estate shops are notorious for underpaying and having little career growth. If you want to join a small real estate firm later in your career, the door will always be open. These shops always need talent and love ex bankers who are willing to be underpaid. But the door to IB will shut.
I’m curious, what’s your asset class and fund size?
First company was a deca-billion dollar fund that invested in everything, mainly multifamily. Second was a $50M fund that did mainly office. At the first company, we had a team of top lawyers, accountants, and vendors for DD. At the second company, we hired the same people but the CEO always paid for the cheapest and shittiest talent. It was a terrible experience.
Go for a bigger and established company if you can. Don't listen to people who say go to a smaller company so you can learn more. I know more about real estate than guys at Blackstone, but who do you think is on a better career trajectory?
This is an interesting take as I’m currently in a big institutional firm and I was thinking of going to a smaller shop to learn more… are you saying the on balance is this the worst choice?
I'd say it's largely dependent on comp structure.
You really gotta find the right small shop, they are not all made the same. The big shops kinda all blend into one, culturally speaking, because they're fighting for the same deals, raising the same institutional capital, feed from the same schools/programs, etc.
Small shops can be a few scrappy guys raising capital deal by deal and just scraping by hoping to hit a home run, to an established guy running a lean team and hitting singles/doubles all day, to a cushy family office job that's low stakes but middling deal experience. Each comes with pros and cons depending on your risk profile and personality type. If you want to go and hit the pavement and fight real hard and earn a few points, maybe the first one doesn't sound that bad. But if you have a mortgage and are tired of the rat race and just want a nice job that leverages your real estate experience, the other two might be better.
I worked at a BB so I'm biased, but as others said I would not turn down IB for the other opp described. Getting a full time IB offer means you can lateral for other banks with some experience or jump to RE. The door on RE will not close. You're early.
IB. These smaller REPE shops are everywhere and if you have an offer from them now, you can most likely keep the door open for future opportunities with them, esp after proper IB experience. Also carry is worthless unless you're planning on staying for 7+ years, which would be very impressive for the first gig out of school. If you want to commit to CRE longer term, broadening your financial experience early on is only a benefit IMO.
Starting at the wrong small shop RE firm can seriously stunt your career growth. It’s not a choice. IB all day then RE later, if you choose so.
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