Institutional Dev to Local Player
So here's my situation -
I've been a developer at one of the top institutional developers now for ~4 years. Started as an analyst (out of UG), now an associate and probably a VP in another year or so. I've done really well, I'm working on some pretty unique deals and I've made a ton of great connections and relationships in the industry. I was recently approached by a small, but powerful, locally-based developer in one of the markets I focus on, to primarily focus on sourcing new opportunities and spend a little time on some of their current pipeline.
The firm is small (15-20 employees), but they've been very successful and are well-respected. They've been successfully developing, building, and managing for 40+ years and are now expanding into other states. The firm is well capitalized and carries a lot of weight politically. They offered me a significantly higher base and almost doubled my bonus, but more importantly, an opportunity to receive carry on deals I source/work on. Granted, these structures can be a gray area, but the opportunity to get a piece of the promote is huge. This is currently not an option where I'm at now, and will only become one if/when I become a partner (5+ yrs), but even then, the partnership structure is not great.
My goal has always been to eventually go out on my own and develop my own deals, so this opportunity seems like a no-brainer. I'd get to work with a proven developer and get a real feel for the entrepreneurial side of the business. It's really hard to get that at an institutional shop. However, I wanted to see if others on here have gone this route and get their feedback. Is this the right move? What more questions should I be asking? Etc. I'm leaning heavily towards making the jump, but would appreciate some insight from my fellow chimps.
Thx
Sounds like there isn't a lot of downside here - just because they're not a huge 500 person company doesn't mean they're not reputable, and 40+ years in the business speaks well of them. Generally speaking, here are some questions I'd be asking:
- what is the story with their back office? This isn't a startup, so I'd expect that have all this figured out, but how do they deal with legal issues, with AR/AP, do they have controllers/bookkeepers/accountants? How much of that work will you be expected to do?
- what is your role going to be? You say you'll be both sourcing new opportunities and spending time on their existing pipeline, but what does that balance look like? What do you want it to look like?
- Are they going through a change in management? I'd be marginally concerned if maybe this is the second generation stepping up to a leadership role and deciding that they'll make their "mark" by expanding a successful business into new areas. Not that this is always bad, but if you've got some relatively inexperienced principals starting to get out over their skis, that might be a warning sign. You say this firm is politically well connected, which probably accounts for much of their success... but trying to execute on the same strategy in another state where you have no reputation or track record sounds like a potential recipe for failure, one which you don't want to be left holding the bag on.
- ask to talk to existing staff. They'll give you way more info, and honest at that, than the people running the interview process
- what does future expansion of headcount look like? As in, where will you be in 5-10 years? Still just sitting on an island, sourcing deals? Or running a team of juniors and executing on those deals (assuming you are successful, of course)?
Given that the base and bonus are higher and they're a well established player, there doesn't seem to be a lot of downside. You definitely should talk to people that work there, see what culture is like, how long people typically stay. Oz mentions several good considerations - a competent accounting department or good outsourced accounting firm is key. A bad accounting department can make your life miserable.
One potential downside to local firms is the lack of diversification. Depending on what market this is, if things turn south you could find yourself with a real lack of pipeline, or at worst out of a job. Top institutional firms typically diversify their risk across markets and offer more stability, as I'm sure you know.
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