MF Debt or REPE
Im currently an associate at a top 20 REPE firm (ignore VP in WSO title - can’t delete). Joined the firm out of undergrad and expect to be promoted relatively soon. Was recently reached out to by a recruiter to join a MF on the RE debt side (KKR, Apollo, Blackstone, etc.). I decided to have the interviews and they have been moving fast and have a final round next week. I don’t really have a preference between debt or equity, but curious to hear what you guys think would be better for my career projection. I believe the pay would be about the same and I view myself growing at both firms.
If pay is the same and you see similar growth opportunities at both, then it ultimately comes down to whether you're more interested in debt or equity investing. Career potential is going to be similar on both sides, they're just fundamentally different jobs, and at the Associate level you really need to make a call as to which you're more interested in.
I’m actually indifferent to both - I find debt and equity both incredibly interesting. Is there any marginal benefit of continuing one over another (pay, career progression…)?
Not particularly unless you're planning to branch out on your own. If you're going to stay climbing the corporate ladder then the top levels should pay equally well and have similar progression/org structures.
They're both interesting, but think about the day to day of each and ask yourself if there's one you'd like to be doing more? Equity guys are more worried about the vision for an asset and coming up with/delivering on the business plan, whereas debt guys are more interested in getting comfortable with the borrowers financials, ensuring their underwriting is reasonable, and in the case of opportunistic debt investing, identifying whether the upside is sufficient in case of default. It's more about hedging the downside whereas equity is envisioning the upside.
Regarding the career potential being the same, don't equity guys earn more at the VP / MD / Partner level? Generally more carry at a given % allocation? At least that's what I've heard from many people
No - equity guys can earn more branching out on their own, but there is a TON of AUM in debt funds. It's more about the AUM and performance and less about the type of shop. Remember, debt funds have lower hurdles to hit their pref. You might see better comp when times are good on the equity side, but you're going to see more consistent comp on debt because you're more likely to be hitting your metrics in the bad times.
Debt funds want the best talent - why would they structure their comp to not be competitive with equity?
EDIT: I should caveat this - I'm referring to debt funds that invest in opportunistic/distressed opportunities, not senior mortgage funds.
If this is KKR, I was in a similar position but got an offer with the equity shop I was interviewing with. I prefer equity generally over debt because you get to dig into assets and business plans a bit more, while on the debt side you’re really just reviewing the sponsors underwriting, comparing it to your own, and making sure their plans are achievable so you can get paid back. But it’s really all preference, and never bad to have a MF on resume.
Equity will have more diverse career paths and top, top performers will make more, but work-life balance is better in debt, there's generally more stability, and you can still make tons of money. I've also found debt to promote faster than equity. What is the title of the debt opportunity? Also associate? I'm guessing you don't have a sense of pay yet.
Assume the is KKR, they've been pinging ppl/are expanding. Pay is the same. Higher flow in debt/faster pace if that is of interest. But would just focus on what you find more interesting / which team you like better etc.
Thank you. What do you think provides additional optionality / future career progression? KKR (with a greater name brand) or a. Large REPE firm?
Dude stop stretching so much, if you’re so fuckin stuck on KKR then take it. If you’re want to invest in the equity side do that. Nobody here can answer that question for you and prestige or whatever the fuck you’re after will only make you happy if that’s really what you care about in life. But if prestige is what you care about then that’s a god damn sad life to live.
Regarding the career potential being the same, don't equity guys earn much more at the VP / MD / Partner level? Generally more carry at a given % allocation. At least that's what I've heard from many people
Also interested. In a similar situation to you. Does anyone have info on the above, but for someone just starting off in career (1 year). Have two offers (REPE and MF debt side) and looking for some advice if different from what has already been said
Bump. Any thoughts would be very helpful. Not sure how career trajectory may be different given earliness of career as compared to OP
I've seen people go from banks like Natixis to VPs in Top 50 equity shops. You should be ok. My guess, is the company is Starwood.
Both are interesting, both you are going to learn more about deals. My quick thought is debt is positioned to be in a great place, especially mezz and B notes. As always the risk adusted returns are greater than equity, although at top shops you never know. You'll see more deal flow than the equity folks and therefor can compare underwriting if and when you move to equity. Plus, if you go to equity, you will actually have an idea of what loan covenants ARE. This IMO is underrated.
Vitae dolores voluptatibus consequatur possimus maxime. Voluptates consequatur reprehenderit nihil aliquam.
Veritatis non harum excepturi aspernatur est consequuntur. Natus quibusdam cumque fuga ut sit animi. Distinctio id eveniet amet autem. Fuga rerum aut voluptatum ab quibusdam cumque. Iusto dolor iure neque sed culpa autem odio. Illum voluptatem quia eaque pariatur.
Sapiente est earum aut facilis. Sit assumenda eum rem excepturi itaque cumque enim tempore. Et cupiditate dolores vero quasi tempora quod doloribus.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...