Moving from equity to debt?
Is this a step backwards? Any reason to make this jump? Thanks for any thoughts.
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Maybe you to a debt originations role it might be worth it if you're good. Typically quicker promotion paths if you can produce.
No, it’s not backwards at all. Equity and debt or equal - don’t pay attention to people thinking equity is the be all end all which is what you generally see here. Some people prefer equity, some people prefer debt - that’s what makes the world go round. Debt compensation can be just as high as equity compensation. Also, in debt, you will probably work on more transactions as debt investing has opportunities to invest via refinances and new acquisitions. There is more volume.
Debt investing is generally more focused on financials and what does the downside scenario mean for our position. How do we structure this? And how do we negotiate the legal documents.
Equity investing is more focused on upside, but you need to understand what the downside looks like to determine the risk/reward. And than how do we operate this asset to achieve the upside and sell it. Legal and document negotiation is part of it, of course, but after you do the purchase and sale agreement and negotiate the debt, it’s all in the operations. (Of course if it’s a commercial asset you need to negotiate leases).
I have generally found, assuming you work in the institutional space of fully marketed deals, equity moves slower than debt. Equity deals which are marketed generally have a 3-6 week marketing period where you can underwrite and work it through the process. The lender comes in at the end of that period and will have 1-2 weeks to underwrite the buyers business plan, provide a quote, and win the deal. It moves much quicker. Some people prefer the slower pace and some people prefer the faster pace and higher volume of debt.
As in all things, it depends. IMO one is not inherently better than the other.
I mean, I would think more about the position/status/responsibilities of such a "jump"... like is this an internal lateral (same rank/role just shifting teams in-house), external lateral, move with promotion, move with demotion, etc.
Having experience on both "sides" can be beneficial in many roles, especially senior ones. Frankly, this happens often I think.
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