Multi-Family Development Non-Compete
Getting a promotion to VP level (carry, peice of the dev fees) at a national merchant build multi-family shop. Looking to see how the non-compete I'm being asked to sign compares. It says that if I go to a competitor and source multi-family development sites within the geographic region I'm currently in I have to give my current company a ROFR, this lasts for 12 months after leaving.
Not much help as I'm an analyst, but I, too, am at a national multifamily merchant build shop. Do you mind sharing what you expect all in comp to be at the VP level and how many YOE you have? Just looking to understand where I'll be a few years from now. Thanks!
~300 all in, 5 YOE. Not including the Carried interest I get in my projects.
Bump to hear about YOE and salary of what the Carry will entail as I am in a similar situation, but that non compete sounds stupid, would never sign that. Try pushing back on that
Ive been calling around and it sounds like a non-compete is pretty standard?
Not an analyst asking about about comp lol
I’ve never seen something this draconian. What type of shop? I’m assuming it’s some big wig who thinks he’s that important.
A one year non-compete is draconian?
TCR/Wood/Mill Creek type place
I'm a VP at one of the above shops and wasn't asked to sign a non-compete.
I had one firm do this for me in their offer but it was non compete for any firm in the market for 5 months if I left. I saw it as a red flag and never joined them. Only toxic firms would have some stuff like this. It’s not like these old geezers are paying us hedge fund money so tell ‘em to suck deez
Been here long enough to know it’s not toxic. I’m in a low cost of living city and getting paid close to what someone my age would be making at a hedge fund.
Would not sign that.
Depends if your new firm doesn't make you sign the waiver, then the old firm can only hold you to it. That being said they can sue you but the arbitration and if it makes it to litigation will cost them far more to enforce and you would most likely be out of your non compete timeframe anyways.
Non Competes are old school and if your new firm has actually good counsel you can get out of it pretty easily with a side out or loophole. These are usually shops that think they are really smart but use agreements they download from the internet. Unless at BB or a HF sponsored by BB I wouldn't worry too much about it.
That being said I would definitely let your new employer know about the contingencies of the non compete, work with them on how to find a loop hole. If they don't know then the new place isn't really interested or doesn't have very well informed people.
To make it clear, I’m staying at the same firm.
I think I agree with you though. I can think of multiple ways I could get around this if I really wanted to. I don’t really see how this would work in practice. Seems like it’s a way to make it difficult but not impossible to leave.
A one year sabbatical in between jobs also wouldn’t be the worst thing 5 or so years down the road. Could also spend the first year at a new firm not sourcing although that would remove much of the value I would be bringing
Top Originators do it all the time in RE, they leave have a lock out. But they go to conferences or seminars and make sure it's one their old clients go to. Then bump in and go "Oh hey I'm at so-so shop now."
In this case you find out a professional or general place they'll be and bump into them. Then if the client reaches out it's completely out of your hands.
PS if you want to take a sabbatical, then do it up!!!
It is clear that you want to convince yourself that this is standard because you want to take the job and don’t want this in the way. That’s okay.
I’m curious what proprietary firm knowledge you could potentially gain by sourcing multifamily sites that would make you such a threat at a competitor.
Big difference between a non-compete (a new boss is hired that you hate and you can’t leave to a competitor?) and a non-solicitation, which is more reasonable.
Agree with you that I am doing mental gymnastics to accept the job.The intent of the non-compete is to make it difficult to leave, not to protect proprietary knowledge. I don't like it but all things considered I'm okay with it.
A new boss coming that I don’t like is the biggest concern. The way the firm is set up I have a lot of autonomy. Even if I hate the guy I think I would still be able to manage. In a worst case scenario there are plenty of roles I could jump to that wouldn’t violate my non compete
Forgot to go anonymous, oops.
Seems like BS if you ask me - I agree with CPMA's15 comment that enforceability of this will be extremely difficult, and at the end of the day would really just become a vindicative spit tool for leaving them. I just don't see there being a way to practically enforce this (how would they ever know you actually sourced the deal?)
I would think you probably would have already signed an NDA which would bar you from disclosing active site negations you were working on at the other firm anything more than this seems unfair.
Gut reaction from me would not be to sign - they are obviously trying very hard to lock you down and make sure you won't want to leave, so it seems like you may have the leverage here...
Agree with the how hard it would be to enforce. I think it’s something they want to be able to hold over me should I consider leaving. The more I think about it the more it seems like a red flag but you’ll have to take my word that the company has treated myself and other coworkers very fairly and I do have a high level of trust that they wouldn’t do anything spiteful.
I do have a fair amount of leverage here but I also know that all other developers at this level in the company signed that non-compete and the other parts of the offer are far more generous than I was expecting.
Yep - Since the agreement is somewhat unenforceable in a practical sense, I think the question becomes will the company use this to be vindicative or a pain in the ass if you leave. I think this is the piece to really think about before you sign if you are comfortable with the firm. I'd ask some "dumb" questions first that might get them to show there hand a little bit - there answers might indicate that it's a total nothing burger at the end of the day.
I'd still personally push back, at the end of the day (depending on what insight they give on the above), I always think that negotiating comp/terms (when you have leverage which it seems like you do) at real estate companies shows you aren't a push over and you have a good business sense when you're negotiating deals on behalf of the firm; hell we spend a lot of time negotiating termination clauses--that almost never get used--with every vendor/contractor that we hire in this business, why would personal deals with the company be any different? at the end of the day they can tell you it's not negotiable, but it would be a red flag to me if they took it personally given the above.
My two cents of advice (what it's worth)
I think this is also jurisdiction dependent with Cali courts and law being the most vociferousloy anti-non compete and Florida courts and law being the most friendly to non-competes. New York is closer/akin to Cali’s view than Florida’s, IIRC.
What is the concensus on how common these are in RE industry and the reasonability of that '1 year' time period?
Personally would push back as if it is enforceable then it will directly affect your immediate role at a new shop. On the same note, would consult an employment attorney in your state. Like a comment above mentioned a good attorney can render it unenforceable pretty easily (good chance it couldn’t be enforced anyway and they couple probably advise a decent compromise).
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