Stay or Jump - Career
Hoping to get some advice here.
I've been with a company for 7 years now, pretty established and in a Director role, in the acquisition/investment team. The team I'm in is relatively lean, I have a EVP ahead of me and thats it. Our company has grown 5-6 folds since I joined and is considered now a mid AUM player and is a competitor with the big guys. Comp structure is relatively simple with a base + bonus (% of salary). My day-to-day is running the deal as a 2nd in command, reviewing UW, and running the DD. my EVP always takes the lead role with managing most of the major brokers and clients.
I've recently been offered another role, a parallel title, but a way smaller company with about a 5th of the size, doing pretty much the same thing. Their focus is on secondary/fringe markets in core cities and runs more a value-add play. My current company pivoted away from that strategy and has focused on newer built. The company has been running for 4 years but has been on a acquisition spree. The comp they offer is pretty much the same as my current role but what they've added is a bps acquisition fee to any deal they close. They are smaller, and also the deal they transact are average $10-20M, but every now and then they transact close to $100M deals (very few). I would go in and pretty much be the top guy running their acquisitions/investments.
The bps is rather nominal right now, almost negligible - few bps. I'm trying to ask for more as I'm countering the offer, since I'm taking a risk from going from an established company to a company thats only been around for a few years. I know I haven't given too much more info, but from people experience, is it worth it to take the risk if they comp appropriately? If I get what I want, this can be potentially 2x my comp with upside for even more.
Based on the most insightful WSO threads, here's what you need to consider when deciding whether to stay or jump:
Key Factors to Evaluate:
Career Growth and Leadership Opportunity:
Compensation Structure:
Risk vs. Reward:
Market Focus and Strategy:
Long-Term Vision:
Actionable Advice:
Final Thought:
If the new firm can meet your compensation expectations and you believe in their growth potential, this could be a transformative opportunity. However, ensure you're comfortable with the risks and have a clear understanding of the firm's long-term vision before making the leap.
Sources: Stay at Big 4 or jump to boutique?, Ask Me Anything - Federal Consulting at a Tier Two Firm, How did you transition from an analyst/support role to a sourcing/production role?, Took an Associate job at a tiny firm, how screwed am I?, Anyone have intel on Incentrum Group?
What does their capital/fundraising look like? If they are a new fund that has already first closed and there is a fair amount of dry powder to deploy, that is different than if they figure out investors on a deal-by-deal basis or it is a family office.
Are you ready to be number one of a group? Being number two means you have at least a little bit of a safety net/have someone in your corner if shit hits the fan. Are you ready, willing, and able to be the person that has to be the authority/adult in the room?
You mentioned that your senior now really handles broker relationships. Do you have enough of your own to truly step into the top spot and be successful. You will not get a ton of time to be productive before you either get shown the door or have to go find a new spot on your own. Jumping from a place where seniors have relationships to doing it all yourself is a pretty big step. If you tell us that is the part you hate, then I’m going to advise you to consider this carefully.
How come neither your current firm nor this new firm is providing carry? Also, which firm looks like the better long-term opportunity?
Real estate operators are notoriously cheap. He's been at the firm for 7 years without asking for carry, so the CEO knows he'll keep working hard without any.
Regarding capital raising (the prospective company). - they’ve been doing quite exceptional with being the new kid on block. They mainly go through retail channels and a have a few family offices & HNW. They’re working on getting with a few institutional partners. Our current firm has exhausted the retail money and now is pivoting heavy into institutional partners.
the main brokers are with my top guy, the EVP. But this potential company mainly works with brokers that has smaller deals, which I have quite a few connections. I don’t think the brokers are an issue as I believe I can easily connect as they know who I am as well.
Honestly both company is in a unique position. The prospect company double their AUM this year but they’re way smaller, which is a lot easier. They want to keep growing and have not had an acquisition guys running the show for almost half a year and more. The cofounder is doing the heavy lifting. In addition, the prospect company principals/founder have less experience than I have. I’ve done this for over 10 years+, they’re looking to lean on my experience for strategies and market to explore.
My current company, as mentioned has started working with pretty big institutional guys. Which if all works out, we could be at an inflection of growing quite a bit as well. But that being said, I’ll always be the second guy, and there no promote or fee based compensation.
it sounds like the whole company is reliant on deal-by-deal fundraising. Only you can answer if that works for you or not. I’ve been at institutions or funds for a really long time and wouldn’t want to give up having pre-wired capital.
You should be angling for a far more aggressive comp structure with this new firm. Carry, bps on acuquisition and disposition, bps on the AM fee if you will be doing that type of work as well, etc. If they are courting you, you need to get a stretch on your comp.
You are at the point in your career where you should be pushing your incentive based comp as much as possible. Just be damn sure your employment contract is air tight when it comes to carry comp. You don't want to get cut 4.9 years into a 5 year carry window and lose 50% of your total comp package just becuase you didn't protect yourself.
How does one ensure their contract is air tight in that respect? Would their need to a specific termination clause?
Specifics on termination is definately a good idea. I would also suggest that anyone going down this route has a very tightly defined understanding of what success is, that the success expectations are inline with the firms trajectory, and most importantly that you do not have an all or nothing carry hurdle. I generally have carry vest with my key people so that they feel secure that their work and effort is rewarded regardless of the short term flucuations in the market.
you are blinded by the "potential 2x". that is paper math based on deal volume. if the market slows, that 2x becomes 0.5x.
the massive red flag is this: "my evp always takes the lead role with brokers".
that means for 7 years you have been an execution guy, not an origination guy.
in a lean shop (1/5th size), you don't have the luxury of just running DD. you have to hunt.
if you don't own the rolodex, you will starve.
also, moving for "bps fees" is a broker mindset. where is the carry/promote?
you take startup risk for equity, not for a transaction fee.
don't jump just to be a big fish in a puddle if you don't know how to swim alone
Aka right now. There is no 2x in 2025 and there will not be a 2x in 2026 at the very least. Might not be a 2x for quite a while.
This is wildly off. Sure there might not be a 2x for a fund managing 10B, but there are plenty of firms working their way up that have been 2xing plus for the past 4 years or more. It is all about where you are starting from.
That is interesting what you said: get start up equity for start up risk.
Seems like OP is repeating the growth stage again but for a bit more ordinary income compensation, with people he doesn’t know.
The rest of my thoughts are general thoughts and not specific to OP’s situation:
One thing I’ve noticed about human nature for the founders of a company going from 3 to 10 (vs 0 to 1) is that the founders are feeling good, they are looking to upgrade their lifestyles, and they look at money as a means to buy talent like at a store.
With each change in the company lifecycle, human nature seems to be very predictable.
It’s one thing when a share of the platform is given (ie stock options to a group of workers at a tech company and the company could grow 1000X) and another thing when you’re signing up for another job with exotic/complicated compensation (prepared to factor in partnership risk while being a powerless employee) - where only you and your employer know the terms.
Be where you trust the people the most. But know they will prioritize themselves (their family) over you. Human nature. If you are screwed, you will be alone. One weapon is time and making you wait for liquidity at the platform level. Less incentive to sell a RE platform, it’s a recurring cash flow vehicle. The nature of closely held companies is not very conducive in spreading the wealth beyond the capital partners.
Your partners also hate dead money. Don’t become dead in their eyes.
If there was one thing I would change about the RE industry is how limiting on the upside RE can be (can’t go beyond a certain square footage or unit count for successful project) with few exceptions (ie buying a thousand acres of path of growth land that could be developed over decades).
My point is human nature is predictable. You will be taking partnership risk the more money you take from the firm. Your boss who did your job before is not going to pay you more (relatively) than what he was paid (adjusted for inflation). Because RE is so repetitive, there is a lot of this situation, and this depresses compensation in our industry. This is all human nature too. I truly believe no matter how much business success you are a part of, how much money you actually take home (actualize) really depends on the state of your internal and external partnerships. Don’t be blinded by hope certificates (promises of upside, especially if only incremental), especially if you will be alone to enforce.
you are easily one of the most insightful people on the RE forum. Thank you!
All good points from people here. I would just pose the question to you - why jump at all? The new role isn't a clear winner and the current role seems to definitely not be a loser, so you'd be taking on a huge amount of risk/instability, for what exactly?
Thank you all for the comments. Very helpful and appreciate it. To answer few of your comment:
I work in the Canadian/U.S (only few markets) market which all the big deals are concentrated by few of the big brokerage. The prospective company focuses on secondary/fringe market smaller buildings (20-100 units) on value-add plays, every now and then they do go on bigger acquisitions (very few). The angle from their end is they know they can't compete on the market deals and the big players, so they go with the smaller buildings and off-market deals. They also understand, my position and where I stand, they need an execution guy but also originate as well.
My last year or two has focused on more origination, so I do have connections to brokers and I have been keeping tally on brokers thats been bring smaller deals to my current shop, but my EVP has always been one to hold on the key relationships.
They don't raise capital on a deal-by-deal basis, they raise capital on a very consistent basis, but their main vehicle is funding their REIT. They do have buckets with other HNW, family offices and eventually they want to work with more institutional partner as well.
Regarding the carry and promote - that has been in the talks, when they start doing private funds. Right now the main vehicle is the REIT for the prospective company. I know my current company, even the top guy does not have a promote or carry has I heard from it straight from the horses mouth, the CFO. His bonus is discretionary.
One of the main reason I'm considering the position, if the comp aligns is a potential break through in my career to be the front running man on the deal end. I'm in my mid 30s, and if I'm going to take risk, it almost makes more sense to do it now. The prospect company has no intention of hiring someone in between me and him and sees if it works out, I can climb to executive role. That being said, I have to prove myself. Any other jump, I'm just one of 2 or 3 directors with a more elaborate ladder on top. The bps is the only thing they're offering - and I obviously understand the risk if no deal comes in, my comp could pretty much stay flat, but the whole point is to incentivize me to help the AUM push, 2x or more could make a pretty big difference financially. Clearly $500K+ is no small feet especially the market I'm in.
“One of the main reason I'm considering the position, if the comp aligns is a potential break through in my career to be the front running man on the deal end. I'm in my mid 30s, and if I'm going to take risk, it almost makes more sense to do it now.”
This seems like a worthy reason to work in the new role to increase your reputation and exposure to new opportunities (0 to 1 start up opportunities; a higher paying, higher title corporate job; or stay at the new firm because principals because your relationship with the principals ends up being solid over time).
Another thing I will say, is spend an inordinate amout of your negotiating capital with the new firm trying to remove any non competes or other restrictions on you working with their capital partners, brokers, property managers, etc.
You want to be able to execute on deals on your own that the firm does not want to engage with.
Think it would help to hear your current comp to weigh the risks/potential upside at the new firm. I’m at a similar sized company to your current one, that also doesn’t likely offer carry. It’s more of a corporate real estate type pay structure (good base, lower bonuses, etc.) than other GP firms. I’m at $150K base + 25% bonus as an Associate (title doesn’t cover the scope of my work, would be AVP/VP elsewhere so feel very underpaid) with 4-5 years of principal side and 2 years of debt brokerage experience. The more entrepreneurial type pay structure sounds more attractive (to me) at face value, specifically at this stage in my career, but I can’t discount the security my current firm offers (i.e. we’ve gotten our full bonuses the 3 years I’ve been here).
Personally, If I was in your shoes I’d go for it. A friend of mine just got a similar type offer, sourcing role with a percentage of management fees, carry, etc. at a smaller firm. Even if the company flounders or he isn’t successful, for his personality type the higher ceiling is worth the risk, even if he could’ve made higher cash pay at a more established firm. He’s also younger and in his early 30s, with no dependents, so less risk adverse than others may be.
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