SVP/MD Comp Structure for Debt Fund/Balance Sheet Lender

Looking to transition from 15+ years in acquisitions (experience on both the GP and LP side) to a role with a debt fund (the group is specifically looking for someone with operator/equity experience vs hiring someone with lending experience).  That said, I haven't spent time comping out how a senior level role on the lending side looks.  The role would be origination focused, i.e. they want me to tap into my borrower/equity relationships to build a book.

Assuming base + bonus (based on origination), but can anyone help me bracket what these types of roles look like.  I am SoCal/LA based, and the group has substantial dry power ($4B as of today) to deploy on the lending side.  Balance sheet, hold to maturity, no leverage.


I don't want to overshoot my ask, nor do I want to go in too low.

 

What does the rest of the structure look like? Is this head of a group/fund or are you just a senior member of a team below a head?

Either way, think you should be somewhere around 750k cash + carry depending on your production. 

 

It's with a private equity group with a 25+ year track record, but they have never originated CRE loans.  They did a ton of buying NPL and distressed debt during the 2008 recession, both commercial and residential.  They have done secondary loan purchases as well.  They are looking to start originating and this role would essentially be the head of that vertical for them.

 

I was in an interview with the group.  They asked me what my comp requirements were.  Then they made a comment to the effect of "We aren't the type of group that wants to pay someone $2M a year to originate loans that are being spoonfed to them, we want someone who has direct relationships etc etc etc".

My first thought was, I'd like to meet the group that does pay $2M for that LOL.  But seriously, I don't know if this type of role is a 7 figure a year earning potential position, or more like a $500k plus or minus with limited upside to go beyond that.  Given that they are on the debt side, for example, I don't know how or if carry would be applicable, or if I should focus more on base + bonus (based on whatever KPIs they have for volume and whatnot).

 

Is this a true fund structure with promote or is capital raised deal by deal?

In a true fund structure, there should be some sort of carry award at this level. The amount is going to depend how much money you raised and your planned strategy/return. 

In terms of cash comp, I would say someone with your experience level should be in the 700s (base+bonus), but I don't know if the company is going to want a discount for you because you are currently on the equity side. 

 

A lot of the skills are transferable, but there is a pretty steep learning curve to be able to actually correctly structure a high yield debt deal. Especially around the legal considerations that most equity people never think about or have to deal with. 

With the importance of track record for investors, you can't really afford to have anything blow up in your first deals in your first fund. 

Also if you are still fundraising, how are you going to explain to your investors that your head of originations has no debt experience? 

I wouldn't trust that spot to a straight equity person without getting some sort of discount. If I'm paying market, then I could go and get the best person with experience.

 
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