Tips For Acquisitions
I will be switching from the brokerage side (~3 years of underwriting) to acquisitions and will be doing a mix of prospecting and modeling. If anyone has some tips/advice as I go in, specifically on how to succeed and stand out that would be appreciated. Thanks!
As someone who did this, the number one piece of advice I can give you is to change your entire mentality / approach to deals. What I mean by that is as a broker your only incentive is to close as many deals as possible as quickly as possible. On the buyside, you will do way less deals and you will go WAY deeper into the analysis of each one because its your job to do so. As a broker you are a mile wide and an inch deep - now you need to be an inch wide and a mile deep into each deal. Consider every little detail important - you will be doing so many things you never touched or thought of as a broker cuz it wasn't relevant to you. You are now a steward of capital so you gotta act like it - ask a million questions when you start about what matters, what your CIO cares about diligencing and paying attention to on each deal - this is how you build out your evaluation process for your strategy. Then implement it relentlessly until it becomes second nature.
This is great advice, thank you!
Congrats on the move - very tough to get an acq job right now! I made a very similar switch about 2 years ago. What asset class are you buying?
Thank you I appreciate it! I’ll be in retail
One tip I have is definitely try to spell it Acquisitions. Usually helps
Hahah great catch, moving too quick
People (brokers, sellers) will say things in passing that could influence the assumptions you make. You can’t take them at their word. For example, If someone tells you they are trading LOIs on a vacant suite at $x, you ask for the redlines.
Asking for redlines would be helpful but feels cumbersome as the LOI should outline those important terms that will impact you as the Buyer. What really separates acquisitions from brokerage, especially in retail, is the narrative and conviction you are required to build around various moving pieces of a deal. For market rents, large brokerage firms often have leasing arms, where they can source data to get a pulse on market comps which they will use to generate their assumptions. For multi-tenant retail deals you will see generalized MLAs which applies a single market rent to multiple tenant suites. However, on the acquisitions side, often every suite gets its own MLA with various market rents based on a number of factors like positioning, frontage, suite size, targeted uses, traffic counts, and much more. All these can be factored into decisions for market rents within your model and likely overlooked by brokers. This is the attention to detail supported by research and evidence from an acquisitions lens which is much different from brokerage. Also brokerage firms aren’t in a position of risk like acquisition individuals are and are focused on volume to get paid, regardless if the deal is good or bad.
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