UHNW Family office opportunity - is this a step back?
So I have an opportunity to join a family office run by an UHNW family who have made their money in RE over generations. It's a solid role with growth, team is very lean, comp is strong, and culture is relaxed.
For this opportunity, I'd be leaving a role at a company due to poor culture. I like what I do at the company and the company's trajectory but the culture is so bad that I can't see myself there much longer. The role at my current firm and the role at this new firm are otherwise quite similar in responsibilities, comp, etc... except for the access to institutional capital. This FO is (supposedly) so well-capitalized that they have the powder to put up 3/4ths of the equity and have no problem filling the rest in with F&F money.
I have a few worries:
(1) I'm worried that deal flow won't be as rosy as they say (3-5 acq or dev deals every year). They are not only most of the equity, they're also long-term holders. So realistically, how much money do they have to allocate to RE if they're funding $50mm deals/projects every year ($50mm-$90mm annual investment) and not recycling probably 90% of that?
(2) I won't have the access to institutional partners like I do now, where I get the experience of working with sophisticated LP's, face time with them/names on my resume, and the opportunity to learn from them. It's looking like I'll be very insulated from the broader investment community since the firm has no need to build GP or LP relationships. I can still go to conferences and stuff, but kind of hard to build a relationship when you start off by saying "we don't do partnerships"
If I had to say why these worry me so much, I guess it would be having to sacrifice my experience and that handicapping my desirability if I were to move to another shop. If I were to be at a more traditional GP, with fund investors/JV relationships (which seems to be the majority of the players in that space), it would be easier to jump to another one compared to coming from a boutique, long-term hold, insular family office - even though in practice my role and the firm's general thesis lines up with many other "traditional GP's".
Besides these worries, everything checks the boxes for me: investment thesis & return targets, role & responsibilities, compensation, culture, flexible hours, people, etc. What do you guys think? How would you look at this opportunity? Anything else I should be taking into consideration (either for or against the role)? Any questions I should be asking the hiring team? Thanks!
Depends on the capital and revenue base. Also what is the actual AUM? Not what they claim is the AUM. That is key.
It's very hard to provide feedback without more details.
But I'll offer two thoughts,
So some of the answers to your questions will really be where are you with #2 in life? It sounds like you aren't quite there yet and thus you're asking these questions, hence that should give you some food for thought.
Maybe they refinance projects and pull cash out to recycle into new deals?
What's their reputation like? What are their past deals like?
Are you able to co-invest or get sweat equity/promote?
Forget about worrying about LP and GP relationships. If this is a great gig, go for it. Sounds like you don't like your current gig. If you go work for another shop or go out on your own in the future, no one will care that you worked for a family office vs some other shop that raises money from investors. Creating great deals is the same regardless of how they're funded. You may even learn a thing or two from entrepreneurs taking all the risk with their own money and being able to apply those lessons on your own if you choose to go out and raise capital.
Hell, maybe they want to grow beyond their capital and turn to you, the experienced capital-raiser to help them expand into funds, etc. World of opportunities if it's a reputable, active, good group.
Agree here. A lot of times your connections at the larger LP firms move on as well, and the connection is lost: my point being it’s great to have those relationships when you need them, but once you don’t it’s not much of a thing to worry about. If you have disposable capital and a SHWI funding things, that’s a far better place to be today than a PE dev for example who has to pivot their entire platform to “be” core apartment purchasers now…. I wish I had that type of balance sheet to work with today, that’s for sure
I wouldn't worry about number 2 - so long as you are doing deals and not twiddling your thumbs you can exit from a family office to REPE if you decide you want to. They are so much more institutionalised and more respected now than they once were.
As above poster says the unique things about family offices is that it can lead to some very interesting opportunities - my buddy was at an SFO doing real estate and then they ventured into Education PE (private schools) and had him run it. He now builds and finances private schools internationally and is having a blast.
In my opinion this is a big step up. Family offices like to work with other family offices when investing in deals so you'll likely have great networking opportunities there. If you ever want to do your own deals, those are the people that can help you as a co-gp or provide flexible terms. Family offices are by far the hardest relationships to build trust/break into and are golden when starting out. larger fund/LP Intros/relationships can be easier to build as most equity brokers can make those connections, but a lot of the family offices are very guarded.
Family offices can be pretty hit or miss. If you get into a good one, it might be the best career ticket you can punch without taking the risk of starting your own company. In my experience, one of the biggest differentiators is culture. This isn't a corporation, it's a family who has their ways of doing things. If you find one where you really get along with the running members, it can really be a great life. If you find yourself in one where the patriarch just sucks the life out of the culture, then you'll be looking for the door fast and probably wishing you stayed on the other side. Are there any current or past employees you could reach out to to get a sense of what it's like?
Honestly, direct message me. I'm in lending now but was at 2 FOs in NYC. Can definitely help
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