Why the WSO Obsession with Acquisitions?
Damn near every post I see, someone is mentioning acquisitions being their long-term goal, their next move, their dream job, etc... But do these people even know what being in acquisitions is like? How can you have a dream job but have no idea what they do on the day-to-day?
Why are acquisitions the end all be all on this site? Everyone can't get into acquisitions in the first place. I don't know why asset management doesn't get more love too. My AM colleagues are super chill and get out earlier all the time before our group. Even an acq role at a pere 15 like mine is not all it's hyped up to be.
I'm not sure if it's all the users from the IB forum coming in and obsessively discussing acquisitions or not, but you guys should learn about other career paths. Half of you won't get the role in the first place, and the ones who do half of your illusions will be shattered within your first week on the job. Find something you really want to do, not what you constantly see on WSO. /end rant.
My dream is to adjust exit caps bro. get off my back
As someone with an interest in corporate finance / M&A and an interest in being an investor more generally acquisitions was a natural fit for me
Why do people want to do IB instead of corporate banking? Why do people want to do PE instead of private debt? Why do actors want to be in movies instead of TV shows? Why do politicians want to work on Capitol Hill instead of being a state senator? Why do doctors want to be brain surgeons instead of primary care physicians?
People go after high-paying / high-prestige / high-stress jobs across all industries. It’s not really unique to the RE forum
And I am not disagreeing with this either. But the RE forum historically has been less prestige focused compared to the other forums. This seemingly has changed within the last couple of years and all I'm saying is that the people who are gunning straight for acquisitions should see what else is out there should they not get the job. There are other "prestigious" positions in CRE if that is the goal.
Institutional real estate has grown so much in the past decade that it’s attracting the type of kids who previously was only interested in banking. So now the acronym-loving kids who decided in high school that they want to work on Wall Street are now considering “REPE” as a career path instead of working at an “EB” before joining a distressed “HF”
That type of kid would never work in office or industrial leasing despite the massive amounts of money to be made in the space. Not “Wall Street” enough
Everyone here underweights the importance of AM to opening your own shop. If you can buy a property but have no clue how to manage it, good luck to you.
I hear AM guys say that all the time but respectfully, I disagree. It is much MUCH cheaper to hire someone to formulate or help execute a business plan than it is to hire someone to source you quality deals in 90% of cases.
This. Speak to any developer and they will tell you this as well. There is a reason that when you look at most of the family firms in NYC and around the country, the children coming into those firms work in asset management and leasing - underwriting isn't hard. It's sought after by people, but it's moving numbers around and managing a relationship. You can buy a building on a back of the envelope - literally. If you can't dumb it down, it's a bad deal.
I'll answer this from perspective of someone who hears this from students at networking events and other venues outside of WSO (admittingly a lot less often due to COVID...)
People on the outside looking in, just don't know that much about the industry. So, they hear that "acquisitions" is the top spot, and just want to do it, but really do not know why. It's just honest ignorance, don't think any deeper analysis is needed.
In fairness, "deal making" is cool, but also stressful. BUT, it is a small part of the real estate business, and not one you need to start in to have a good career. Again, people don't really understand the business, so the more or less accidentally come to think of asset management as "back office" in essence, even though this is completely not the case.
I've always figured people just figure this out as their career progresses, and frankly, those people really are no longer coming to WSO to post or ask questions. So, WSO is dominated by questions from those on the outside looking in, the real world is a different place (I mean, a similar question I'd ask is "Why is everyone so fixated on REPE? Do you even know what you are talking about?")
From reading more posts (and commenting on some) this past year, I am more worried some take "WSO rules" to heart and may actually be totally fucking their own careers. Seen some weird statements, hopefully, people aren't narrowcasting their job hunts as much as they claim. Or even just thinking they are some sort of "failure" for taking a role in AM at a place like PGIM or Nuveen (an amazingly great job btw).
Even the whole fear of niches, or just the whole "piegonholing" concept in general. I mean, for fuck sakes, people post like "if I take this INTERNSHIP in XYZ, am I piegonholed in XYZ, what if I want to do ABC, should I hold out?" How can people hold such crazy thoughts! Equally nuts for ANY first job out of UG or even grad school, yet it might as well be WSO wisdom that..... "Hey if I make too many posts about debt market roles, am I piegonholded as a WSO debt market poster", if can see how dumb that sounds, let me just say that is how I feel when I read these narrowcast search and/or niche/pigeonholed fear based posts.
Rant over, but seriously, take a wide look at the world, it's fine to be "non-standard" or whatever. There is ZERO chance everyone who wants an acquisitions role at a "mega fund" will get one, there are really very few relative to qualified applicants, just fact of life. TONS of great jobs/career tracks beyond that thought process, live a little!
This. redever is spot on. I think people need to determine what they are good at and what they enjoy. Personally, I like acquistions because it is project focused and short term. I like to do many things at once and than by the time it's over, I'm bored of that deal, I get to move onto the next one. With asset management, you need to be able to work on one deal for 3-10 years, and be happy working on a long term project. I also really enjoy relationship management, which both acquisitions and asset management deal with. Arguably, asset management actually has more relationship management than acquisitions. When an asset manager runs into a problem - they need to know which service provider is the best person, and you need that relationship. You need relationships on taxes, elevators, engineers, leasing brokers, ESG. The acquisitions team just needs to manage brokers and operators in their markets (for the most part). I think people don't get introspective about what they enjoy and are good at and they just think...acquisitions, this is hot. In reality, and it is one of the reasons I am actually looking for a role where I can do some asset management, running the asset and completing the business plan is more important than buying the damn thing. Anyone can buy an asset, that's easy - but not everyone can manage an asset and make money - that's the hard part.
This is where I think Scott Galloway's Algebra of Happiness comes in (I encourage everyone to watch it on YouTube). He makes the point that you need to determine what you are good at and can make you money vs. passion or desire.
You may want to be in acquisitions, but you may be good at and have the personality for AM.
I always thought I was going to be in a "deal guy". I took a job in PM/AM thinking in a few years I would switch over and even had the offer, but turned it down because I found I was good at AM (debt) and really enjoyed it. 10 years later I lead AM for a debt fund and cleared 350k + carry last year (good people in niche areas have pricing power). You would think that by the way people talk about AM (and debt AM especially), that I was dumb and underpaid, but I know for a fact that I'm the highest paid RE/Finance person among my friend group.
God, you're point about being pigeon holed is so spot on. I did my summer MBA internship for a real estate research/consulting firm and got a job post MBA in development. The internship let me grow and see a different part of the industry, it didn't suddenly tag me as the "RE consultant" guy. Granted, I came with construction experience that some developers really like, but people are so fixated on "this one key internship or bust" that they forget there are so many paths to get to where you want to be.
I did not expect in a million years I'd be where I am now when I was in college, but when I graduated and was fairly aimless I had a really great conversation with someone who did development and he told me the best advice I ever heard: visualize where you want to be in 10 years and figure out not just 1 path to get there but 3, try and see which one makes the most sense and go after it, and if one path doesn't work, re-evaluate and try again.
I know right! Like people are shocked to learn that many employers like people with diversified experiences and skillsets!!!!
Because people who are interested in investments want to make investment decisions?
Get back to me when an entry level analyst is leading an acquisition from cradle to grave. And I'd argue that asset management experience combined with acquisitions gives you a better investor mindset than either one alone.
I mean you can turn that around and apply that to anything. "Get back to me when an entry level AM analyst is leading lease up / running an asset from acquisition to disposition." No entry level anyone is doing anything - but you're learning it from the guy who is, or at worst, from the guy who's working for the guy who is.
Definitely agreed, I think it's important to have exposure to both sides of the business which is why I'm really not a fan of the giant corporate silo'd role model
As a young acquisitions person, you don't make any investment decision. Yay/Nay is voted by an investment committee. All you're doing is gathering data, coordinating deal DD materials and backing into a discount rate determined by your fund structure. Sometimes you get a voice on changing proforma assumptions, which is based on someone else's research, but again that decision is ultimately made by your manager. Most of the time, acquisitions assumptions ending up being incorrect and that's where exceptional operations/management determines whether or not you beat the benchmark/hit the hurdle to achieve your incentives. To be quite frank, the whole DD process is a charade to appease your money source and make it look like you did you homework - the real magic comes from the operations team.
A highly paid acq professional isn't good at "making investment decision". No one knows whether the deal is going be good or bad with certainty (look what happens to funds/proforma assumptions made before March 2020 and how they're doing as result of COVID). A highly paid/senior acq professional is good at handling broker relationship, dealing with brokers bullshits, negotiations, structuring and solving deal related problems and having great people skills. THOSE are the things you'll be learning as a young acq analyst.
Not trying to shatter your dreams nor do I care to argue on what's better. Just wanted you to know the truth from the inside.
This fellow is spot on
Yeah.. I've been an acq analyst, don't worry - you're not "shattering my dreams" lol
Just want to chime in at as somebody who made the jump from IS to a hybrid Acq/AM role at a REPE, I honestly don't find acquisitions to be all that different or more appealing than working on the brokerage side. It's still a very heavily relationship-driven and "salesy" role with a lot of property underwriting mixed in (same shit you do in IS). I thought acquisitions would be more intellectual and less sales driven than IS, and in *some* ways it is, but at the end of the day you're still just pitching yourself/your firm to brokers to be awarded a deal, to investors to partner with you, and getting on the phone / attending events to stay on peoples radar. I got sucked into the WSO mentality of IS -> REPE being "the path" to follow but could honestly see myself going back into brokerage at some point.
People don't say it much on here, but brokerage is an awesome career if you can deal with the uncertainty and ups/downs in income. On top of that, the compensation for those that can survive and learn how to generate business is probably higher than the average acquisition person plus - it's cash - no deferred comp.
Agreed, the one nuance I would not for the young bucks is more lifestyle-related. Trying to build a book of business while raising a family is tough, and a lot of those folks don't get it right (also true of non-brokers though). Most of the really good investment sales brokers work ALL THE TIME. Sounds great when you're 23, but a lot less appealing when you have young kids. Just my two cents.
Because this is WSO
Now if you were to find a r/FinancialCareers equivalent for CRE, you'd likely find a vast difference in what people are targeting
I would say the obsession with exit ops is more infuriating.
”Hi, I have an offer from BX/Starwood/Hines, but I am concerned with what the exit ops would be. Thanks!”
I think stories of what I’m going to tell you happen more often than not:
I once had lunch with the head of a real estate company as I was interviewing for a higher level Acq role. We start talking about XYZ land acquisition deal that he sourced and that eventually became a very profitable project for the company. And he said that after he helped acquire the site, the development team developed it, the sales/leasing team sold it, and each time the deal passed through the snake, he got a pat on the back. The deal was a big part of his success. He eventually became head of the company. Turned out the prior company head also got promoted from Acq and from the same role.
I think Acq folks have a lot to learn about the other facets of real estate. I agree with much that has been said. Good Acq folks either have a mix of experience (Acq + Dev; LP + GP; AM to Acq) or they are just freakin wired to do deals. There’s a mix of types from an investment wonk who can sell (and likely has internal politics on their side) to a deal maniac who has great instincts and is a closer. Learning from these types was invaluable.
There is also a distinction between Acquisitions at the LP level and at the GP level. LP is more investment wonk with internal broker skills to sell IC and portfolio managers. GP is more deal maniac and/or local guy with local connections with an aggressive Acq vehicle in which to execute.
Lifestyle wise, I actually enjoyed working more AM later in career (I once vowed as I pressed the button for the office elevator to leave work to never be an Acq analyst again), there is a sort of customer success angle to the AM work (making stakeholders, tenants, happy) that I enjoyed and the days were more predictable.
I think one reason to try Acq when you are earlier in your career is the energy level needed, could be harder to want that later (like IB). Furthermore, the Acq game becomes even more personality dependent at the higher levels (almost broker like in sales skills) that at more junior levels you can see this world, participate in it, and learn from people who really fit the mold - even if you are so fresh. It might be possible you can fit the mold one day too, and it’s a lot easier to emulate if you have Acq mentors.
Lastly, at the start of any investment firm or regional office, you need a deal, money, and energy. Person #1 is usually an Acq person and likely the head of that operation going forward. Then he or she starts hiring.
I am of the belief that Acq early on provides more optionality. What you do later on will likely fit more your innate skills/personality however earlier career “trama” could mold you.
I spearhead acquisitions for my firm and agree with your sentiment, it's fucking exhausting. In contrast, our AM guy leaves at 5pm every day, doesn't work weekends, doesn't need to hop on a plane last second, etc.
We make a similar salary, bonus, and get the same carried interest on deals. I'm still single and young (relatively speaking), but I can see myself moving over to AM when I settle down my life.
Having been in both AM and Aqc., I absolutely see your point. However, I found asset management to be rather dull most of the time (I was at a junior role) and the aspects of the role that was most fun were functions that just fell on my lap (as opposed to the regular responsibilities). It could be a factor of the company I was at (mid-sized fund focusing on Core+ and value-add in NYC), but my weeks were really similar and the only time it was remotely busy/challenging was during budget forecast and year-end. I found the countless calls with property managers, variance analyses, reporting and assessing capex needs to be not for me. I 100% understand why young people entering this industry find acq. more attractive than AM, but that is not to say one is more prestigious than the other..
What's the difference between acquisitions and AM..?
Some good responses here. Another aspect: very few "moguls" are AM guys. You look at Jon Gray, Sternlicht, Bluhm, Zell, Roth, etc, they're all acq guys, which prob adds to the allure. There's a reason Trump's book is "Art of the Deal" and not "Art of the Business Plan Execution." Granted, they all made their bones in a less institutional world with less acq / AM segregation. But even today, if you look at the RE heads at every PE / dev / bank, the heads are usually acq guys (rightly or wrongly). Kinda similar to how in corp PE, they're never run by operating partners.
SB+1 for Art of the Business Plan Execution
Because asset management sucks
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