Takeover wealth management firm or take IB FT offer?

This past summer I’ve been a summer analyst at an EB in the healthcare group and just received a full time offer. Simultaneously, my grandfather’s wealth manager decided he wants to retire and give me the business. It’s a fairly large group with multiple brokers/services. I’m thinking about pivoting some of the AUM to launching a REPE fund and eventually a traditional LBO fund. As of now though, is it worth sacrificing the FT IB offer to takeover a company like this with no experience in that industry?

 

I feel you should strongly consider doing IB for 2 years to get your experience (your chops). You will learn a lot in this time and will also learn what it is like to be part of a successful company. Maybe you could get in writing though that you will take over the other business in two years. 

Also, nothing looks worse on your resume than taking a C level position and driving the business into the ground. I think wealth management is fairly straightforward though.

And another benefit to doing IB is that employees and clients at the wealth management firm will take you more seriously. If you go straight to the top of the firm after college it smells of nepotism and it’s like being a butter bar (2LT) in the military. The Non Commissioned Officers per se in the company have more experience than you and you will be seen as a newbie for years.

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee
 

Damn, I thought I saw wealth and privilege on this website before reading this post. Easy street since day one, and now your grandpa's buddy handed you the opportunity to run millions of dollars. On a serious note, it sounds like this job offer that was gifted to you by a family friend might not be very formal in nature. You haven't really ironed out any specifics of note. People on this site can compare IB offers with each other because we all know what each one roughly looks like, but it's gonna be hard to get substantive feedback not providing any other details about the offer. You haven't even alluded to what possible pay progression would look like. If the offer is relatively similar in compensation or even, say like a 20-30% discount compared to an analyst role, this seems like a no brainer to take. Ignore my title, or it will warp your perception of the validity/ethos of this comment.

 

I wouldn’t say I’m privileged more so than lucky for these opportunities (maybe one in the same) but I’m from a lower middle class family and non-target school. With regards to the pay, it would be a full ownership transfer over 3 years with a payout continuing for the current owner over ~8 years, so would pay significantly more but I simply don’t know if I’m prepared for that kind of a role.

 

If it's significantly more, it's a no brainer to take. As others mentioned, you might have to cut some deals. What's the best case of the EB route? Exit to PE to work 70-80 hours a week in 3-4 years? That's if you slog through 100 hour weeks and make it past PE interviews. What's the best case for the WM role? Making exponentially more with a way better lifestyle. My apologies about the assumptions, I just couldn't imagine someone who wasn't insanely well off to have a grandpa with a wealth manager capable of handling hundreds of millions to their grandson. You better have all of the compensation stuff worked out, it might be a good idea to consult someone regarding that. Yes it's risky and either way, you will still end up very well off, but opportunities like this are stuff you might regret down the line.

 

UncookedBooks

I wouldn't say I'm privileged more so than lucky for these opportunities (maybe one in the same) but I'm from a lower middle class family and non-target school. With regards to the pay, it would be a full ownership transfer over 3 years with a payout continuing for the current owner over ~8 years, so would pay significantly more but I simply don't know if I'm prepared for that kind of a role.

Of course you’re not prepared for the role. That can’t really be the question at this point, right? You have 0 full time working experience and 0 experience in that industry.
 

The question should be whether you think you can figure it out? Can you learn a new industry? Be a manager to grown men and women? Talk to existing clients? Sign up new clients? Run a professional service company?

Sorry to be a tool here, I just think this whole situation is crazy. For avoidance of doubt, you should take the free money.  Hire or promote people that actually know what they’re doing and enjoy your ride. 

 

Take it... You'll learn so much more running the business alongside building a network. Slogging away as a pitchbook maker... C'mon lol. 
You got the sweet deal many yearn for. 
If you don't run it like a rich trust fund kid, and work alongside great partners at that firm you will do good. 
 

IB ain't even close to this. 
My uncle didn't graduate HS... yet he is a Oil tycoon in the UK worth over $100m... 
Hustle takes a person a loooooong way. I've seen it with my own eyes. 
 

 
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If he's just handing it to you, no purchase price, then take the free money and never look back. RIAs are a hot consolidation play right now.

What's your value-add here? I'm sure I'm missing something, but it's kind of odd that it's ostensibly a sophisticated business with multiple service lines (and presumably management) and yet he wants to turn it over to an unrelated college student with no FT work experience. Succession planning is tough as well - even if the firm goes to you his clients may not want to go from their grey-haired counsel of 30 years to the kid who's never even had a 401k, let alone managed one for someone else. (Again, correct me if I'm being too presumptuous)

Also, do you want to be a wealth manager? It's a very different business than sellside / alternatives - not in a bad way, wealth managers can make ridiculous money with very little work once they've built a book - but the day to day is nothing alike.

You absolutely cannot just "pivot" some of the AUM into a fund model - there are many regulatory steps (are all of your clients accredited?), and the client approves all allocations (how much are they already allocating to alts? Suddenly changing IPSs to an aggressive, illiquid strategy with high fees that's managed in-house is going to land you in some hot water). REPE and LBO are also very different, although some funds do make the pivot successfully.

It sounds like you're trying to view this as a platform to accelerate your buyside career, which I think is an ill-conceived plan (albeit not impossible). You'll have a far better starting point if you go EB -> PE.

Personally, I'd take the equity, stick with your job offer, and give one of the current managers a huge raise to be interim CEO while you build out a network / resume, decide what you want to do, and learn a little more about being the industry through research and osmosis before taking over the reins

 

If I saw this comment before I posted mine, I wouldn't have replied.  This is it.  Well said.

 

Really like that last point. In terms of the REPE component, I currently work with my professor on the side helping to manage his fund (~100M equity) which has given some experience in that space. I wouldn’t be looking to make a significant capital change to the advisor side so much as simply ask clients if they’re interested in that area.

 

I struggle with the idea of a person responsible for other people's wealth who is content with handing his business over to an intern.  You must be massively simplifying the arrangement, but if you're truly being offered the chance to take over the business, that is just insane.  Full stop.

If this is all true and you take this job, prepare yourself.  I imagine the "multiple brokers" will not be thrilled that they did not have a chance to inherit or buy the business.  You'll want to take a good look at their contracts (NC/NS), otherwise I expect they, and their revenue, will be out the door.  I'm sure clients will be excited to learn that their money will be redirected to a first-time fund led by a 22 year old, never mind the fact that this is way more complicated of a process than I think you realize.  

Not to mention that wealth management M&A is white hot right now, with a literal endless pool of strategic/private equity buyers.  This guy has decided to bypass all those options and give his business to you?  Not sure what I'm missing and I think his estate, staff, and clients would agree.

 

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