Acquisitions Analyst Advice - New Analysts

luther's picture
Rank: Chimp | 15

I am starting a new role as an analyst in 2 weeks (the role is focused on underwriting opportunistic acquisitions across Europe - primarily offices, retail, industrial, and residential). Do you have any advice for new analysts in terms of setting up good long term habits (organisation, excel formulas, routines, etc.) that you've successfully implemented in your careers?

I have previously done an internship in asset management but this is my first full-time role as an acquisitions analyst. Thank you in advance!

Comments (14)

Sep 26, 2018

interested as well

Sep 26, 2018

As a fellow european, I'll soon apply for a job!

Can I pm you?

Thanks

Sep 27, 2018

Of course, happy to help

Sep 26, 2018

Underwrite every deal that comes across your desk, no matter the probability of it actually happening. Sit down with someone senior who is also underwriting the deal and talk through it. Keep very thorough notes on what you learn so you don't have to ask the same question multiple times.

    • 2
Sep 26, 2018

It's OK to not be the last one at the office every night, but make sure you ask everyone if there's anything you can help with before you leave.

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Sep 26, 2018

Create a spreadsheet that tracks all the deals you underwrite and include the important high level info in the spreadsheet (return metrics, deal size and type, per unit costs etc.) and add some notes about the deal or your assumptions/feedback you received. Over time you will be able look back and see trends or get a better idea of what deals should look like based on your previous assumptions. I do this and it has been pretty useful.

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Sep 27, 2018

As said before, underwrite everything that crosses your desk, analyse them from top down, bottom up, inside out. Do this with every deal, learn to spot a good opportunity just at a glance (can take quite some time). If there is nothing on your desk, then go window shopping...who knows, you might even get lucky!

I personally run a few different techniques in my models to arrive at the same results, this can be a good habit to get into to identify flaws in your/their models.

Don't be overly sceptical or super optimistic, sit some where in the middle of the spectrum.

Don't get too attached to any deal that crosses your desk, it can sometimes lead to a very bumpy relationship!

Most importantly...know your mandate.

P.S. If I was starting a new job in an acquisitions role the first thing I would do is go through all underwriting (depending on quantum) for the last year or so and find out what made those deals attractive or not to your new company. But I'd kind of advise not to do this just yet until you get familiar with the ins and outs of things.

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Sep 28, 2018

very helpful. do you mind expounding on "running a few different techniques"?

Most Helpful
Sep 27, 2018

First Analyst Gig on the Horizon: Do's and Don'ts

There is a lot of good information in the linked thread that is applicable to anyone who is stepping into an analyst role for the first time.

As far as acquisitions specific advice, I'll go unconventional and advise you to develop your "investor" mindset. Study not only real estate professionals like Sam Zell but also look for common themes among the most successful investors. Individuals such as Howard Marks (amazing quarterly letters), Charlie Monger, Seth Klarman and others will help you develop your mindset. Always ask yourself - would I do this deal, why or why not? What are the biggest risk factors - operationally, logistically, market condition wise, product/project specific?

In a similar vein, really understand and live by the concept of margin of safety. Remember that all this due diligence you are working on is for one reason - so you can adjust your acquisition price appropriately or NOT invest. Your margin of safety should vary depending upon your knowledge of all applicable risks and your tolerance to take these on.

Congratulations on making it into acquisitions - keep working hard and learning and you'll go far.

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Sep 27, 2018

All the advice above is on point. To speak to some of the points you specifically pointed out.

Organization
Organization is extremely important when underwriting multiple deals. As things heat up and the deals enter due diligence, I always find it helpful to use a template check list for each deal, then specialize the template to the deal. With many deals there are so many moving parts and questions you will have to answer, having a check list makes you organized and faster. Checklists can also help with underwriting in fire drills.

Modeling
Always model dynamically and simply if possible. This will make things easier to quickly make edits and adapt a model to the current aspects of a deal.

Routine
Typically my day will start like the calm before the storm. You have a small window to finish things that were extra from the day/night before. By 8:30 AM emails are flowing, fire drills are starting, and you can kiss your morning plans goodbye. By 5:00 PM you will again have more time to yourself to catch up on your work. Moral of the story, is try to get things done as they come in. If not prioritize by time sensitivity. It is hard to catch up when you are behind so try to stay ahead if possible. Especially near quarter end!

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Sep 28, 2018

This is extremely accurate. From 8:30-5 kiss your day goodbye as you will be hit with emails and tasks from everyone. I like to get in about 7-730 (8am start) just so I can have some time to get projects completed like DealCloser mentioned. Then the rest of my projects are usually done from 5pm-7pm as the day gets away from me very quickly.

Also checklists are a very useful tool.

Oct 1, 2018

Build every model from scratch for at least your first 10-15 deals. It will take forever, you will make a ton of mistakes, and you will get yelled at for both taking forever and making tons of mistakes. However, the whole point of modeling isn't to spit out some returns summary, it is to understand how much impact various inputs have to your pro forma and your returns. Once you understand intuitively the impact that a 100 bps decrease in rental growth has on IRR vs. say, a 50 bps jump in interest rate over your hold period, that's when you can graduate to the next step of being an investor and grow your investing mindset, as mentioned above.

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Oct 1, 2018

If the firm uses a standard model (I assume they do), understand it from top to bottom. Spend time fiddling around in it, understanding how it flows and how certain inputs change the model. Most deals will eventually require some type of hardcoding and manipulation of the model, so it's best to understand how it works so you can appropriately hack it.

DOUBLE. CHECK. YOUR. WORK. The last thing you want is to send a model, investment committee memo, sensitivity analysis, etc. to your superiors and have there be errors. Make a habit of double checking your work, manually check some of excels calculations, and print to proofread long bodies of text (it's easier to spot errors this way).

As many have already said, stay organized and do not be afraid to ask for deadlines on projects. Keep a daily log of things you need to do and a pipeline of all active and dead deals your company is working on. You will probably have some type of weekly pipeline meeting, be prepared and know your deals top to bottom. You will be the right hand of your MD's and they will favor you if you can work as a team and know the details of a deal while they're focused on making those deals actually happen.

Ask questions, but make them intelligent questions. Once you're inside the organization you will have access to information on past and presently held assets. Understand the dynamics of those deals, read the investment thesis, comb through the models, then ask questions based on your understand of the deal thusfar.

Be self-sufficient. Nobody wants to hold your hand but they will help you. However, always try to find the answer yourself and if you cannot, then present your next best solution and see if you're on the right track.

I'm US based and started doing acquisitions in a family office for 2~ years and am now at an institutional REPE shop. Feel free to PM me with questions.

    • 2
Oct 1, 2018
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