Career advice needed: Acquisitions vs Asset Management

Hi RE Forum, need some advice from seasoned RE professionals.

I'm currently in my second year as an analyst for a small REPE firm. It's a boutique shop and most of our capital comes from high net worth individuals. We focus on value-add, distressed office and retail assets across the US.

Over the past year or so I've gained some experience in underwriting new deals, but mostly analysis and reporting for asset management. After speaking recently with my supervisor it appears that the firm wants to develop me into an asset manager. While it's great that they're planning to develop me further, I got into the business with more interest in acquisitions. I didn't get as much deal-making experience in my first year due in part to the size of the firm, and with cap rates where they are today our deal volume has been on the lower end for value-add assets.

At the same time, asset management has become attractive too. I personally place quite a bit of value on the ability to successfully managing distressed assets (we're return junkies), and the guys here are authorities in that area. I enjoy my team here and have so much more to learn from them, which I don't take lightly. I also observed that asset management tends to be a more stable role than acquisition, where demand for analysts is determined more or less by market.

I'm now wondering whether I want to stay and develop into an asset manager or try to find an acquisition position elsewhere. To the experts here, what is your outlook on the future of these two roles? There's got to be a correction coming and I see asset management being more in demand with higher stability when the time comes, but my understanding could be flawed. Also curious as to how easy it is to go from one role to the other should I decide to make the switch.


Comments (9)

Feb 5, 2018

Hi just_another_analyst, any of these topics helpful:

  • Advice needed: JP Morgan European vs Global Equities- which team? (-> best case: Portfolio Manager later on). Therefore I want to apply for summer internship at asset ... almost every asset manager defines roles differently and has different names for the same ... managers. However I am a litte bit unsure about the job description of JPM and the options I have since ...
  • Advice needed: Offers from Top Performing HF in Hong Kong vs Reputable AM (Fido/Capital/Wellington) a quant hedge fund ($500m AUM), fundamental L/S equity fund ($5Bn AUM), and long-only asset manager ... USD$3Bn in AUM. Investment team is pretty small (<15 with 1 fund manager and 2 PMs) and have been ... promised that I will be mentored by the fund manager himself, which I think is a huge plus. Will be given ...
  • Need help deciding which offer to pursue: boutique HF vs. BB vs. asset management a boutique hedge fund w/ $100million aum, Asset Management w/ $4billion aum, and at a BB for its securities ... say in the next 10 to 12yrs? Thank you. career hedge fund investment bank job BB Opportunity asset ... management ...
  • REPE: asset management vs acquisition has within a REPE firm's Asset Management and acquisition division respectively in terms of ... acquisition repe ...
  • Asset Management vs Investment Banking 101 Asset Management vs Investment Banking- What are They? Before examining whether you'd like to ... standard. Asset Management vs Investment Banking- Compensation Compensation in investment banking is, on ... a career, PWM is all about bringing in that sweet flow, or assets under management. This involves a lot of ...
  • Asset Management: Portfolio Manager Career Path? Salary BlackRock Pimco Career Path Asset Management Forum Resources Investment Banking Interviews PE ... So after doing my own research and reading this site I have realized the Asset Management is ... a asset management firm like BlackRock, PIMCO and wellington. Also what is the salary like for a portfolio ...
  • PE RE Asset Management vs. REIT Acquisitions I've gone through the full interview process for (1) an Asset Management role within a MM PE ... RE fund here in Chicago and (2) an acquisitions role for a top healthcare REIT. Any opinions on which ...
  • More suggestions...

If we're lucky, the following pros may have something to say: @ariccio @World-Domination @azurlo

I hope those threads give you a bit more insight.

Feb 8, 2018


Feb 8, 2018

You're not wrong that asset management is more stable from an income/career trajectory, although generally speaking the end game potential is much higher in acquisitions from what I've seen. You could also go the portfolio management route from AM, which can outpace both of them if you play your cards right. The thing you want to keep in mind that if you're looking to hedge against a downturn, asset managers are only safe if there are assets to manage. I.e., try to avoid a situation where there would be a high likelihood that a shop will liquidate a good % of holdings if it gets into trouble.

    • 2
Feb 8, 2018

Out of curiosity, what does the end game from acquisitions look like?

Best Response
Feb 8, 2018

This is probably the most generic way I can break it down, acknowledging that there are many different ways that firms can structure comp, roles, etc. I'm just going to start at associate level since obviously almost all analyst roles are just salary/bonus.

AM Associate > Asset Manager > Director of AM/Regional VP > Senior AM Partner

ACQ Associate > Acquisition Manager/VP > Managing Director/Senior Partner

The first 2 levels of the AM track are usually salary/bonus, without any form of participation, bonus variability, or carry. In fact, generally speaking, until you become a partner at the firm or have the ability to contribute to deals, the comp rates are fairly static at all levels of AM until the end.

With acquisitions, almost all firms start giving you a performance based bonus/some type of acq. fee on deals you bring in for every rung of the ladder after associate (so after 1 promotion), and some firms allow participation/contribution from the get go as an associate. So, you have the chance to get a bonus tied to production along with carry/participation quicker than someone in AM, and for higher gross $ potential than AM because of this. Obviously, if there's a shitty year for acquisitions then the comp could dip below the AM track counterpart, but that's the risk you accept with the higher earnings potential.

    • 5
Feb 12, 2018

Thank you for your response, this insight is exactly what I'm looking for. I've always found it interesting that acquisition roles tend to pay better across the board, when, at least at my firm, more value is generated by asset managers.

Feb 12, 2018

Remember, money in any investment - but especially in real estate - is made on the buy.

Feb 12, 2018

I see your point. Makes sense that average acquisition comp. relies pretty heavily on bonuses and splits.

Edit: What's your opinion on the difference in compensation? I get that when there's a "buy" everyone immediately involved in the transaction generally makes money. But from a long term perspective, an AM brings in AM fees for the entire duration of management, and at a shop like mine, so much of added value isn't realized until the property is successfully repositioned and sold. Not to mention disposition of properties often require the AM to be pretty involved. If I were a principal, would it make sense for me to emphasize the AM side when it comes to comps and hiring?

Just thinking.

Feb 12, 2018
    • 2