Curious on what Family Office careers are like in terms of being part of equity capital distribution versus, say, a more traditional LP source like a Life Co. I would imagine that most would have small teams that source deals from D/E brokers.
I am aware that some Family Offices do debt, mezz debt, and pref equity would all of these be looked at by the same team?
If you guys could share, what is the lifestyle like (Comp, hours, team structure, etc.)?
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I can weigh in here. I work for a very large family office that operates on the scale of an institution. I explicitly call that out because how a family office works and feels will depend greatly on the size.
I hate to say it, but the honest answer to your question is "it varies greatly from one shop to the next".
Generally speaking, the lifestyle will be better at Family Offices. You will likely have a more laid back work environment, work fewer hours, have more PTO, and better benefits (insurance, 401k, etc.). If you are a real type A person who is obsessed with sourcing and closing deals at the same pace a fund with discretionary capital will do, then you might be a bad fit. With that mentality, a Family Office could be a frustrating place to work. Remember the family has already made their money. They don't have to do anything, and they act like it.
From my experiences, Family Office compensation is more diverse than a fund where you get Base + Bonus + Carry/Fee Participation. They can offer profit sharing from their entire portfolio, not just the RE side of things, co-invest opportunities, carried interest in deals you work on, phantom equity, pension, and other deferred compensation plans. Where I work, the family will give me a sizable loan (LIBOR + 125) to invest in deals they are investing in. I would say Base + Bonus comp is comparable to lower than a similarly sized fund, but all the "extras" will make up for that over the long run. Your compensation should be structured to align you with the family's long term goals.
The types of real estate that families will invest in are all across the board. Some families only want to own Class A assets, while others are fine investing in workforce housing, suburban office, and vintage value add industrial. This will vary greatly from one office to the next.
From a staffing perspective, the teams will run extremely lean, and turnover will usually be very low. To directly answer your question, the same team will look at office development, Mezz financing on a hotel, and a multifamily value add deal. In most family offices you are a generalist.
I think that covers a lot of what you asked, but I am happy to answer more questions.
Great insights.
You pretty much covered everything, thank you for the incredibly thought out response.
As for additional questions, how would one land themselves in a FO team? I would imagine a lot it would have to do with right place right time type of opportunities. Do they typically look for a very technical background or more cultural fit?
The path to a FO isn't terribly different than the path to any other large LP. My path was RE Banking -> RE Opportunity Fund -> FO. Other people that work at FO's come from REIT's, other funds (usually opportunistic), banks, or large lenders. There isn't much of a training program at family offices so you are expected to be a plug and play candidate. Generally, this means you need a broad skill set and at least 5 years of experience. You also need to be a cultural fit. Generally you need to be patient and understand things won't be as mechanical as a larger institution (LifeCo, Op Fund, etc.).
As I mentioned, turnover is very low at most FO's. Our hiring process is to stretch people as far as possible, then hire a junior team member to expand the teams bandwidth, and allow them to grow into a more senior role. This is meant to ensure upward mobility and limit turnover.
So, very well said in comment above. I'll add a general point...
The comp structure/equity potential/partnership potential/etc. is always a fairly direct function of the capital structure/ownership structure of the firm and deals/fund they do. I.e., if you work for REIT, you can get shares/stock options; if you work for a privately owned firm, you can get 'equity' or 'profit sharing' (same as equity without ownership); if they have structured deals/funds, you can get promote/carry; if it's large corp (like the Life cos), then base/bonus/stock is usually the deal (sounds less sexy, but may be pretty equal to the above over many years as less volatile).
Thus, generalizing family offices or even institutional firms is pretty difficult. Same can be said for work/life balance and promotion potential; that is really all over the place.
Personally, you build a career by gaining skill/experience in some functional area/asset type or something like that. That experience should hopefully create value propels your personal value to where you can get the best 'deal' (with risk/return trade off of course). I really don't think it makes much difference early in a career; it's all about learning and getting really good at something.
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