Reasonable share of acq. fees & promote
tl;dr What share of acquisition fees/promote should I ask for on deals that I source; unique role - joined small, JV sourcing partner who has already negotiated economics with a large fund on deals we source (acq fees, promote). We source exclusively for this fund.
Hey guys - I started a unique role at the beginning of the year. My now boss signed an exclusive sourcing deal with one of the larger REPE funds to source deals in a niche sector. They've sourced a few $B (current asset value) over the years since they started, so they have the trust of the team and a track record.
When I joined, I negotiated my current compensation (monthly stipend, bonus and fixed per deal fee on deals that I don't source; I work on all of them regardless of who sourced), but kicked the can on the sourcing aspect. My boss has openly talked about getting me more into sourcing and that we would need to get a new agreement in place. The per deal acquisition fees are generally in the high 5 figures to low 6-figures per deal (expecting 5-10 deals this year, more next) and the promote is significant.
What is a reasonable share of acq. fees and promote that I should ask for when we get around to talking about my new agreement? I've known my boss for a while so assume that negotiation of a new agreement is a matter of when, not if.
On a similar note, if I were to source deals in another sector, in which my boss has no experience, but in which I have quite a bit of and have the relationships, should my economics be better? The capital partner was receptive to looking at deals in this sector when I asked about it, so I feel they should be different given what I'm bringing to the table relative to the other asset class we already source, but that could be naive. Hoping to get your thoughts.
Bump. Curious if anyone has successfully negotiated a fee structure that gets you different economics for different property sectors..
Bump - I’m curious as well
What is your experience or when were you able to start negotiating beyond just a base and salary?
I’ve worked in acquisitions/CRE consulting for 6 years.
My boss’ arrangement and my role are quite unique, but he mentioned it before I started. I had another, similar offer waiting in the wings so I had a bit of leverage.
What is a JV sourcing partner? Are you effectively a capital markets broker?
We source deals in an exclusive manner, and in exchange we receive basically a salary, bonus and deal fees (acq. fees and promote). We aren’t employees though.
Maybe JV sourcing partner isn’t the right label, wasn’t sure what to call it.
So do you run the asset management and/or acquisitions process? Or do you simply match up capital with operating partners?
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