To all you ACQUISITIONS people, explain your process at the ANALYST level

Hey everyone, I am about to start an investment analyst internship in acquisitions and I wanted to get some knowledge from you all on the step by step process an analyst takes when put on a prospective deal.

You know, you're sitting at your desk and then get an email saying, "We need you to get started on an XYZ deal". How does this process start and what steps are taken in order to create the property in Argus, then underwrite it, and lastly present the deal to your investment committee.

I'm looking for some detail here to really hit the ground running when I start. I'm really interested in all the nitty gritty, modeling and process aspect that gets you to investment committee.

Thanks!

 
Most Helpful

So, I'll let someone who is an analyst or has been one more recently that me give you a "step by step", but I'll give you advice as someone who has/had to train and manage analyst and interns...

  1. Figure out the template/form/substance your boss/firm wants. There is no one size fits all, and you should get training on this. I would look for the work product of other analyst on old deals to get a sense of what's required and desired.

  2. Don't just read OMs or other docs from sellers/brokers and believe it, part of why analyst are paid decent if not outright good money is to "analyze"... are the rents reasonable, occupancy projections correct for the market, are the expenses correct (or is something missing). Picking out and calling BS is one key thing that makes a good analyst. If you are doing "data entry" into a spreadsheet or powerpoint, that is not much value add, and frankly why would a firm a pay a lot for that!

  3. Be speedy and efficient, the best analysts work fast and accurately (PLEASE check your math and work product, and for typos!). The great analysts know what the MD/VPs want ahead of being asked and get that done ahead. Easier said than done, but if you figure out what is needed before being told, you will look good (this will not happen on first day).

  4. Be sure you are working on the priority of the day/hour/minute. Not sure the type of shop you will be working for, but some move fast others slower. Always be sure you are doing what is needed at that moment, don't be afraid to ask, that is a manager's job, to make sure you know the priorities (hard to mind read).

  5. Know the calendar and key dates. When are bids due, when is ICOM, when is the CEO visiting, when are clients/investors coming in, etc. This is critical to staying on top of what is needed and prioritizing work flow.

Good luck! Fun times ahead....

 

That was really helpful, thank you! From what I understand the broker gives you an OM and it typically comes with a breakdown of the current tenants leases? Does it usually provide additional detail after the current leases roll over? (for example, renewals, speculative leasing etc.)

I'm not sure if the broker typically provides an Argus model, but if they do, I've heard its best to build it from scratch to really catch the modeling mistakes.

 

You will typically get a rent roll, if its office/retail/industrial, it should be fairly detailed with annual rents, exp. dates, and renewal options. Multifamily you will get trailing 3 or 6 months or more data with some forward rent roll summaries.

Brokers will often provide Argus runs and share the files, but yes you will usually have to rebuild or update the model, at least to validate market leasing assumptions and expense escalations.

How much you get in an OM vs. due diligence is the big question. Until you are a finalist in bidding you may not get much more than a summary OM (you have to make assumptions to offer a price). In due diligence, everything gets verified and more detailed, but you have to win the deal first.

 

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