Equity / Comp Advice
Yoooooo, so I have an oddly specific question I'm hoping some of you may have experience with. TL;DR is at the bottom, but in short, I work at a development firm and will get some form of equity in our next project. The exact nature of that is to be discussed in the next few weeks and I am hoping to get some advice on what/how to ask for.
For some context, it is a small family office located in a 2nd tier North American City. In the development company there are less than 5 of us, but we have property management, accounting, and admin staff based at the properties that we own (approx $150-200 million AUM). Due to our size we only do 2-3 projects at a time and generally are self-funded (no outside investors or partners on this upcoming project). Our next project will be a brownfield -> mixed-use condo project in a tertiary market.
As for me, I have been with the firm for about a year and half and have ~5 years of development experience but was most recently at a large RE advisory firm. Due to the small nature of the firm we are all involved in every aspect of the business from, acquisitions, planning and approvals, deign, development, construction management, leasing, asset management etc., but generally, I focus on looking for new acquisitions, underwriting them and guiding the files through planning and approvals. Our next project is a deal I brought with me when I joined (although bringing in new deals is a large part of my job) for what that is worth.
As usual we will create a new company for our next project and I will get shares in it. My question is what is a reasonable structure and amount of shares to expect going in? Considering there aren't that many of us I would think it isn't unreasonable to expect a fair amount of shares but I also recognize that I have not yet put any money up (all the equity is put up by the family and isn't a PE/GP structure). Other structures would include being able to co-invest (the company would likely guarantee a bank loan to allow me to do so), or taking a promote structure and getting higher exposure to the profits the better the returns are (almost like a GP/LP structure where I am like the GP and ask for something like a 2/20). One of the reasons I joined (in addition to better base salary and lifestyle, which is great) was the ability to get a taste much quicker than I would have been able to at my previous firm, but given the unusual company size/ structure I don't have much of a benchmark to go off of (the comp google sheet is great but I have struggled to find relative comps).
Any advice on what you think would be best / reasonable to ask for or expect would be much appreciated!
TL;DR:
Work at a small dev shop and can get shares in our next project. Not sure what to ask/for expect in terms of % and structure.
Just as a data point - people at my firm get between 0.25% and 5% of the developer profits based on their seniority, their involvement in the deal, their role, etc.
this is helpful! thanks!
I was an analyst at a Developer doing $60MM MF developments, I got 300 basis points of the carried interest, we only did about .75 projects a year. 90% of our equity stack was from pension funds, we got a waterfall from that. I had 1 year of experience in development coming into it. my math was around an additional $30,000 a year from the carried interest, I left too early to get any. The carried interest was at the owners discretion, if he felt it was earned, it would get paid.
What size deal is it?
Similique nesciunt aspernatur ex corporis nostrum distinctio. Consequatur omnis dolore cum ab dolores esse. Numquam exercitationem voluptatem quas praesentium quis.
Aut impedit magnam nulla impedit. Debitis cum eveniet cumque. Quae nam itaque vel facere voluptas.
Qui quam eligendi atque placeat harum. Aut quisquam a aut dolorem explicabo et consequatur. Alias est cumque ut eligendi id amet quis. Sit ut sit cum numquam numquam occaecati. Tempora fuga qui eos facilis eos vel omnis saepe.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...