My Past Life in Private Equity: An Interview with Christopher Sparacino

“Pleasure in the job puts perfection in the work” - Aristotle

Starting as a part-time sales associate for Allied Home Mortgage Capital in 2006 and advancing to an analyst for a small private equity fund focused on the acquisition of distressed residential and commercial whole loans in 2009 –– Christopher Sparacino’s journey to owning a CRE advisory has been both adventurous and advantageous. Here, we learn about some of the highlights:

How did you get your start in private equity?

I had finance experience from college. While working for an apartment market research firm in 2009, I couldn’t believe the level of distress I was seeing. I decided to cold-call some private equity firms and tell them about my observations. Long story short, I was recruited to work for a small group of high net worth individuals who cashed out in 2007 and were working to “buy up as much distress” as they could. And so, I went to work for them, establishing trading relationships, generating deal flow, and analyzing deals.

What was your greatest fear at the start of your PE career? How did you manage it?

I had no fear. I was just happy to be there and to absorb all that I was able to absorb. Looking back, I probably should have feared the long hours, but it didn’t really bother me until it did.

How do you define success?

Your level of happiness. Money is great, and it makes your life comfortable, but if you have all of the money in the world and you aren’t happy, then what’s the point?

Is there an achievement or contribution from those days that you’re most proud of?

Cold calling Michael Corbat when he was the CEO of Citi Holdings. He was responsible for and led the divestiture of a portfolio of non-core business and assets following the financial crisis of 2008 and Citi’s participation in the Troubled Asset Relief Program. I literally called him and asked him who to talk to about buying distressed assets from Citi. He was a nice guy and sent word down to the fixed income desk that I’d be calling. I called, and the guy was impressed with my unafraid route to get the head trader’s desk line.

Most recently, I cold-called the CEO of Bank OZK regarding some apartment loans for a client. He forwarded me to the applicable person within the bank to speak with. The clients couldn’t believe that I called the president of the bank and got traction. I told them that I used to do this stuff a lot, 11 years ago.

What ultimately made you decide to leave PE?

I was working 80-100 hours a week. The pay was good, but nothing compared to what I could have made being on my own. Also, not to toot my own horn, but I was more forward-thinking than my bosses due to my previous experience in the whole loan space. I kept urging them to buy non-performing loans, to which they replied, “we’re not set up for that.” I was vindicated years later when I saw a press release about them buying a package of loans in the 90s. When I was pushing them to buy loans, they were trading at about 45-60 cents on the dollar.

After I left, I was going to go to business school and get a master’s in financial engineering through St. Marys College or an MRED through USC. But my father intervened and basically said, “you can go $200k into debt and climb the ladder –– which you obviously hated –– or you can get your real estate license and make $200k.” I come from a forward-thinking, entrepreneurial family; my father ran a successful commercial construction business for 35 years, and my mother sold recycling containers before recycling was even a thing.

I took his advice, and I wish I had taken it sooner. Now I get to work when I want, and really, it’s not work because I love it. I’m a people person, and I love helping them.

How did your processes change after leaving PE?

I wasn’t beholden to the “program” of what my bosses and their bosses laid out. While my prior employers had great programs, my time with each allowed me to uncover the operational inefficiencies and also enact solutions for the issues.

After PE, I worked for a small brokerage in Oakland. The first thing I did when I started was to comb through all of the properties that had been foreclosed on and reach out to the lender. I was able to get in touch with a private mortgage bank, and ultimately I sold three REOs for them, collectively for about $20M.

The process went from trying to acquire investments under return requirements and other constraints to going to the market to facilitating a transaction. I went from market participant to broker.

How did your time in PE make you a better CRE advisor?

Attention to detail, understanding the big picture as far as real estate investments go, understanding that real estate is cyclical and that it also adheres to the laws of gravity. One of the wisest things a fixed income trader told me was, “the collateral never changes, only the people do.” That one hit me in the chest.

What was your most satisfying moment in PE?

Getting a small shop to play in the same space as the big boys and compete.

What has been your most satisfying moment in CRE?

It’s like any loving relationship: there are ups and downs. Some of the most satisfying days are those where getting told “no” or cursed out call after call, ends with that one interaction that introduces me to someone who, after years of “no’s,” has experienced a life event that has put them in a position for my help. These serendipitous happenings make all the knocks worth it.

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Life is 10% what happens to you and 90% how you react to it. It does not matter how slowly you go as long as you do not stop. Confucius.

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