Due Diligence and Investment Strategy: Family Office Club Panel
Panel Discussion: Tech, Due Diligence, and Investment Strategies at The Family Office Club Event
Family office principals, LPs, and fund managers who want to see how experienced panelists approach diligence, strategy, and exits.
The short version
A 156 question checklist sits at the center of this Family Office Club panel, where family office and fund representatives compared how they vet deals. One Heritage panelist described making only 5 to 7 to 10 allocations a year, so a defined process matters more than a large team. Background checks on operators have led them to pass on deals with appealing narratives.
The panel also covered who invests in these strategies, from small family offices to high net worth W2 earners in oil and gas. Advice to investors included asking sponsors about their model assumptions, planning an exit strategy early, and sticking to a chosen strategy. Panelists also discussed whether a family office with $250 million or less should start its own or partner with a group.
The 5 big lessons
- Separate investment and operational diligence. A strong investment story is not enough. The Heritage panelist said operational diligence looks at fund documents and manager backgrounds, and it has caught red flags that the narrative hid.
- Process matters more than team size. With only 5 to 7 to 10 allocations a year, Heritage does not need a large diligence team. It uses a 156 question checklist instead.
- Run background checks on operators. Personal background checks on the people Heritage invests with have uncovered issues on deals they otherwise liked. They passed on those operators.
- Ask what assumptions sit in the model. One panelist warned that four to five key assumptions pushed to the upside can change a financial model completely. Investors should ask sponsors what is being underwritten.
- Stay with your strategy. Panelists said trouble came when they strayed from their core strategy or chased the new hot thing. One described focus as saying no to good ideas that do not fit the vision.
Worth quoting
"Don't be afraid to ask for help if you are a family office and you don't know something about a certain industry."
"Intellect does not necessarily qualify someone to be good at managing money."
"Process has been more important than depth of team."
Facts from this talk
- Heritage uses a 156 question checklist in its due diligence process.
- Heritage makes 5 to 7 to 10 allocations a year.
- One oil and gas panelist cited a first purchaser charging $4 extra per barrel as an operational detail diligence can reveal.
Sources
From Richard C. Wilson's Centimillionaire Strategies YouTube channel: Panel Discussion: Tech, Due Diligence, and Investment Strategies at The Family Office Club Event. Quotes come from the video captions, lightly edited for readability. Figures are the speakers' own estimates and experience.
General education only. Not legal, tax or investment advice.
Talk to a securities attorney to explore options around fund entity structure, fund document review and investor economics terms. Do not use AI to write your own legal agreements.
Related questions
- How do I close a funding round?I close a funding round by focusing on investors who fit the opportunity and moving each interested prospect through clear, consistent follow-up.
- What documents do investors request during due diligence?Prepare a clear, organized package covering your operations, investments, compensation, team, and track record.
- How do I raise capital for my business?I raise capital by building a repeatable system for attracting the right investors, establishing credibility, and developing relationships before asking for money.
Questions about this video
Why separate investment diligence from operational diligence?
One panelist said a good narrative and likely returns can still hide operational problems. One example involved how a fund was set up, which is a topic many investors and sponsors talk to a securities attorney about.
How many investments does Heritage make each year?
The panelist said they make 5 to 7 to 10 allocations a year. Because of that, they rely on a defined process rather than a massive team.
What should investors ask sponsors about financial models?
They should ask what assumptions are being made and what is being underwritten. The panelist said four to five upside assumptions can completely change how a model behaves.
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