Due Diligence Time Savers for Private Investors
Private Investor Due Diligence Mini-Series: Episode 2 - Investment Due Diligence Time Savers
Private investors, family office principals, and busy business owners who receive many deal pitches and want a faster way to screen them.
Five points worth keeping
- Know your three buckets first. Investors who are clear on their three buckets waste less time on deals outside them. In real estate, this means sticking to the right asset types and location, with only rare exceptions.
- Say no early and politely. If you do not like the people or cannot say why a pitch deck feels off, Richard suggests saying it is not a fit and moving on. He adds that investors need to get better at saying no each year without burning bridges.
- Screen over email, not calls. Founders raising capital often push for a Zoom or phone call right away. Richard prefers a set of three, five, or seven written questions first, because many sponsors never answer or take weeks to reply.
- Watch how they answer. Questions can cover three years of financials, how the valuation was reached, the team, and what sets the company apart. Answers like having no competition, or quoting future revenue instead of last year's results, are warning signs.
- Ask for detailed financials before deeper work. In the 10 million EBITDA medical practice example, a billionaire client asked for five years of financials on each of the 12 practices. If they were missing or disorganized, a lot of time would be saved. Some investors consider an NDA at that stage.
What you will hear
Screening deals by email before any call is the main time saver Richard C. Wilson describes. He suggests asking every sponsor the same three, five, or seven questions, such as prior financials, how the valuation was set, who is on the team, and what sets them apart from competitors. Weak or slow answers are often enough to pass.
He also urges investors to know their three buckets and say no to anything outside them. He says saying no early, politely, and often can help keep a reputation intact. He says email screening can clear 95% to 99% of inbound deals, which could otherwise take 100 hours a year on calls. He closes with a 10 million EBITDA medical practice group, where a billionaire client asked for five years of financials on each practice.
Facts and figures
- Richard says the Family Office Club has about 7,000 investors and a thousand members raising capital, so screening deals verbally is not practical.
- The club has equity in about 37 medical practice locations, and the 10 million EBITDA group in the example had 12 practices.
- A billionaire client with 19 deals done with Richard asked for 5 years of financials on each practice.
Sources
From Richard C. Wilson's Centimillionaire Strategies YouTube channel: Private Investor Due Diligence Mini-Series: Episode 2 - Investment Due Diligence Time Savers. 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 nondisclosure agreements, sharing financial information and deal screening practices. Do not use AI to write your own legal agreements.
Worth quoting
"Everyone who's raising capital wants to get you in a Zoom, on a phone call, in a live meeting, face to face."
"If you don't like the people, then none of that matters, right?."
"Someone who's raising capital and doesn't respect that doesn't really respect you."
- 1Define your three buckets
- 2Send five or seven email questions
- 3Ask three to five follow-ups
- 4Request detailed financials
- 5Consider an NDA, then take a call
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 screen deals by email instead of on a call?
Richard says sponsors want a call right away because it gives them maximum engagement, but it may not be a good use of the investor's time. Written questions let investors filter out most deals before any meeting.
How many deals can this kind of screening remove?
Richard says that focusing on your three buckets, asking five or seven questions, and then three to five follow-ups can eliminate 95 or 99% of what comes in. He says those deals could otherwise take 100 hours a year in calls.
When do investors think about an NDA?
Richard says he personally would not sign an NDA before knowing what industry the company operates in. In his medical practice example, a billionaire client was willing to sign one once detailed financials were requested.
Put this into practice with the data room checklist. See all due diligence resources.
