Private Investor Due Diligence Mini-Series: Overview
Private Investor Due Diligence Mini-Series: Overview - Episode 1
Business owners, CEOs, sponsors, private investors and family office team members who want a practical starting point for evaluating private deals.
What to take from this talk
- Due diligence reduces risk, not removes it. Richard says even the best due diligence can still lose money. A skilled liar can fool everyone around them. The series aims to build confidence, and each investor stays responsible for their own risk level.
- Passing on deals carries no penalty. Richard cites Warren Buffett, who says that unlike baseball, there is no penalty for letting deals go by. The real penalty comes from connecting with bad deals. Richard would run from anyone applying too much pressure.
- Specialized knowledge beats general knowledge. Citing mentor Dan Sullivan, Richard separates general knowledge from specialized knowledge. Watching billionaire interviews or this series is described as a way to gain the specialized kind.
- Public markets are the defensive bucket. The first bucket is broadly diversified public markets, mostly left to a wealth adviser. Richard describes this bucket as mainly playing defense, with a small effort to beat the market.
- Real estate and a niche complete the plan. The second bucket is mostly cash flowing real estate, chosen by property type and location and run by third party sponsors. The third bucket is the niche the family knows best, where it plays offense. Bucket sizes differ with each family's risk preferences.
Summary
Richard C. Wilson opens a free private investor due diligence miniseries by explaining where the advice comes from. Family Office Club began in 2007, and over 17 years more than $25 million has gone into running it, including over 275 live events. Richard says the series cannot make anyone an expert, but it may help investors avoid a $100,000 mistake and invest with more conviction.
Richard also describes how effective wealthy families tend to split their wealth into three buckets. The first is public markets, handled mostly by a wealth adviser who plays defense. The second is cash flowing real estate, usually placed through third party sponsors. The third is a laser focused niche where the family made its wealth and plays offense. The talk also cites Warren Buffett on why no investor needs to rush a deal.
Key facts
- Family Office Club started its investor club in 2007 and has held over 275 live events.
- Richard says over $25 million has been spent running the investor club over 17 years.
- Richard says he has helped source and close over $500 million worth of transactions.
- The real estate bucket may hold 10 or 20% in development or land, but is usually mostly cash flowing.
Sources
From Richard C. Wilson's Centimillionaire Strategies YouTube channel: Private Investor Due Diligence Mini-Series: Overview - Episode 1. 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.
Said on the call
"Warren's point is that you don't get penalized for not swinging at good deals that may hit your strike zone. You get penalized by connecting with bad deals."
"I would just run the other direction if people are too high pressure."
"The third bucket, where you're playing almost true offense and really spiking the balance sheet up, is in the niche that you know best, like the back of your hand."
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
Will this series make me a due diligence expert?
No. Richard says nobody becomes an expert after a handful of short videos. The goal is to share what sophisticated families do so viewers can avoid costly mistakes and invest with more conviction.
What are the three buckets of wealth described?
The first is public markets, mostly handled by a wealth adviser. The second is cash flowing real estate, often placed through third party sponsors. The third is a laser focused niche where the family created its wealth.
Should investors feel pressure to act fast on a deal?
No. Richard cites Warren Buffett, who says there is no penalty for letting deals go by. Richard would run the other direction from high pressure sales tactics.
Put this into practice with the data room checklist. See all due diligence resources.
