The deal screen: what families check before diligence
Built on Chapter 12 of The Single Family Office by Richard C. Wilson. Full chapter text: FamilyOffices.com.
Full diligence takes weeks or months. Most deals do not deserve that much time. The families I see doing the most deals well use a short screen first. Only deals that pass get a meeting, and only deals that pass the meeting get full diligence.
The case for a screen
A busy family office gets far more pitches than it can study. Without a screen, the team spends time on deals that were never a fit. With one, it can say no politely and quickly, and save its energy for the few that matter.
A screen also helps the people who send you deals. When you share it, the people who source deals know what to send and what to skip.
Commitment comes first
There is an old saying that in a breakfast of bacon and eggs, the hen contributed but the pig was committed. One of the first things we screen for is full commitment from the CEO. A founder who is half in, or has one foot out the door, is a warning sign no matter how good the numbers look.
What a good screen covers
Every family's screen is different, but most strong ones cover the same ground.
Fit with the mandate. Is the deal in an industry the family knows? Is it the right size and stage?
The people. Is the CEO fully committed? Is there a capable team beyond the founder? Do references check out?
The business. Is there real revenue or clear proof of demand? Are margins healthy? Is the company too dependent on one customer?
The terms. Is the valuation grounded in results, not hopes? Are the terms normal, or do they block future investors?
The exit. Is there a believable path to selling the company or getting money back?
Outside variables. Does the deal depend on a subsidy, a pending approval, or a single regulator decision? Fewer of these is better.
A sample first call
When a deal passes the written screen, the first call should be short and focused. I like to ask the founder three things. What would make you walk away from this company? Who else has seen this deal, and why did they pass? What happens to the business if you are not there in two years? The answers often tell you more than a polished deck.
Keep it short
A screen is not a diligence checklist. It should fit on a page. The goal is to decide quickly whether a deal deserves real time. Some families will not take a meeting or a long call until most boxes are checked.
Use it as a team tool
A written screen lets junior staff sort incoming deals for you. It also keeps senior people honest. When a partner falls in love with a deal that fails the screen, the team can ask why the rules should bend this time.
Update it from experience
Every year, compare the deals you did with the screen you used. Which items predicted success? Which bad deals slipped through, and why? Add or change items based on what you learn. A screen that improves each year becomes one of the most useful tools a family office owns.
Share it in clubs
In a club deal or co-investment, agreeing on a shared screen helps partners avoid wasted effort. If every member agrees on the must-haves, fewer weak deals reach the costly stage of full diligence.
What to take from this
- Write a one-page deal screen and use it on every pitch.
- Screen for full CEO commitment early.
- Share the screen with people who send you deals.
- Review and improve it once a year.
This page is general information, not legal or investment advice. Speak with qualified advisors before relying on any screening process.
Questions and answers
What is a deal screen? A short list of must-haves a deal must meet before it gets serious time.
How is a screen different from diligence? A screen is quick and decides whether to dig in. Diligence is the deep work that follows.
What should come first in a screen? Fit with the family's mandate and the CEO's full commitment.
Should a club share one screen? Yes. It saves time and keeps partners aligned.