Writing a buy-side investment banking mandate for a billionaire family

Built on Chapter 4 of How to Start a Family Office by Richard C. Wilson.

A banker retained to find acquisitions for a billionaire family needs a specific assignment. Sending the family occasional opportunities is different from searching on its behalf. If that distinction stays vague, the family can pay for activity without receiving the search work it expected.

Chapter 4 discusses investment bankers working on family mandates. I would define the search and the boundaries of the banker's authority before it begins. The banker should know what qualifies for attention and what it may say to a prospective seller.

Describe the acquisition the family can actually pursue

Translate the approved investment mandate into a search description. Include the business characteristics that matter and the limits that exclude an opportunity. Keep confidential family information out of material intended for broad circulation.

Confirm that the family has resources to assess the proposed opportunities. A search can generate businesses the family is interested in owning but cannot currently evaluate. Identify who will perform that work before creating a larger flow of inquiries.

State how a proposed change in scope will be approved. A banker should not gradually expand the search into unfamiliar industries because the original assignment produced few opportunities.

Define what the banker is being retained to do

Identify the activities included in the engagement. Researching possible sellers differs from approaching them, and arranging an introduction differs from negotiating terms. The family should understand which work the fee covers.

Agree what the banker will deliver for an opportunity presented to the family. A useful first submission should establish why it appears to fit and what information remains unavailable. The family can then decide whether deeper work is warranted.

Have counsel examine the engagement and the proposed activities. The office should understand the obligations it is accepting before authorizing the search.

Control representations made in the family's name

Approve the description the banker may use when contacting a seller. State who can disclose the family's identity and under what circumstances. A confidential search does not authorize misleading statements about the buyer.

Distinguish interest from commitment. The banker should know which conversations it can conduct without approval and which statements require the family's authorized representative.

Give prospective counterparties a verification route suited to the stage of discussion. The family can preserve privacy while providing a legitimate way to confirm that the banker has an assignment.

Understand incentives and competing relationships

Ask how the banker is compensated and what other relationships might affect the assignment. Have the relevant advisors assess conflicts and required disclosures. A familiar intermediary can still have obligations to another party.

Clarify the handling of opportunities already known to the family. Duplicate introductions and prior relationships can create disagreements about compensation. Establish the process for identifying those situations early.

Keep fee discussions attached to the actual engagement. An employee should not promise additional compensation in an informal conversation merely to encourage another introduction.

Name the office contact who receives proposed opportunities. Define the information needed before the investment team spends time on a meeting. Let the banker know how questions will be routed.

Assign responsibility for declining or advancing a submission. A search loses usefulness when the banker cannot tell whether the family has reviewed an opportunity. The office should return an accurate status without suggesting an investment commitment.

When deeper work begins, identify who coordinates the seller's information requests and the family's specialists. Avoid several advisors approaching the same counterparty with inconsistent questions.

Assess the work against the original assignment

Examine whether the banker is producing qualified access and useful information. Separate a difficult market from a failure to perform agreed work. The number of introductions alone does not establish value.

If the scope needs revision, make that decision explicitly and address the effect on the engagement. Keep unresolved opportunities and confidential materials accounted for if the assignment ends.

A clear mandate lets the family evaluate the relationship through the work it purchased. It also lets a capable banker concentrate on opportunities the family has a realistic basis to pursue.

Questions and answers

Can the banker bind the family to an acquisition? Only the authority actually granted should govern. The engagement and external representations should make the limits clear.

Should an existing family relationship count as a new introduction? Address prior relationships and overlapping sources in the engagement with appropriate professional advice.

This page is general information, not legal advice. Family governance documents and dispute processes should be reviewed by a qualified attorney.