How do family offices vet private equity investments?
Short answer: Michael's $4-per-barrel example turns operational diligence into a question about whether projected production can reach a buyer at the expected cost.
Heritage on operator background checks
A Heritage investor says the firm runs personal background checks on everyone it invests with. He says a check uncovered things the firm investigated further. It passed on a deal, even though it liked the investment narrative. (at 1:22)
Investment and operational diligence
A Heritage investor says he separates investment diligence from operational diligence. He says one deal used an LLC instead of an LP, which raised an operational concern. The firm passed on the deal. (at 2:16)
156-question diligence checklist
The Heritage investor says the team uses a 156-question checklist and spent seven months reviewing one operator. In his view, a defined process mattered more than having a large diligence team. (at 2:42)
Michael on oil and gas experience
Michael says his family office's oil and gas experience helps it ask operational questions. He says marketing issues on the midstream side could prevent access to oil, and a first purchaser might charge an extra four dollars per barrel. (at 4:35)
"Prior to working at Heritage, I did a lot of personal investing and I didn't do that step"
From Richard's exclusive Billionaires.com interviews
Lessons from Richard C. Wilson's one-on-one interviews, as published on each interview page.
- Anu Aga: Focus on one main cause. Her family found its giving more satisfying and impactful once it chose primary education for the underprivileged in India.
- Binod K. Chaudhary: Never chase a deal out of desperation. Stay cool and look at every part of the deal. Have your advisers and your finance team review it critically. Your counsel should review it too.
- Larry Connor: Learn from every mistake. Larry's team owns its failures and makes no excuses. They learn, change quickly, and keep getting better.
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Frequently asked questions
How do family offices vet private equity investments?
Michael's $4-per-barrel example turns operational diligence into a question about whether projected production can reach a buyer at the expected cost.
What assumptions did Michael say can affect an oil and gas model?
Michael says four to five key assumptions made to the upside can completely change how a model behaves.
What did a panelist say about industry expertise?
A panelist says family offices can ask people with relevant expertise for help. He says there are experts who can answer those questions.
Sources
Quotes are copied from the video captions and checked against the transcript. Timestamps link to the moment in the video. General information only, not legal, tax or investment advice.