Why Family Offices Move Slowly on Direct Investments
On the Family Office Podcast, Richard C. Wilson interviews Michael about direct investing by single family offices.
Richard C. Wilson speaks with Michael, a former family office investment executive, about how single family offices pursue direct investments. Their conversation covers what affects deal pace, how offices can organize sourcing and diligence, where opportunities and peer relationships may come from, and how an office can judge its own ability to support a business.
In this video: Richard C. Wilson (Host of the Family Office Podcast), Michael (Former family office CIO and CFO, now a consultant to family offices and businesses)
What they said
- A slower pace can be deliberate. Michael says family offices may lack a fixed deployment schedule and have smaller staffs than private equity firms. He says those limits can make them more methodical about which deals they pursue. (at 9:00)
- Comfort zones narrow the search. Michael says a principal may focus on an industry they know well and look at a company through an operator's lens. Moving into a new sector can mean learning it first and seeking a close fit. (at 10:28)
- Michael on matching staffing to the work. Michael says a company needing a turnaround, management changes, or manufacturing process reengineering calls for more hands-on support. He recommends deciding the intended role before setting the internal team's size. (at 17:42)
- Michael on building a connected sourcing team. Michael recommends a sourcing team of two, with at least one person who already knows the industry's channels and relationships. He says an existing network can speed up introducing the office to the market. (at 20:02)
- Michael on independent diligence. Michael says legal and financial diligence can be outsourced, while someone in-house should review the work from the investor's perspective. (at 20:30)
- Michael on checking an investment partner's work. He cautions that even a respected investment partner can miss problems. (at 30:00)
In their words
"they're very methodical in their approach"
Why it matters if you are building or preserving great wealth
Michael says his team was deciding whether to make a follow-on investment after a venture capital firm gave the company its stamp of approval. Two months later, the firm was questioning what it had gotten involved in. Michael says investors still have to do their own homework because even an expert partner can miss something.
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.
See the data
Frequently asked questions
What experience shaped Michael's move into family office work?
Michael says he studied accounting, worked in financial roles at Wall Street firms, then joined a technology startup before moving into venture capital.
Where did Michael suggest family office professionals meet peers?
He suggested conferences focused on areas such as direct investing, boutique firm gatherings, and institutional events in sectors the office follows. He said those events can help professionals exchange ideas and keep up with industry changes.
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.