How Do Family Offices Filter the Deals They Receive?
Short answer. Family offices filter deals by comparing each opportunity with their stated investment priorities, then screening for fit before committing time to full diligence. They focus on relevant sectors, deal size, terms, and partners. A consistent process helps the team manage deal flow and spend attention on opportunities it can assess properly.
Family offices filter incoming deals by applying a clear investment mandate, screening for fit, and reserving detailed diligence for opportunities that merit more attention. Without a process, the team can spend too much time on pitches that do not match its priorities or capacity.
Make the Investment Strike Zone Clear
Start by defining the types of deals the family wants to see. That can include the sectors it understands, the role it wants to take, the kinds of assets or companies it considers, and the terms or time horizon it can accept. Share those priorities with trusted deal sources so they can screen opportunities before sending them over.
Relationships and networks are a major source of deal flow. A focused group of valuable partners can be more useful than trying to maintain an unstructured stream of contacts. When the family explains what it wants to invest in, partners can identify opportunities that match and explain why the family might be a good fit.
Use an Initial Screen
When a deal arrives, compare it with the mandate before scheduling extensive calls or reviewing every document. Check whether the opportunity is in a preferred area, whether the family can play the intended role, and whether the proposed terms and structure warrant a closer look. Record the reasons to proceed or decline so that the team can apply the same standards across opportunities.
Some opportunities may require a quick decision because the family already knows the sector or source well. Others need more information before the team can judge fit. In either case, an early screen should clarify what is known, what is missing, and what would cause the family to stop reviewing the deal.
Move Promising Deals Into Diligence
Deals that pass the screen can go to an analyst or investment committee member for a closer review. The team can then examine the business or asset, the people involved, the assumptions, the structure, and the risks. An investment committee offers a place to discuss the findings and decide whether the opportunity should proceed. For more detail, see the investment committee's role and the due diligence process.
Screening is especially useful when a family office receives many communications from fund managers, companies, and deal partners. A disciplined process helps the team avoid chasing every opportunity while preserving time for the ones that fit. The family can refine its criteria as it learns which kinds of deals match its expertise, capacity, and investment goals. Clear feedback to deal sources also helps them understand which opportunities are worth bringing forward.
Read next: What are family offices looking for in a deal?
Narrowing your focus is a key to a productive deal-sourcing strategy.
Sources: How to Start a Family Office, The Single Family Office. Informational only, not financial, legal or tax advice.