How Should a Family Office Document the Reasons for Approving or Rejecting an Investment?

A decision memo should let someone understand the family office's reasoning without having to reconstruct the meeting from memory. It should connect the investment thesis to the evidence, identify what remained uncertain, and record why the committee approved or declined the opportunity.

Record the Decision in Context

Identify the investment, the date, the people who reviewed it, and who had authority to decide. Summarize the thesis in plain language: how the investment is expected to create value, what needs to happen, and what the minimum viable success looks like. Keep the summary specific to this opportunity.

Then distinguish facts from assumptions. For each important claim, cite the supporting document, source, or check and note whether the team confirmed it. If the case depends on a forecast, explain which inputs mattered and how the result changes when they weaken. A future reviewer should be able to trace the reasoning to the diligence file without treating a sponsor presentation as proof.

Show How the Committee Weighed Uncertainty

Describe the risks that affected the decision and the evidence that addressed them. Record unresolved questions, who owned each follow-up, and whether the committee accepted the uncertainty, required a condition, or treated it as a reason to stop. A red flag is a reason to investigate; the memo should state what was found, not turn an allegation into a finding.

Useful questions for the record include:

• "What is the most realistic way we could lose most or all of the capital, and what evidence makes that less likely?"
• "Which assumption would change our decision if it proved false?"
• "What information did the sponsor not provide, and why?"
• "What must be completed before funding, and who will confirm it?"

For an approval, state why the expected value and downside fit the family office's objectives and decision rules. Record any conditions, such as a term change, additional support, or a control that must be in place before funding. Name the owner and the evidence needed to close each condition.

Make a Rejection Useful

For a decline, state the main reason directly. The evidence may not support the thesis, the exposure may exceed the family's limits, the terms may be unacceptable, or an important question may remain unanswered. If the office would reconsider after a specific change or new evidence, record that condition. Avoid vague wording that could be mistaken later for a temporary delay or an endorsement.

Record any material dissent and how it was considered. The governance policy should establish who can approve investments and what record is required. The single family office governance guide can help define those decision rights. Link to supporting materials and preserve the version of the model and terms reviewed.

Keep the Record Alive

File the memo with the diligence materials and use it during monitoring. If a thesis assumption changes after approval, update the record and route the issue back for review. For a structure to organize the supporting work, see the written diligence plan guide.

Checklist

• Identify the opportunity, decision date, reviewers, and authority.
• State the thesis and the evidence supporting its main claims.
• Separate confirmed facts, assumptions, and unresolved items.
• Record the downside, dissent, and reasons for the outcome.
• List approval conditions with an owner and completion evidence.
• Link the memo to the diligence file and record later changes.

Read next: What process ensures that unresolved diligence issues reach the decision makers?

This document should outline who has the power to make hiring decisions, investment portfolio allocation changes, compensation adjustments, profit distributions from the family office to family members, and when the next generation of the family is to receive capital and the process for those distributions.

Sources: Family Office Club investor due diligence framework, The Single Family Office. Informational only, not financial, legal or tax advice.