How Family Offices Filter Deal Flow (And The Red Flag That Kills A Deal Instantly)

0:03You guys get a ton of deals probably every day. Your inbox must be filled. I want the audience to understand what is your filtering process how do you look at deals from what vantage point right do you mostly stay in your lane uh dj let's start off with you well you do get an awful lot of deals and it's like you have a bullseye right at the time so fortunately um we do have parameters that we look for so if it fits in our box unfortunately a lot of families don't have something like that. So because we do, we're able to decipher what we want to look at more and what we're just going to pass on and go from there.

0:47If there's something that we know that another family maybe is looking in a certain area, then we'll ask them if it's okay if they want to meet this person. So we'll help other families too if we know that they're looking at something that we're not. Do you look at every OM that's sent to you? Or do you look at OMs, I guess, from a trusted source first? Well, you're always going to go with a trusted source, but from our perspective, we'll go to the person or the company implementing what they're trying to implement, right? Because if you don't have a good operator for whatever it is, it doesn't matter what the deal is.

1:30but first it's what's the deal if we know who they are then we don't have to dig as deep because we probably already had in the past that's a great resource right there do you want to add to that yes I think our focus in co-investment is also the reason why we do it this way is because we We can share the due diligence with other families. If we have another family who is already invested in a company or in a fund and they want us to go with them, we just share. They can give us their insights and vice versa. So I think the way that we invest with others really accelerates the process and shortens the due diligence, which is something that's important for us because obviously it costs money and we can lose opportunities.

2:36So that's something that we look at. But other than that, I would say initially we just reject a lot of opportunities because we have our thesis and so we just don't react to opportunities. It's really like we built our tesis and then we seek investments. One thing I would say, the best I've ever seen is, and this is a number of years ago, it's a group out of Chicago, and they had probably 20 people there, and these were all people that had a specialty area in a different part of the industry where they created their wealth. And so when deals would come in, that person would spearhead it because they would know.

3:20because that's one of the things. Whatever somebody does, if they created their wealth, they're going to know immediately, right? And so I thought that was interesting because families love doing deals with other families. And when you can piggyback off somebody that has already done it, it makes it easier. Absolutely. Absolutely. Looking at someone else's experience and know-how, much easier to underwrite a deal. Sasha, I want to get to you. What do you see as the biggest red flags when you encounter someone giving you a deal or even a service provider? What are the biggest red flags you see that kills a deal immediately off the bat?

3:58You know, that's a good question. I think for us, really finding a sense of humility with people. and I'll give you an example of a group that we actually decided that we're going to test out you know we were we were giving this person an interview and he said to us that he was going to be converting this 230 unit project in Providence it was a textile mill and you know we had never done anything in textile mills it sounded crazy and at the at first I said no I rejected it but I knew the person really well that recommended me to this person because we started doing industrial outdoor storage through one of his contacts and they've done really well.

4:46So we focused on what we call emerging. They're new. They don't have a track record. But we think that with our help, we can help them convert to that. And one of the questions we asked them was, you've converted a 30-unit textile mill. you're now jumping to 230. Like, how do you, how do you feel? Are you nervous? Right. And a lot of the times people are, you know, they'll say, Oh my God, we're 100 % or, but his answer was, I'm scared as hell. Right. And, um, he's like, I, you know, this is the first time I feel like I can really lose, um, money and, and, and, and all that. And, um, um, and then I remember he told me that his dad was a human rights lawyer.

5:28And I was like, if that was a human rights lawyer, like, how are you getting, he was putting significant money. And he was like, look, look, when I graduated, I had$30 ,000. I did this project and I 3X'd it and I did another project and then I 5X'd it and he was going all in in this project. But I think that every step of the way, just talking to him, there was this humility to that person. We ask questions and a lot of the times he's like, look, I'm going to be learning a lot of it for the first time because I haven't done it before, right? and so you know and so i i appreciated the candor and um you know and and and um when me and my partners were talking i was like look let's let's give it a shot because um you know the the fact that he was willing to say that i want to learn that i'm going to make mistakes um you know um gave us confidence he was worth uh giving a shot in you know in other situations we've had situations where you know that you could tell the per that that person is you know not just confident but more cocky they're they they behave like they know everything and that no mistakes those are the things those are where you you get nervous because then those expectations okay what happens when it doesn't go their way can they um do they know how to handle challenges can they pivot and right right can they pivot and meeting someone that just said that that came out right away saying look there's going to be a lot of unknowns because these are textile mills i've done 30 ones but the the risk return was worth giving it a shot so humility is definitely a major factor when you're looking for a huge sponsor huge um you know not that they're uh you know not overly confident um you know you want to make sure that they have a baseline of competence right 90 of the time the people that you'll screen have uh competence right actually i I take that back.

7:26No, I take that back. I'm wrong about that. But usually people, that's humility. Usually you want to make sure they have some confidence because 90 % of the people that you do get, they don't have the confidence. So you want to make sure they can add one plus one first and then go from there. Hi, I'm Richard C. Wilson. Our community has closed over$1 billion of transactions. We have over 16 million registered members across 100 plus LinkedIn groups. And I own billionaires.com and run Family Office Club. Over 19 years, we've hosted 300 live events. I've built 50 of our own AI tools. And between the billionaires I've interviewed, the centimillionaires who have spoken on stage, and over a thousand decamillionaires who have presented, we've found there's three things that really can build your wealth.

8:13Proximity, superintelligence, and scale. That's exactly what we provide at Family Office Club. We host 30 events a year, including five large summits for wealthy founders and investors, dozens of workshops and masterminds, including 12 artificial intelligence, laptops out, implementation workshops. So you leave with AI implemented. To learn more, please go to familyoffices.com. And I look forward to meeting you at our next live event. If you are a founder, raising capital, developing real estate, or you're an investor, we'd love for you to get involved in the Family Office Club. I've run this community for 18 years now.

8:53We've hosted 300 live events. We have 17 million social media group members and followers. We have the number one YouTube channel on Family Offices. We have the number one most popular podcast on Family Offices. You can learn more about us and our membership options at familyoffices.com. We have 30 in-person events planned in 2026 and another dozen events this year. Please go to familyoffices.com to learn more.