Raffles Consulting Services
Family office private-investment due diligence should preserve independent checks, conflicts, information rights, valuation updates and exit triggers.
Family office private-investment due diligence should make the family’s decision understandable without taking that decision away from the principals. Before funding a direct deal, record the investment thesis, ownership, management, financial position, legal rights, valuation, conflicts, downside, information rights and exit assumptions. After completion, monitor the facts that could break the thesis.
The strongest file is proportionate to the investment and the family’s risk. It does not need institutional paperwork for its own sake. It does need enough independent evidence to distinguish a trusted introduction from a verified opportunity.
Translate the family mandate into a deal screen
The current EDB single family office setup guide asks families to identify an investment strategy and the public or private assets they intend to manage. Turn that strategy into a short screen before detailed work begins.
Record sector, geography, stage, ticket size, holding period, liquidity, return objective, impact preference and prohibited exposures. Add concentration limits and the amount of follow-on capital the family may need to reserve.
A deal outside the screen can still be considered, but the exception should be explicit. State why it deserves attention, who approved further work and what additional risk the family accepts.
Identify the real owners and decision-makers
Verify the legal entity, shareholders, ultimate owners, directors and key executives. Understand any nominee, trust or holding-company arrangement. Reconcile the ownership account across official records, constitutional documents and the founders’ explanation.
Check who can bind the company and who controls bank accounts, intellectual property and critical contracts. A charismatic founder may not hold the legal authority or assets assumed by the investment presentation.
Record connected parties, prior businesses, litigation, insolvency, sanctions and adverse information in a proportionate manner. Give the company a fair opportunity to explain a credible discrepancy and preserve both the issue and response.
Test the commercial evidence
Rebuild important numbers from source records. Revenue can be tested against contracts, invoices, bank receipts and tax filings. Customer concentration can be tested against the sales ledger. Cash runway can be recalculated using current cash, committed spending and realistic collections.
Separate signed business from a pipeline, and recurring revenue from one-off work. Ask how cancellations, returns, rebates or channel fees affect the figure. Use direct customer or supplier confirmation only with proper consent and a clear purpose.
For technology or intellectual property, identify ownership, assignments, licences, open-source obligations and key-person dependence. A demonstration supports functionality, but not necessarily ownership or scalability.
Make conflicts visible
Ask every family and team participant to declare financial, family and business connections to the company, founders, advisers and co-investors. Include referral fees, board roles, prior investments and personal relationships.
Decide who should abstain from discussion or approval. Record the declaration, decision and any safeguards. Informal family knowledge is not a substitute for a file when other relatives, trustees or the next generation later review the investment.
If the family office receives an allocation that differs from other investors, understand why. Side letters, fees, preferential rights and co-investment terms should be reviewed together rather than in separate email threads.
Negotiate information and protection rights
Private investments are hard to monitor without contractual access to information. Define the frequency and content of management accounts, budgets, cap tables, cash reports, covenant certificates and material-event notices.
Consider board or observer rights, consent matters, pre-emption, anti-dilution, transfer restrictions and exit rights with legal advice. The commercial value depends on enforceability, ownership structure and the position of other investors.
Record the post-closing owner for every right. A right to quarterly information has little value if nobody requests, reviews or escalates it.
Set a valuation approach before closing
Document the entry valuation, method, assumptions and comparable evidence. Identify which facts would require a change after investment, such as a down round, missed milestone, loss of a major customer or new arm’s-length financing.
Separate company-reported value from the family’s own carrying value. Where an external valuation is used, record the valuer’s scope, information and limitations. Avoid keeping the entry price unchanged only because no sale has occurred.
Agree the review frequency and who approves changes. Consistency helps family reporting, tax work and decision-making, but it should not prevent a justified reassessment.
Build an ongoing monitoring record
| Area | Evidence | Escalation example |
|---|---|---|
| Financial | Management accounts and cash runway | Repeated missed forecast |
| Ownership | Current cap table and financing notices | Unexpected dilution |
| Operations | Milestones and key contracts | Major customer loss |
| Governance | Board packs and conflicts | Related-party transaction |
| Value and exit | Valuation memo and options | Down round or blocked exit |
Plan downside and follow-on capital
Before closing, write the events that would cause the family to hold, support, renegotiate or exit. Consider whether further funding protects value or only delays recognition of a weak thesis.
Reserve decisions should consider the whole portfolio. An attractive follow-on can still create concentration or liquidity pressure. Record the family’s available capital, competing commitments and the consequences of not participating.
EDB’s family office journeys show that families adopt different structures and priorities. A practical file should reflect the family’s own mandate rather than copy another office’s process.
Keep advice and authority distinct
Investment, legal, tax, valuation and technical advisers can test parts of a deal. Record each adviser, scope, reliance and unresolved limitation. No adviser should be assumed to have reviewed an area outside the engagement.
The family principals retain the investment decision. The EDB global business families page describes Singapore’s family-enterprise ecosystem, but it does not replace deal-specific professional advice.
The family office governance operating model is the pillar cornerstone. The investment policy statement guide covers the mandate. The outsourcing oversight guide covers external providers. The Family Office and UHNW hub connects the library.
A disciplined record protects more than the initial decision. It gives the family a shared account of what it believed, which rights it secured and how it will respond when the facts change.