Family office investment committee process for direct deals

How does a family office investment committee approve direct deals?

Many family office investment committees (ICs) follow a similar arc: a sponsor brings a memo, the committee tests it against the family's mandate and risk limits, votes, and then monitors the investment through regular reviews. Adding one standing agenda item on records and rights at owned companies lets the same table decide whether a SourceX licensing screen is worth running, and who signs off.

Structures vary a great deal by family and by whether the office is single-family or multi-family, so treat this as a working pattern, not a rule. Your charter, trust documents and advisers control what you actually do.

Prerequisites

• A written IC charter that states members, quorum, voting rules and conflicts policy.
• A mandate or investment policy statement with limits on size, concentration and liquidity.
• A standard memo template and a list of named approvers.
• Someone responsible for post-close monitoring.

The process, step by step

1. Sourcing log. The deal lead records the opportunity, the source and any conflicts before spending time on it.
2. Screening call. One or two members review a short summary and decide whether to proceed.
3. Diligence plan. The lead lists workstreams: financial, legal, commercial, operational and, newly, records and rights.
4. IC memo. A written memo covers thesis, structure, returns range, risks, governance rights and exit routes.
5. Committee discussion. Members question assumptions; an independent member or adviser may challenge the thesis.
6. Decision. The IC votes, records conditions and names the owner of each condition.
7. Closing and onboarding. The lead sets the reporting calendar and board or observer rights.
8. Monitoring. Quarterly reviews track performance against the memo, with an annual deeper review.

The records and rights item

Add three lines to the memo and the annual review: which systems hold the company's records, who controls them, and whether the company has rights to license them. It takes five minutes to discuss and avoids surprises later.

Bain's 2026 global private equity report says buyout holding periods at exit have lengthened to around seven years, up from five to six years in 2010-2021, and that owners are under pressure to find new sources of value. Family offices are not buyout funds, but they may weigh the same question of new sources of value, so a one-time licensing payment is a lever worth a few minutes of IC time rather than an automatic yes.

Common mistakes

The annual calendar

Roles around the table

• Chair: keeps the agenda and makes sure the records line is not dropped when time is short.
• Deal lead: owns the memo and the conflict note.
• CFO or controller: supplies the system list and confirms who can export.
• Independent member or adviser: challenges the thesis and checks rights and privacy questions with counsel.
• Secretary: records conditions, owners and dates.

Questions to ask counsel

• Do any customer or employee agreements limit licensing of the company's records?
• Does the company hold consumer personal data or health information that needs separate treatment?
• Who must consent under the shareholder agreement before an exclusive license is signed?

When to stop and escalate

Pause the screen and take it back to the full committee if the company is in a dispute with a customer over data ownership, if a lender or trustee holds a claim on its assets, if the records are mostly consumer or health information, or if the deal lead has any personal interest in the outcome. A short pause costs little, whereas a license signed over an unresolved rights question is hard to unwind.

Illustrative example

Illustrative: a family office holds a controlling stake in a fictional 180-person engineering services firm. At the annual review the CFO reports 11 systems, the oldest dating back nine years, and a second administrator for the ERP. The IC approves a preliminary screen, assigns the CFO as the contact, and requires a written conflict note from the deal lead. No licensing decision is taken at that meeting.

Where to learn more

The direct investment risks guide explains the records blind spot behind the agenda item. Peers can compare notes at events listed in the family office conference guide, and those financing through deal-by-deal capital should read about pledge funds and executive-led buyouts. Private equity teams use a similar screen, described on the operating partner page, and sector context appears in what AI roll-ups look for in acquisitions. The network opportunity finder helps with outbound introductions, and the who qualifies page lists the company baseline.

Rewards and approvals

Partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 per referred company. The reward is paid only after the buyer pays and SourceX receives its fee; an introduction, meeting or signed agreement alone does not trigger payment, and no reward is guaranteed. Have the committee confirm that a family office role as referral partner is permitted by its charter, trust terms and any adviser rules, and review the program terms.

Next step

Add the records and rights line to your next IC memo template. If an owned company passes the screen, register as a partner and make the introduction, or have the CEO apply directly at sourcex.si/apply.