Q/A: SFO Direct Investing 101
A Q&A with Nathan Troutman, Privatus Partners, LLC on SFO Direct Investing
Q: Multibillion-dollar families too often have great complexity in their investments, how did you go in there and review their holdings and whether these were successful or not?
Q: I have heard you discuss some of the assignments you had, I think our audience would be interested in an example of how you went in there and “cleaned” things up?
Q: Another example with another family?
Q: Given your investment banking background, what are common mistakes that families make in investing in direct deals?
Q: Many believe that alpha opportunities are going to come from direct investing, how do families source deals and incorporate this philosophy into their allocation?
Q: Deal flow and then making the right decisions are critical, this is much more hands-on than most other investments, do they outsource this or should an SFO build this internally?
Q: You have such a wonderful background, please tell us an about how you got into investment banking and why you found this so engaging?
Q: After a successful career you then initially consulted and worked in such a capacity for some of the world’s most prominent families, how were you able to do this?
AJR: You have such a wonderful background, please tell us an about how you got into investment banking and why you found this so engaging?
NT: I came from a business family background. within my immediate family tree, someone has been involved in farming (tobacco, corn, soybeans), construction, beverages (Nehi Sodas, bourbon), construction, food processing or barges. I owned my first business when I was 17 which was a concession business at a large municipal park with two baseball fields and a pool. At peak periods I had ten employees. So Business School, Wall Street, investment banking were places I thought I could learn how to do business better.
I was especially intrigued when I discovered that I didn’t necessarily have to
build the business myself as my family members had done but that I could buy an existing one and that there were ready sources of capital to do so. in that regard, I immediately gravitated to M&A, Merchant Banking and bankruptcy work to learn how to value and buy a company. I never had much interest in the capital markets side of investment banking. Investment banking provided a terrific exposure to business. I didn’t necessarily like the business itself of investment banking as I saw its underbelly continued to grow over the years with conflicting advice and fee gouging.