Daniel Galvanoni and all about Family Offices

“At DPG we believe risk is in the deal structuring. We can de-risk investments within our deals with our novel deal structuring.”

Daniel comes from a successful business family. Hence was exposed to investing at a very high level at a very young age. He was also a Division 1 high-level basketball player. That helped him learn the finance world in a better manner. In 2004, he started DPG Investments LLC (DPG). It is a premier, multi-strategy global private equity, merchant banking, and multi-family office advisory firm. DPG takes pride in delivering customized capital solutions in a disciplined manner.

Daniel Galvanoni

Tell us your journey. How did you go from majoring in Religion to starting DPG? How did DPG evolve over time?

First of all, to understand a person you have to understand their beliefs. Who is their God? What is their God? If you can understand that, you can have a better-informed basis for interacting with your counterparty and might be able to influence them more and collaborate with them more effectively.

I come from a successful business family. Due to my parents’ divorce and other issues growing up, I viewed money as somewhat evil. My family was happy and together when we had much less. This is the main reason I obtained a religious studies degree.

I was a Division 1 high-level basketball player. That was my main focus in college. At home in my father’s family office I learned business, and was exposed to investing at a very high level at a very young age. My freshman year in college I got engaged and by the end of college was set to be married and start a family. Therefore, money became important again.

My competitive sports background served me well in high finance. I was fearless, young, and not intimidated to meet or pitch executives who were way more experienced than me.

You can say I had moxie.

For family offices that would like to co-invest with you, what exactly does DPG do and how do you do it?

What sets DPG apart is our deal flow, process, people, and our significant family office investor base. We have discovered extremely successful family offices that want to partner with other like-minded cutting edge family offices.

The effectiveness of our process is demonstrated by our $2 billion in capital committed since 2004 in over 63 closings, and many more billions committed to deals that didn’t close.

Based on your experience, how are the risk/return/timeline requirements of institutional investors different from family offices?

There are significant differences. These differences can be magnified depending on what investment strategies you are deploying, such as distress investing, real estate, or high growth.

Institutions are fiduciaries and investing somebody else’s money and family offices are typically investing their own money. This usually results in institutions being more risk averse and less flexible than most family offices.

Family offices generally are cutting edge, depending on the age of the patriarch. Often, family offices were founded by someone who once didn’t have much but now is wealthy through building a business. They are entrepreneurs, and if shown investments in industries they are familiar with the risk appetite can be very high.

What mistakes do you help operators avoid?

We help their understanding of the private capital markets and exits; challenge their business plans to help them be realists and from being overconfident; help them work through many technical issues during execution of the investment or post-closing. We try to help them understand all the risks as well as the rewards.

You recently closed the largest deal in Tennessee ($125M), what challenges do people face in closing a deal of this size?

It was a $125M closing that was the first and necessary piece of a $2.5B total mixed-use development that our family office investor had the experience and ability to execute on with the sponsor. At DPG we believe risk is in the deal structuring. We can de-risk investments within our deals with our novel deal structuring.

First challenge is the size, since very few investors have that type of capital.
Second challenge is the multi-strategy nature of the development. At completion the development will include 1M sq.ft. of office, 5-6 hotels, 10,000 apartments, major amphitheater, retail, and other uses. This takes real skill and a versatile developer/investor to execute successfully. Most investors/developers just focus on 1 asset class.
Third challenge was timing. We only had 60 days to close a deal with $5M up nonrefundable and the deal had been heavily shopped.

How did COVID-19 impact different asset classes in real estate? Which asset classes are you now bullish or bearish on?

COVID further created the haves and have nots in real estate per the asset classes. Multi-family and master planned single family are red hot. Office, senior care, hospitality, and various other markets were completely crushed.

How important is impact investing in real estate? How do family offices invest in impact-oriented real estate funds?

We don’t base investments on specific desired impacts. If the investment produces a specific positive impact that is just an added benefit. We are IRR driven and feel we can use our profits to impact many people.

Seems like you’re effortlessly juggling work and raising your daughters, how do you teach grit to them?

That is a good question. I also have a son.

As a father you want them protected in a bubble but at the same time growing to become fully functioning capable adults. My divorce wasn’t easy on them and they are learning so much every day. Family values are very important to me, and why I started DPG Investments in the first place.

I had my family young which mentally focused me on another level than my peers

What headline would you want to read in the WSJ about DPG by 2025?

DPG closes $3B in deals, exits 30 investments netting $15B, donates $1B to set up infrastructure to save children out of sex slavery and to provide abused women a place to rehabilitate and develop technical employable skills.

Which early investor/mentor believed in you, even before you did?

My Dad. I struggled in school and wasn’t what any Wall Street firm would hire.

My father believed in me, brought me to meetings, allowed me to network and was an early investor in many smaller deals. He also would discuss his portfolio and his investment strategies often with me. Through him I met numerous business leaders and many extremely wealthy people prior to going into business.

You can say it was hard to impress me already.

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