The number four trait in a syndicator: communicative
In choosing a syndicator, select for a firm that says what they are going to do and then does just that--or more and better than they promise. That includes communicating with you, the limited partner in the deal.
We have found essentially a 1:1 relationship between those syndicators that communicate well and frequently with us and those who perform well. The exact timing of the messages, the degree of detail, the mode of communication--sure, these things can vary. But the best syndicators keep you in the loop, good and bad.
Likewise, our worst performers finance-wise are also our worst at communicating with us. It's our experience that the deals in trouble go silent well before we have any sense of a problem with the deal. Then, when we start to ask question, they are slow to respond. With little good to say, they stay annoyingly silent. Of course, that means we are unlikely to continue to invest with them in future deals, but at the same time we have cash locked up with them, $50,000 or $100,000, and don't know what is going on.
Put another way: If we don't know what is going with a particular syndication, that means "nothing good" is going on.
And by "communications" we mean a whole host of forms of communication. It ranges from the small things to the bigger things. You would not think there should be a correlation between, say, K-1 tax documentation and returns. But at least across the 20+ active deals and funds we have, there is a correlation. Timing of K-1s are also nearly a perfect indicator of successful syndicators in our view: those who get K-1s to you by the deadline of March 15, or at least by April 15, tend to be on top of their game--and that corresponds to other forms of success.
Our favorite syndicators are the ones who tell us what they are going to do in general and then they do it--or do better than that. Communications are both a key part of those promises and an indicator of overall deal and firm health. In our vetting process, we ask what kind of communications we can expect. We ask to see past communications from the syndicator. And we ask whether we can count on that or more going forward. Our favorite firms do what they say they will do and even reach out a bit more, directly, to see what is going on with us. That's what we like to see--and at this level of investment, it seems like a reasonable expectation.