David’s story, from Tanya Muro’s book The Operator Question, is based on real cases.

He saw a slide with ten past deals. Every one of them made money. It looked like a company that didn’t miss.

He never asked how many deals the company had done in total.

The answer was fourteen.

The four that weren’t on the slide

The missing four told a different story:

One paid investors back only what they put in, two years late.
One was a shopping center hit hard when tenants stopped paying during COVID.
One was an office building still struggling to fill space.
One sold at a loss.

None of that means the company was a bad operator. Every company that does enough deals will have some that struggle. But David couldn’t judge how this one handled its hard deals, because he never saw them.

A track record is a selection

As Tanya writes in the book, a track record is a selection, not a history. Someone chose what went on that slide. What gets left out tells you something.

So ask two questions:

How many deals have you done in total?

Which one did the worst, and what happened?

You can also check part of the answer yourself. Many private fundraises leave a public filing on the SEC’s free EDGAR site. Tanya explains how in Check a Company’s Past Deals Free on EDGAR.

Would you have asked about the missing four?

This post is based on a one-minute video on Tanya Muro’s YouTube channel. For education only, not financial advice.