Family offices bleed ‘Economic Powerhouse’ in Private Company Deals

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Family offices are Increasing Private Equity Funds and Buying Stakes in Private Companies Directly, According to a new survey.

Half of Family Offices Plan to do “Direct Deals” – Or Invest in a Private Company without al.

As they grow in size and sophistication, family offices are baking more confident about finding and negotiating their own private equity vals. Since Family Offices-The In-House Investment and Service Firms of High-NET-Worth Families-Are Typically Founded by Entrepreneurs who started ES and Leverage their expertise.

More than Half (52%) of Family Offices Surveyed Prefer Doing Direct Deals Through Syndicates, Where other investors take the lead, “Reflecting a cautious approach and reliably Ding to the report.

“Family offices are being gradually recognized as an economic powerhouse in private markets,” According to the report.

The big challenge for family offices as they do more direct deals is so-called deal flow, or the volume of posesible deals. Since most deals are either unattractive or not suitable, family offices may see 10 deals or more for every one that works, according to the report.

At the same time, family offices Fiercely Protect their Privacy and Prefer to Remain Largely Unknown to the Public. Without a public profile, they are available to be included in deal offers or banker calls and miss out on potential investments. Fully 20% of Family offices surveyed cited “Quality deal flow” as a primary concern.

One solution, according to the report, is for family offices to start development more public profiles and network with each other more to Attract Deal Flow. According to the survey, 60% View Networking with Other Family Offices as “Important,” and 74% are “eager for more introductions.”

The other challenge for family offices doing direct deals is due diligence, according to family office experts. When a private equity fund or company invests in a private company, they often have teams of bankers or in-house experts alle to dissect a company’s finance and its prospects. Family offices typical Lack the infrastructure for rigorous due to diligence and risk buying into troubled companies.

To formalize their deal process, more family offices are creating boards of directors and investment committees. According to the survey, 54% of North American Family Offices have Establed Investments Committees to Help Vet Investments.

When it comes to their preferred private investments, they like to venture “off the beaten path,” focusing on niche and emerging asset classes. Family offices, for instance, are Increasing in Real Estate Tax Liens, Fertility Clinics, Sale-Lasebacks of Real Estate, Whiskey Aging and Litigation Financing.

“These Approaches Provide Family Offices With Access to Private Investments that Offer Attractive Returns, Cash Yields and Low Correlation to Traditional Markets,” According to the report.