The Role of Family Offices in Private Equity

Family offices have historically taken the role of limited partner, relying on private equity firms to make critical investment decisions. But this is changing. To gain greater control of their investment strategies, and to reduce management fees, direct investment is becoming more popular among family offices.

In fact, many have already taken steps to create infrastructure to support this new way of doing business, including the hiring of former PE professionals and other industry experts to source and manage deals. This trend is likely to accelerate.

As family offices grow, they’ll search for new opportunities that can earn ever-higher returns. To optimize success with direct investment, family offices will need a sound strategy, a compelling story, unique expertise, and managers who are deal people.

As more family offices take on the challenges and responsibilities they once entrusted to private equity firms, they need to adopt many of the strategies that CohnReznick advises for private equity firms.

Developed in partnership with Francois de Visscher, founder of de Visscher and Co. LLC, an independent financial advisor to single-family offices, this four-part series focuses on the powerful new role that family offices are playing in private equity, and the organizational changes family offices should consider before implementing a direct investment strategy.

Article One: Family Values

Family offices are searching for higher returns. An increasing number are finding them by investing directly in private companies.

Article Two: All in the Family

Family offices have natural appeal to many businesses looking for investment. They should use that appeal to get deals done.

Article Three: Direct Investing Is a Marathon, Not a Sprint

Once family offices build out their deal-sourcing capabilities, they need to shift emphasis to expanding operational components. 

Article Four: Family Office 2.0

Family offices must embrace innovation to succeed in the ever-accelerating investment market of the future.

For more information, contact Jeremy Swan, Managing Principal - Financial Sponsors & Financial Services Industry at 646-625-5716 ; jeremy.swan@cohnreznick.com.