The term “family office” has been in existence for decades. In fact, some family offices can trace their lineage back several hundred years. But the number of family offices has grown exponentially the last few years according to a recent article in Axial:
The number of family offices in the middle market continues to surge. There are at least 10,000 single family offices around the world, half of which were established in the last 15 years, according to a 2017 report by Ernst & Young.
Why have they grown so dramatically in recent years? Again, according to Axial the reason is very simple:
“Family offices historically weren’t usually involved in direct investments. But increasingly they have begun to look for ways to avoid paying the standard 2 percent management fee and 20 percent performance charge.”
On top of this, family offices traditionally were started by entrepreneurs in specific industries. Subsequent generations gained expertise in that industry and grew the business dramatically in many cases. Now they are recognizing that by making a direct investment in a company in the industry from which they came, this allows them to bring knowledge and expertise to the holding, most of which the original owner(s) would not have access to.
Another benefit we have seen to business owners that have family offices invest in them is the much longer hold time than traditional PE firms. In many cases family offices will hold their businesses indefinitely, which richly aids in building upon the legacy that the original founder created.
This is how Axial describes it:
Many business owners are drawn to family offices over private equity firms, for a number of reasons including the longer hold periods that family offices can typically support. Emphasizing this and other value-adds, like your family’s experience building and growing successful companies in your industry, can help tip the balance when businesses are considering multiple bidders.
For these reasons, more and more of our deal teams are establishing relationships with family offices in key industries to enrich the buyer lists they create for our clients. If you are entering the market without professional M&A guidance, you should seriously consider adding family offices to your list of targets.
Yet Axial points out a major challenge when considering family offices for your business:
Many family offices have traditionally made a conscious effort to fly under the radar when it comes to marketing and business development — they may not have a website or do any other traditional marketing.
I know that years ago when I began researching family offices that finding them at all was a big challenge and, even more so, to determine their investment mandates, size of acquisitions, and other key data. Although this has changed in recent years, and directories of family office groups are available, having a dealmaker at your side that knows how to find the appropriate ones, and speak their language, is vital.
One of the reasons for our success over the years is that our dealmakers are skilled in communicating with all types of buyers, including family offices. If you are interested in learning more about family offices and their viability for your business, you should set aside a few hours and meet with us at one of our exit planning conferences.
Although not every privately held company is a reasonable target for family offices, exploring your many options is vital.
To learn more about us and our services, please use the following links:
Carl Doerksen is the Director of Corporate Development at Generational Equity.
© 2020 Generational Equity, LLC All Rights Reserved
The information we learn from customers helps us personalize and continually improve your experience. Here are the types of information we gather.
We receive and store any information you enter on our Web site or give us in any other way. We do not sell or rent your personal information to others without your consent. We use the information we collect only for the purposes sending promotional information, enhancing the operation of our site, serving advertisements, for statistical purposes and to administer our systems. We DO NOT use third parties to provide customer service, to serve site content, to serve the advertisements you see on our site, to conduct surveys, to help administer promotional emails, or to administer drawings or contests, but reserve the right to do so in the future without advance notice.
Generational Capital Markets, Inc.’s affiliates are all part of one corporate family, they work with one another and may work together to provide services to you. The sharing of your information among affiliates enables Generational Capital Markets to serve you more efficiently and makes it more convenient for you to do business with Generational Group. Generational Capital Markets is permitted by law to share information with its affiliates. All of our affiliates follow similar privacy policies.
For reasons such as improving personalization of our service, we might receive information about you from other sources and add it to our account information.
Generational Group may license the use of its intellectual property including but not limited to its name, likeness, and logo for the use of affiliated offices. Such affiliated offices may not be owned, controlled, managed, supervised or staffed by employees, officers, or agents of Generational Group. Affiliated offices may be independently owned and operated. For more information about a particular office, please contact Generational Group at its office in Dallas, Texas.
This page may contain other proprietary notices and copyright information, the terms of which must be observed and followed.
Information on this web site may contain technical inaccuracies or typographical errors. Information may be changed or updated without notice. Generational Group may also make improvements and/or changes in the products and/or the programs described in this information at any time without notice.
Generational Group does not want to receive confidential or proprietary information from you through our web site. Please note that any information or material sent to Generational Group will be deemed NOT to be confidential. By sending Generational Group any information or material, you grant Generational Group an unrestricted, irrevocable license to use, reproduce, display, perform, modify, transmit and distribute those materials or information, and you also agree that Generational Group is free to use any ideas, concepts, know-how or techniques that you send us for any purpose.
Our computer system protects personal information using advanced firewall technology.
Information Generational Group publishes on the World Wide Web may contain references or cross references to other products, programs and services that are not announced or available in your country. Such references do not imply that Generational Group intends to announce such products, programs or services in your country. Consult a Generational Group representative for information regarding the products, programs and services which may be available to you.
Generational Group makes no representations whatsoever about any other web site which you may access through this one. When you access a non-Generational Group web site, please understand that it is independent from Generational Group, and that Generational Group has no control over the content on that web site. In addition, a link to a non-Generational Group web site does not mean that Generational Group endorses or accepts any responsibility for the content, or the use, of such web site. It is up to you to take precautions to ensure that whatever you select for your use is free of such items as viruses, worms, Trojan horses and other items of a destructive nature.
IN NO EVENT WILL Generational Group BE LIABLE TO ANY PARTY OR ANY DIRECT, INDIRECT, SPECIAL OR OTHER CONSEQUENTIAL DAMAGES FOR ANY USE OF THIS WEBSITE, OR ON ANY OTHER HYPERLINKED WEBSITE, INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS, BUSINESS INTERRUPTION, LOSS OF PROGRAMS OR OTHER DATA ON YOUR INFORMATION HANDLING SYSTEM OR OTHERWISE, EVEN IF WE ARE EXPRESSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Generational Capital Markets, Inc. ("GCM"), member FINRA/SIPC, is wholly owned by Generational Capital, LLC ("GC"). Both GCM and GC are affiliated with Generational Equity, LLC; and all part of the Generational Group of companies. This website is solely for general informational purposes and is not guaranteed by us to be accurate and complete statements of fact and should not be relied on as such. Opinions in this website constitute the current judgment of the author as of the date and its last update. The content of this website does not necessarily reflect the opinions of GCM, and is subject to change without notice, and GCM is not under any obligation to update or keep current any information contained herein. This website does not constitute any personal recommendations and does not take into account the specific investment objectives, financial situation or particular needs of the reader. The information contained in this website should not be construed as an offer, or a solicitation of an offer, to buy or sell any securities or other financial investments. The information presented should not and cannot be viewed as an indicator of future performance. To the extent permitted by law, GCM does not accept any liability arising from the use or retransmission of the information in this website.
Furthermore, all information contained within this website is the property of Generational Group.
Honored to win Investment Banking Firm of the Year 3 years running.
Over 50 awards and counting.
Sign up to receive regular email updates, industry-leading insights and details on complimentary M&A executive conferences in your area from our award-winning team
Success, you have been added to our list.