A recent article published on themiddlemarket.com was extremely informative as it pointed out the strong competition for deals in the M&A market today. And it reinforced the tremendous growth in the role that Family Offices (both single-family offices and multi-family offices) are playing in the M&A landscape today. You can read the entire article here:
For owners of privately held businesses, the current seller’s market is stronger than we have seen in years and one of the most active groups are Family Offices. For those of you unfamiliar with the role Family Offices are playing in M&A, we recently published an Insight post that you may enjoy reading as well:
Some of the salient points from the middlemarket.com article regarding Family Offices include:
The competition for high-quality deals is more intense than ever, leaving many buyers to think outside the box for ways to win dealflow. The competitive environment is forcing family offices, like Pritzker Private Capital and Sam Zell’s Equity Group Investments, and independent sponsors, like the Grantchester Group and Rotunda Capital Partners, to look for new ways to participate.
By definition, family offices and independent sponsors fall outside the mainstream of traditional private equity firms. Originally, family offices were established by wealthy families to invest in private equity firms. Over time, many family offices began investing directly in companies themselves.
“During the last 12 months, we have gone from an economy that was shutting down to one that is rapidly ramping up again, with a flood of new capital all driving record-high valuations,” says Paul Carbone, president and managing partner of Pritzker Private Capital (PPC), a Chicago-based family investment firm. “We have seen both ends of the spectrum in a very short period of time. Family direct investing will continue to evolve, and alternative strategies throughout the M&A industry will continue to proliferate and become more important as the industry matures and investors adapt to meet the demands of a highly competitive marketplace.”
According to themiddlemarket.com, there are now over 3K U.S. based Family Offices with assets under management of $1-1.2 trillion. In addition, there are approximately 150 multi-family offices with $400-$450 billion under management. So these are key players in the M&A landscape today.
Buyers that you should be very aware of if you are marketing your business.
However, the challenge you face if you are not using professional M&A advice, is two-fold:
Historically, most Family Offices operated under the radar screen, avoiding the limelight for confidentiality reasons. Although this has changed dramatically over the past five years, finding the appropriate Family Office for your investment opportunity can still be a challenge (unless you have a buyer database of over 34K like Generational Equity which is comprised of quite a few Family Offices). Finding the right buyers to approach has always been the art of deal making.
Secondly, if you do find a good list of Family Offices to approach, your next challenge is even greater: Creating documentation that attracts them to your opportunity, created in such a way that the Offering Memorandum you send has key information in it that they need to see to get the investment committee of the Family Office to request more information from you.
Fortunately, there is an answer for both of these dilemmas: Hiring a professional investment banking firm to represent you in finding all buyer types.
An investment of capital in a firm like Generational likely will pay off handsomely down the road as we have access to key data on Family Offices (and a myriad of other buyer types) that can benefit you. Don’t just take my word for it, click on the following links to learn more:
If this Insight post has intrigued you to learn more about Family Offices, please reach out to us at 972-232-1121 so we can provide you with more research on this key buying group in today’s market. And special thanks to our friends with themiddlemarket.com for so clearly outlining how vital this group of buyers is today.
Carl Doerksen is the Director of Corporate Development at Generational Equity.
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