Family Offices and Private Deals
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In this article we sum up our findings about the role of Family Offices in the Private Deals.
1) Family Offices Are Increasingly Important Players in Private Markets
Family offices have grown amid increased monetization events and surging equity valuations in recent years. Their influence on the private markets has grown in tandem: Many now can take on significant control and minority transactions, ranging from less than $25 million to $1 billion or more for a single asset, although under $100 million is more common.
In today’s buyer’s market, with valuations for many companies having fallen, family offices are well positioned to find attractive investments. Management teams and founders seeking patient capital can find them to be graceful partners with the ability to weather a great deal of volatility.
According to the PWC Family Office Deals Study 2022, family offices have become increasingly active and prominent players in the European and global deals landscape, getting involved in a widening array of direct investments in companies and real estate. Looking across both asset classes, the value of disclosed family office deals in 2021 reached USD 227.6bn – again a record high, buoyed up by several multi-billion USD transactions involving family-owned businesses.
2) Primary Deals by Family Offices have grown 10x since 2014
This is happening because they are growing in size and shifting more money into private assets.
According to a report by Robert Frank at CNBC (@robtfrank), family offices investments into start-ups will reach 20% of Family Offices portfolio in the next five years.
3) Secondary Buyers Expect More Wealthy Investors to Seek Exits
A survey of around 30 secondary buyers conducted in early 2022 by WSJ Pro Private Equity found 80% of respondents expect to see increased deal volume from family offices and high-net-worth individuals in the next 12 months, up from 70% of buyers who responded to a similar survey in 2021 and 55% in 2020.
4) Europe to catch up with the US in private investments
Because of a high concentration of family offices and the search for value versus the unexciting returns of the public markets, Europe is catching up with the US in the number and total value of global private deals.
5) Private Equity fees are pushing Family Offices into DIY
Another reason family offices are investing directly in private deals is that they are able to hire the expertise in-house and are unhappy with the fees and performance fees the private equity models charges. In PRE IPO CLUB dealings with family offices, we have been able to win business because the Club’s fees where competitive versus other private equity and venture capital firms. The Club was particularly successful in serving family offices when offering in competition with banks trying to sell private deals, because they added an extra layer of fees and complexity for family offices.
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