Why family offices are playing in PE’s sandbox

Entrepreneurs seeking investment may find a family office (FO) a compelling alternative to private equity (PE).

According to Preqin, family office deals currently represent 2.5% of total M&A deals, a small share but one that has been steadily increasing since the great financial crisis. The Economist estimates family offices manage assets worth an estimated US$4 trillion, with individual offices averaging $500 million to $1 billion in AUM according to Forbes.

Our guest is Katherine Hill Ritchie, Director and Board Member of Nottingham Spirk, a 50-year-old innovation firm with a family office. Katherine has 18 years of finance, investing and family office experience and started her own firm working with family offices and alternative investment funds and companies. Katherine is also an Angel Investor and advisor who supports and invests in female and diverse founded venture capital funds and companies and is on the board of several organizations. She has spoken at over 100 global investment conferences, lectured at universities, and was recently awarded a lifetime achievement award for her family office work.

Eight things companies should know about FOs:

1. FOs can and do compete with PE for direct investments.
2. FO fund structure, investment thesis, acquisition requirements, portfolio and shareholder mix are frequently opaque.
3. FOs have flexibility to change their focus.
4. FOs are not beholden to a 7-10-year exit timeline.
5. IPO is not always the exit strategy for a FO.
6. FOs don’t face the same regulatory requirements as funds.
7. FOs may or may not care about ESG requirements for their investments.
8. Companies must build relationships with FOs to ensure alignment of objectives.

For your convenience, full text transcript of this podcast is also available. Read the transcript.