Family Office

A family office is an entity that manages the wealth of one or more wealthy families. It takes care of investments, shareholdings, and often also tax and organizational matters. Many family offices invest directly in companies and therefore act as capital providers.

A distinction is drawn between the single family office, working exclusively for one family and economically sensible only from very large asset bases, and the multi family office, which serves several families and shares the cost of the structure. In transaction practice the group is interesting because it differs from private equity funds in one decisive respect: there is no fund life and no obligation to sell a holding again after a few years. A different time horizon follows, often lower leverage and a willingness to hold an investment permanently. For selling entrepreneurs in the mid-market this is often attractive, because they do not want their life's work placed in a resale cycle and because many such investors have entrepreneurial roots themselves. Against this stand limitations: decision-making is individual and less standardised, diligence capacity is smaller than at institutional investors, and willingness to participate in competitive processes with tight deadlines is lower.

Some family offices also invest as limited partners in funds or take part in co-investments to gain access to transactions without building their own team. In approaching them it should be noted that these investors are not a homogeneous group: some invest only in the sectors in which the wealth was originally created, others broadly. Some take majorities and appoint their own managing directors, others act as minority shareholders. Decision-making varies just as widely, from a single individual to a formal investment committee. Early clarification of responsibilities and timetable is therefore particularly important in the process.