The past few years have seen an increase in private wealth creation, along with it the increase in the number of family offices. Family offices are individual families with high net worth, with generally more than $50 million that they can use for investment. There are also multifamily offices – multiple families who work together and pool their funds for investing purposes.
The family office model consists of a fairly flexible structure, permitting it to adapt easily to volatile circumstances in the environment and customize their own organization depending on the needs and preferences of the individual and the family office.
More and more, family offices are investing in small- or medium-market businesses. These ultra-wealthy groups are seeking to invest in privately held companies to diversify their investment portfolio and add more to their wealth, which bodes well for business owners prepared to sell wholly or partially.
Family offices not only bring with them the capital to help the business, but they also bring with them extensive industry expertise. These groups tend to invest in industries where they have become financially successful, providing the business invaluable advice and market knowledge.
Another advantage of having family offices buy into the business is their long investment horizon. Unlike other traditional investors, family offices are not bound by a limited timeline; they invest for the long run.
One of the most appealing reasons to consider selling to family offices is they truly understand the mindset of founding entrepreneur and they realize how important the preservation of the business legacy is to the seller. Most family offices have descended from an original founder several generations earlier. Because of this they know how important it is to maintain the long term legacy of any acquired company.
For business owners looking for a buyer, family offices offer a new, and generally better, alternative. Looking for such groups, and establishing a healthy relationship with them can potentially lead to a mutually beneficial partnership.