The super-rich (net worth = $500 million or more) through their single-family offices are using a significant and increasing slice of their enormous wealth to acquire businesses throughout the world. According to Angelo Robles, founder and CEO of the Family Office Association and author of Effective Family Office,
“We’re seeing direct investing playing a larger and larger role in the portfolios of a growing number of single-family offices. Looking worldwide, all indications are that single-family offices are pouring billions upon billions of dollars into buying privately held business.”
Critical to the effectiveness of deal making by single-family offices is a combination of internal and external experts.
“Many family offices are gearing up to become deal making powerhouses,”
“At the same time, they’re working with carefully selected outside professionals. Their aim is to maximize their ability to do deals effectively while maintaining a high degree of control over the process.”
Another issue that global single-family offices are taking into account is tax mitigation.
“Considering that global single-family offices are doing deals in various jurisdictions, sometimes there are a number of possible ways to mitigate taxes. This not only applies to the deals they’re doing but to their personal situations as well,”
One of the biggest obstacles to global single-family offices building their private company investment portfolios is generating high-quality deal flow. Many of them are getting very creative in finding good private company investment candidates. According to John Bowen, co-founder of BSW Inner Circle and author of Reaching for the Stars; How to Fast-Track Your Business Success by Leveraging Mastermind and CEO Groups,
“A strong trend is for senior executives from single-family offices to join elite mastermind and CEO groups. Based on a study of 76 single-family offices, a key reason they’re members of these groups is to connect with driven entrepreneurs with the intent of investing in their companies.”
As reported by Forbes.com, looking at the rapidly expanding world of global single-family offices, the world is awash in money. A sizable and likely growing percentage of these funds are going to purchase – in whole or in part – privately held companies.