NEWS AND INSIGHTS FROM FINTRX
Private equity and strategic buyers aren’t the only suitors pursuing family businesses today.
Family offices, those low-key organizations formed to manage the wealth of ultra-high-net-worth families, are discreetly wooing business families who might be interested in selling a stake.
“Families that have built and grown successful businesses are increasingly looking for opportunities to invest in [other] family-owned businesses,” says Irene Mello, director of the Direct Investing Network at Family Office Exchange (FOX), a network for wealthy families and their family offices.
This relatively recent development is part of a growing trend by family investment firms to allocate a portion of their assets to investments in operating businesses. The past 24 months have seen a big uptick in this “direct investment” by the family office sector, notes Russ D’Argento, CEO & Founder of FINTRX, which provides data and research on the family office sector to the private capital markets.
In FOX’s 2017 Global Investment Survey, 57% of family offices reported being involved, in some fashion, in direct investments in operating businesses. It’s safe to assume at least some of those investments are in family businesses. Most family offices are looking for deals under $1B. Almost all companies bought by family investment firms are private businesses, observers say.
There are several reasons for the increase in direct investment. To begin with, family investment firms today are very sophisticated and have hired top-tier talent, D’Argento says. As savvy financial investors, they’ve become increasingly dissatisfied with the “2-and-20” fee model used by private equity funds — a 2% management charge and a 20% performance fee — says Angelo Robles, Founder & CEO of the Family Office Association, a global membership community of successful families and single-family offices.
Family companies provide great cash flows and growth opportunities, explains Bobby Stover, Ernst & Young’s Americas family office leader. Because public markets are extremely efficient today, it’s harder to find growth opportunities there, he says.
FINTRX provides comprehensive data intelligence on 850,000+ family office & investment advisor records, each designed to help you identify, access, and map the private wealth ecosystem. Explore in-depth dossiers on each family office and investment advisor. Access AUM, source of wealth, investment criteria, previous investment history, sectors & industries of interest, and advisor growth signals amongst other key data points.
Additionally, FINTRX provides insight and expansive contact information on 850,000+ decision-makers, featuring job titles, direct email addresses, phone numbers, common connections, alma maters, past employment history, brief bios & much more.
For an in-depth exploration of the FINTRX family office platform, request a demo below.
May 25, 2018
Kathleen Leahy joins the Cap Hedge Ventures team with a focus on the FINTRX Platform. As an Account Executive, Kathleen handles a myriad of FINTRX related tasks: client oversight, business development, data management and new user due diligence. Kathleen earned her degree of, Bachelor of Science in Criminal Justice from Bridgewater StateUniversity.