There’s a piece of advice we give companies navigating the investor landscape: If you’ve seen one family office … you’ve seen one family office.
An increasing number of family offices have opened in recent years, all with the ability to invest directly in private companies. But each office is unique with an array of factors that distinguish one family office from the next, including:
- Hold Periods
- Sector Interest
- Cultural Dynamics
- Approach to Debt
See part one of this two-part series on family office investors.
Video Transcript
Because of our extensive experience with family offices, we know very well that each one is unique. There’s an expression out there that is so true … if you’ve seen one family office, you’ve seen one family office.
There are several factors that can distinguish one from the next.
One of the biggest distinctions is their investment hold periods. Because their capital is their own, family offices have no externally prescribed timeframes for their investments. Many of them hold for very long periods of time, in some cases basically “forever” holders. Others will opportunistically divest of holdings when they and the company determine the time is right.
Sector interest also varies. Some family offices target the industry in which they created their wealth, where they can add value to businesses due to their experience and networks. Others do the just opposite, seeking to diversify their wealth. Still others develop theses based on current industry dynamics.
Cultural dynamics also come into play. Many family offices trace the roots of their wealth to once having been owner/operators themselves. For that reason, they are highly interested in preserving and extending the legacy, values, and community interests of the companies in which they invest.
Family offices are generally conservative when it comes to debt, which often aligns well with family-owned companies and means family offices are not as impacted by changes in the lending environment.
These are just some of the unique attributes of family offices, which in many cases, are consistent with the goals of family-owned and founder-led businesses.
Since every family office is different, an advisor who knows each of them deeply after years of working with them on actual transactions has the intel and experience to help find the best partner for each situation.
As an independent, private partnership since our founding in 1935, William Blair shares family offices’ special appreciation for founder- and family-owned businesses. That uniquely positions us to connect business owners with this distinctive type of investor.