• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer
  • Subscribe
  • facebook
  • instagram
  • RSS
  • RSMUS.com

The Real Economy Blog

Search

  • Economics
  • Technology
  • Consumer
  • Industrials
  • Finance
  • Real Estate
  • Health Care
  • Life Sciences
Home > Financial Services > Family office direct investing is on the rise

Family office direct investing is on the rise

Aug. 21, 2019 by Jason Kuruvilla

  • email
  • Twitter
  • Facebook
  • Linkedin

According to a study by Campden Wealth, an independent research company, family offices manage about $4 trillion globally. That amount is growing as more families sell out of their founding businesses and, with the proceeds, look for opportunities in wealth preservation, philanthropic activities and increasingly, asset management that includes direct investment in private companies and investment funds.

The evolution of family offices

Family offices have historically entered deals as limited partners in funds, relying on asset managers to perform due diligence on would-be investments. But larger family offices are now building out their investment infrastructures in-house to assimilate  professional investment firms, giving them greater control of their money and the ability to make their own investment decisions.

The number of professionals employed by these offices is dependent on the assets under management and the needs of the family members. Staff are responsible for everything from paying bills, filing taxes and managing finances to family wealth planning and coordinating activities with outsourced investment professionals. Some offices are adding their own investment professionals to the internal roster.

Growth in direct investing

The data shows that direct investing by family offices has grown more than 100% in the last decade. The number of completed deals by family offices since 2008 is trending higher, and the average capital investment per deal grew to $4.8 million in 2018 from $1.3 million in 2008, according to deal tracker PitchBook. PitchBook reports that family office deals span all industries, but are skewed toward health care and information technology.

Power to the family

According to Bloomberg, millennials are set to inherit about $30 trillion from their parents in the coming decades. As families pass down wealth and investment responsibilities to the younger generations, lack of investment knowledge by the new generation is one reason why a built-out internal investment infrastructure is important for the growth of the family office.

In addition, private equity firms are likely to face more competition as family offices engage in more direct investment. Middle market companies looking to sell some or all their business should be prepared for a family office to knock on their doors.

Information about RSM’s family office services can be found at the RSMUS.com website.

 

  • email
  • Twitter
  • Facebook
  • Linkedin

Related posts

  • Initial jobless claims rise to 230,000

    First-time jobless claims increased to 230,000 for the week ending April 26, well above our preferred metric, the 13-week moving average of 217,100.

  • homebuilders chart--July 2019
    Homebuilder confidence indicators rise but still lag 2018

    The homebuilder confidence index rose to 65 in July, according to the National Association of Homebuilders, as a dovish Federal Reserve is expected to reduce interest rates later this month and, potentially two more times by the end…

  • Passive investing reaches a milestone, surpassing value of active counterparts

    For years a profound shift has been taking place in the financial community as individual investors have increasingly favored a passive, low-cost approach over the traditional actively traded assets. Last year, that shift reached a significant milestone as…

Filed Under: Financial Services Tagged With: direct investing, family offices, wealth

About Jason Kuruvilla

@JasonKuruvilla1

Jason is a partner and financial service professional from RSM’s Chicago office, aligned with the tax practice. He works primarily with clients in the financial services industry and has particular expertise in meeting the needs of hedge funds, fund of hedge funds, broker-dealers, private equity firms, commodity trading advisers, commodity pool operators, proprietary trading groups, family offices and high net worth individuals.

In January 2018, Jason was selected as a senior analyst in RSM’s cutting edge Industry Eminence Program, which positions its senior analysts to understand, forecast and communicate economic, business and technology trends shaping the industries RSM serves. These senior analysts advise clients on conditions impacting middle market leaders. Jason’s focus is the financial services industry.

Primary Sidebar

Read RSM analysts’ industry coverage of coronavirus.

Categories

  • Economics
  • Technology
  • Consumer Products
  • Industrials
  • Financial Services
  • Real Estate
  • Health Care
  • Life Sciences

Recent Finance articles

5 trends from defense technology companies’ Q3 earnings calls

Jan. 4, 2021

5 trends from government services companies’ Q3 earnings calls

Jan. 4, 2021

With added benefits, lenders stand ready to roll out more fiscal aid

Dec. 22, 2020

RSMUS.com links

The Real Economy

Middle Market Business Index

MMBI Special Reports

Footer

  • Facebook
  • Instagram
  • RSS

About The Real Economy Blog

The Real Economy Blog from RSM US LLP was developed to provide timely economic insights about the middle market economy. It is offered as a complement to RSM’s macroeconomic thought leadership, including The Real Economy monthly publication and the proprietary RSM US Middle Market Business Index (MMBI).

© 2021 RSMUS.com | Privacy Policy | Cookie Policy

The Real Economy Blog
  • Economics
  • Technology
  • Consumer
  • Industrials
  • Finance
  • Real Estate
  • Health Care
  • Life Sciences