November 8, 2018

Private Equity: How to Access Family Office Capital

There’s a staggering amount of money sitting in family offices, and private equity funds see those investors as an attractive source of funding.  But in an increasingly competitive fundraising market, how can PE funds best position themselves to access family office capital?

According to this Nixon Peabody blog, tapping into family office capital depends on preferred access & effective communications.  Here’s an excerpt:

Preferable means of access include specialized forums and working through professionals, such as high-end lawyers and accountants and retained intermediaries. However, there is room for significant growth when it comes to inroads to family offices. Research suggests that family offices are struggling to identify and motivate professionals to provide vetted introductions. The private equity funds that are taking the initiative to sensitively market to these potential investors, such as by leveraging thought leadership content, are reaping the benefits of their efforts. Firms need to give careful and creative thought as to their avenues to this attractive source of capital.

Once a private equity fund gets the introduction, however, it must be attentive to how best to communicate the value of the investment to the family office. The pitch that has been compelling to countless other investors may well be lost on the family office. The conversation must be geared to this specific audience in order to maximize the success of the messaging. Therefore, understanding how family offices think of value is critical to tailoring this presentation. Critically, traditional thinking may not make the grade.

What that last sentence means is that many family offices don’t think about their portfolios in traditional ways. Family offices that are making direct investments often have longer time horizons & seek greater returns than typical private equity funds. Bearing this information in mind may help a private equity fundraiser to have the conversation around investment in a manner that is responsive to the way that a family office investor sees value.

John Jenkins