Family Offices: How the Ultra Net Worth Families Protect & Create Wealth for Generations

auroreFamily offices are growing rapidly in scale and gaining significant influence. Yet given the inherently private nature of their activities and because the term is used loosely for marketing purposes, the field remains misunderstood. Each office is unique and reflects the distinct personality and objectives of its principal(s). From single to multi-family offices, staffed with a few investment professionals to full-service offices with hundreds of professionals, here is a sneak peek into an exciting corner of asset management and how ultra-high net worth families protect and create wealth.

  1. It’s a Family (Office) Thing. They now manage over $3 trillion globally – more than hedge funds. The Rockefellers and Gates are not the only families to have created one, but you’ll need at least $500M to $1B for a full-service family office. The trend towards family offices is accelerating. Here’s why.
  2. The New Rising Class. John D. Rockefeller was the United States’ first billionaire in 1916. According to BCG, there are now nearly 500 billionaires in the U.S – 100 new billionaires were created in the last five years alone. According to a recent UBS study, from 1995 to 2014, the number of global female billionaires grew even faster – by a factor of 6.6, versus 5.2 for men. More than 80% of female billionaires hail from the U.S.; though 19% of them were self-made. There are over 12,000 Americans who are worth more than $100M.
  3. Ultra-Wealthy Hold More Private Equity Than Stocks. According to Tiger 21, aggregate investments in PE – at 23% of total portfolio value – exceeded the value held in stocks. The biggest change in asset ownership has been the growth of PE, up from 12% in 2007. Over the same time frame, stocks dropped from 28% to 22%. Only real estate, at 25%, exceeds PE’s share of Tiger 21 wealth.
  4. Pritzker Group and Other Wealthy Families Skip PE Firms to Invest Directly. Families increasingly prefer to invest directly in private companies. Traditionally, wealthy families served as limited partners in PE firms, which in turn backed portfolio companies. But over the last several years, family offices have begun hiring  professionals to invest in private companies directly. Doing so successfully requires tremendous scale and expertize in a competitive investment environment.
  5. Germany’s intensely private and immensely wealthy Reimann family. Inspiring story of a family making bold investments in consumers products and coffee.
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About Ludovic Dumas

Ludovic transforms innovative companies into world-class organizations. He is an investment professional at an investment firm representing the interests of one of the most successful families in Canadian business. Before joining the private equity world, Ludovic was an investment banker at CIBC and with ING Group’s investment banking team in Frankfurt, Germany. Mr. Dumas was also a management consultant with Deloitte where he worked on corporate strategy, restructuring, market analysis, due diligence, and economic development mandates. Specialties Mergers & acquisitions, capital raise, corporate strategy, entrepreneurship.
This entry was posted in 5-Bullet Friday, Family Office, Finance, Private Equity and tagged , . Bookmark the permalink.

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