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Why Family Offices Make Great Buyers/Investors for Privately Held Companies

By Generational Equity

02/28/2022

Recently, our friends with Axial published a very informative article about what makes Family Offices unique in the M&A world. You can read the entire article here:

As you can see, all seven are really important traits that you need to be aware of when you create a buyer list for your company, which should include Family Offices.

One of the seven reasons really stands out though, because it has a huge impact on entrepreneurs we work with and the legacy they have created and want to protect/grow:

Family Offices have a longer time horizon – While a typical private equity fund is looking to exit its investments within seven years, family offices can hold companies much longer. They generally are investing with money that isn’t needed to pay any near-term expenses.

“Our family has been phenomenally successful since the patriarch took over the business 50 years ago, and now they are thinking about the next generation and making sure their wealth grows with their expanding family,” says Michael Barnes, Vice President of Walnut Ridge, the investment office for the Kanfer family, which owns Gojo, the maker of Purell. “We have much more flexibility than traditional private equity firms because we’ve got no artificial timelines that drive a need for liquidity.”

The long-term perspective also creates an incentive to hold investments so their value can compound without triggering capital gain taxes, Barnes adds.

One of the most common themes we hear from entrepreneurs that we work with is this: I want the company I have built, the team I have created, and the reputational foundation in our community to continue long after any acquisition. 

Family Offices can provide you with that security, knowing that their goals are often aligned with yours and that, because they have a long-term hold vision (often with no exit planned at all), they will invest in your business, providing capital and managerial expertise that you most likely would never have access to.

Keep in mind that most Family Offices invest in industries that they are very familiar with, often the industry that the founders of the Family Office started in generations earlier. This can give you confidence that not only do they know what they are doing – they will work with you (if you want to stay) to grow your legacy.

That is why we consider Family Offices a win-win for our clients. If you are interested in learning more about how Family Offices operate, you can do so here:

The challenge you will have is that even though odds are good that several Family Offices are already operating in your industry, by their very nature, they are very protective of their involvement in most acquisitions, so finding them can be a challenge. In addition, you must approach them with documentation on your business that fits the model they are used to seeing. You can’t just cold call them and get them to open the door!

That is why our firm has been so successful over the years in finding appropriate Family Offices as buyers/investors for our clients. We have over 34K buyers in our database, many of them Family Offices, that tell us specifically what they are interested in based on industry preference, geography, size of EBITDA, etc. We match our clients up with the optimal buyers because we listen to our clients’ desires and needs both personally and financially.

To learn more about Generational’s family of companies and how we can help you grow and exit your business optimally, please use the following links and bottom-line, be sure to include Family Offices in your buyer list if you are exiting without professional guidance:

Carl Doerksen is the Director of Corporate Development at Generational Equity.

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