Insights & Info

Insights > Family Offices Continue to Make Acquisitions

Family Offices Continue to Make Acquisitions

By Generational Equity

Family Office Make Acquisitions

One group of buyers that you need to be very aware of as you look for investors in your business are family offices.

Family offices have been around for decades and in some ways operate as private equity firms do. But there is one major difference: Investment hold times are much longer for family offices. In fact, unlike PE firms that typically retain an investment for 5-7 years, family offices, in many cases, plan to hold their investments forever.

Because their hold horizons are much longer, family offices have continued to be active acquirers despite the ongoing pandemic and related economic challenges. A recent article on middlemarketgrowth.org was quite informative about family office acquisition plans.

Entitled, “Faced with Uncertainty, Family Offices Take the Long View”, the publication was full of really good information about family office plans. But one point really stood out to me:

Many investors are continuing to deploy capital, despite uncertainty caused by COVID-19, according to a survey of institutional limited partners and family offices from Campbell Lutyens, an independent private equity advisory firm.

Despite some changes to the due diligence process, family offices are generally well-positioned to invest right now. They aren’t locked into a fixed timetable for making investments and selling their holdings, so the pause in new transactions at the beginning of the year didn’t necessarily hurt them. And if it takes longer to exit or do new deals, a family office can usually wait that out.

“It’s a delicate balance,” Dan Patterson, founder and chairman of Patterson Thoma, a family office based in Dallas, stated. “We wanted to get our bearings and we took time to do that at the beginning of this year. But you also want to stay in the mix so that you aren’t missing out on new opportunities.”

And that is another point that the article made: Despite what you may think, there is a tremendous amount of competition out there right now among family offices who don’t want to lose out on the limited number of good targets in the market now:

Andrew Glaze, founder and chief investment officer at Shiro Capital, says the deal environment remains competitive, despite uncertainty about the broader economy. His Los Angeles-based family office makes minority and control investments in middle-market businesses.

“We’re looking at the smaller end of the market, and it’s still really crowded,” he says. “We might look at a deal once and by the time we come back, it’s already under a letter of intent. Or we’ll look at a deal and there are already two or three other families interested in it.”

And we concur based on interest we have seen from buyers regarding our clients. In fact, during the 3rd quarter of this year we closed more transactions than any quarter in our history.

Since requests for our Non-Disclosure Agreements (NDAs) from buyers are up 45% so far this year, we expect the level of buyer activity to continue at a high level through the end of the year (generally the 4th quarter is the busiest quarter in deal making).

If you would like to learn more about how family offices are operating in our current market, I would invite you to read the full article:

But to learn even more, if you haven’t done so yet, you should attend a Generational Equity growth and exit planning conference. Not only do we discuss family offices; we also talk about the entire buyer universe and give you ideas on how to position your company to attract the most interest from buyers. To learn more about our conferences, please use the following links:

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

© 2020 Generational Equity, LLC All Rights Reserved

Make an informed decision

The best decisions in life are informed decisions. We release educational business insights like this every week. Subscribe to make sure you don’t miss the latest news, views and analysis.

Success

Success, you have been added to our list.

I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.
Jay Dinnison, Owner of Sharpe Mixers
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.
Andy Graham, Vice President, Modern Heating & Plumbing
Thank you again for all your guidance and support. Any company will achieve what they intend, if they have you on their team!
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
I must say that I have never worked with a more driven, competent and focused individual as Don Ho.
Jay Dinnison, Owner of Sharpe Mixers
Michael worked tirelessly, He followed every lead meticulously and urgently to make sure nothing was missed.
Robert Evans, President and CEO of Mealtracker Dietary Software
Generational Equity’s assistance was invaluable in compiling and marketing our business.
Bil MacLeslie, CEO, ipHouse
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.
Bil MacLeslie, CEO, ipHouse
Tom Staszak is one of the most professional people I have dealt with in my last forty years of business. You’ve got a great group of people and you have built a truly professional organization.
Michael J Polarek, President, Paragon Packaging
Greetings Mike. Thank you for the captivating and compelling presentation you made at the Phoenix presentation last week. Over many years in business yours was the most informative and well-presented presentation, on any subject, that I have ever attended! Your energy and enthusiasm combined with your concise and captivating support of your positions with easily understood examples and data was compelling.
Pete L.
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.
Robert Evans, President and CEO of Mealtracker Dietary Software
I wanted to write you a quick letter to express our appreciation and our delight on the outcome of helping us through the process of our recent sale. We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.
Terry D. Wickman, President, Keytroller
We thank you Eric and Generational Equity making our dream come true.
Larry Moore, Owner, A Company Portable Restrooms
Thanks again Phil and feel free to have a future client call me if they would like a referral. You are a true professional!
Andy Graham, Vice President, Modern Heating & Plumbing
We will highly recommend Generational Equity and Musa Jagne to any business owner about to embark on the same process.
Karen S. Williams, CFO, BW Manufacturing
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).
Bil MacLeslie, CEO, ipHouse
We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
We are extremely pleased with the way Generational Equity handled the sale of our company. Your associates, Tom and Chris, did an outstanding job of getting us (me) through the process.
Michael J Polarek, President, Paragon Packaging
The process was much more involved than I expected and your help, experience and advice was a big factor in making the negotiations go as smoothly as possible.
Terry D. Wickman, President, Keytroller
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.
Ralph Noblin, President of Noblin & Associates
Bruce and I wanted to take this opportunity to thank Generational Equity for assigning Musa Jagne to our transaction. In Bruce’s words, “Musa did one hell of a job for us!”
Karen S. Williams, CFO, BW Manufacturing
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.
Larry Moore, Owner, A Company Portable Restrooms