Insights & Info

Insights > Are Family Offices Different from Other Buyers of Middle Market Companies?

Are Family Offices Different from Other Buyers of Middle Market Companies?

By Generational Equity

Family Offices Middle Market Buyers

Family Offices, that unique set of business buyers that are hybrids of several other models, including Private Equity (PE), High Net Worth Investors (HNWI) and Ultra High Net Worth Investors (UHNWI), have become (as we have examined in other Insight Posts) an established and growing buyer group for middle market companies.

Unfortunately, most business owners are completely unaware of this segment of the buying community and this is unfortunate because, for many entrepreneurs, Family Offices (FO) offer a really fantastic alternative as buyers.

Because of their growth as a buying class, our friends with Axial recently released an article covering this unique set of buyers. Entitled, “Seven Ways Family Offices are Different from Other Buyers of Lower Middle Market Companies”, it is full of interesting points that truly show how unique and special they can be for owners of middle market companies.

Here is how Axial summarized their findings:

Like most other institutional investors in recent years, family offices have shifted a significant share of their assets from the public markets to private equity, real estate, and other nontraditional assets. Unlike pension funds and endowments, however, affluent families have not been content to invest through private equity funds. They are at least as likely now to invest directly in middle market companies. 

A 2021 survey by Citi Private Capital Group found that nearly half of family offices have more than 25% of their overall portfolios in direct private investments. The Family Office Exchange (FOX) found that the overall share of assets devoted to direct private equity investments by family offices increased by 50% from 2014 to 2018.

Until just a few years ago, most Family Offices were content with making indirect investments via PE firms. However, as Axial puts it, “They (Family Offices) hate paying fees. Because of this, the appeal of direct investing is that it avoids the management fees charged by traditional private equity funds.”

Here are a few other unique features that Family Offices possess:

They have a longer time horizon

This is really an important distinction that many of our clients find very attractive. Unlike PE firms that generally have a mandate to “flip” an investment in 5-7 years’ time to generate a return for their limited partners, most Family Offices do not operate under this same restriction. In fact, many plan on holding the investment forever.

This appeals to a number of our clients, especially those that are in the 3rd – 4th generation of family ownership: The legacy built by the family will continue and grow under the Family Office.

As pointed out in the Axial article:

“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.”

Again, if you are concerned about preserving and growing the legacy you have created in your company, Family Offices may be perfect for you.

They want to be involved after writing the check

Since most Family Offices invest in industries that they have been involved in (often since their inception generations ago), they can provide not only capital for growth, but also advice, guidance, and key contacts to amplify your firm’s long-term expansion/profitability.

These are all things important to consider if your company has reached a plateau and needs an infusion of talent/money/direction to reach the next level.

“They (Family Offices) are operators at heart and think they can generate outsize returns by investing in the lower middle market, being involved, serving on boards, and digging deep,” Barnes says. “It’s also, quite frankly, what they enjoy doing, and they figure why not get some enjoyment out of the way they invest their money.”

Getting access to deal flow can be a challenge for Family Offices

And this is where Generational and its team of award-winning dealmakers and valuable proprietary databases come into play. Frankly, this issue is not unique to Family Offices, quite a few Private Equity Firms suffer from this problem too. In fact, unless they have a dedicated business development team out looking for deals, often these great buyers with lots of capital to invest have very little access to sellers (especially qualified sellers).

We do!

Through our unique process, we take business owners that want to exit and help them create buyer-ready businesses for buyers like Family Offices who are looking for companies to invest in.

The great news is that we have over 35K registered buyers in our proprietary DealForce database that have told us specifically what they are looking for in terms of industry, size, location, and a myriad of other criteria, so that we can match our clients up with qualified, driven buyers like Family Offices.

We are very unique in the world of middle market investment banking because of this.

So, the evidence (and our decades of experience) are clear: Family Offices have become key players in the middle market the last 10 years, and this will only continue to grow.

But wait…

The critical questions for you, especially if you are going to market your company without the benefit of a middle market investment bank, include: Can you find Family Offices operating in your industry? Can you create documentation that they require in order to review your opportunity? Why are those Family Offices active in your industry as buyers? What specific traits are they looking for in targets?

These are tough questions for most entrepreneurs to answer because historically Family Offices have been very private regarding their activity. Since most revolve around a specific family, they do not tend to want to attract attention to their wealth and investments.

Again, this is where Generational can help. As mentioned, we have over 35K registered buyers in our proprietary databases who have told us exactly what they are after. In addition, we invest a significant amount annually to have access to databases that augment our internal sources, giving us a tremendous information base that we bring to our clients.

If you are interested in attracting Family Offices (or any other buyer for that matter) to your company, you need to reach out to us and start a dialogue on how to exit your company optimally. Each client’s situation is unique, and our services are tailored to meet them.

To learn more about Generational and our proven middle market investment banking services, please use the following links:

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

© 2022 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, you have been added to our list.

Through the sale process, Generational brought in several interested buyers and we closed in about 6 months. I am so glad I accepted that invitation to the conference and could not be happier with the whole process. The team at Generational coupled with their knowledge and guidance was so valuable that in the end, I know I could never have done this on my own!
JoAnn Ellis, Owner of Fondren 5 Star Kennels
I am pleased that I was able to work with Andrew Byrd throughout this experience. From the first meeting we had in Minneapolis I felt that I was in good hands. His knowledge and expertise is second to none. He guided the process consistently throughout. I feel lucky that I was pared with Andrew and could not be happier that I chose Generational Equity to handle this major life event. Thank you Andrew and GenEq for everything!
Eric Erlandson, Owner, Action Fastenings, Inc.
After attending a conference with GE, I decided that the value they bring would be worth the expense and as soon as I started working with them, I realized that was the right decision. When we started to get LOIs, Fred Zweifel took the lead on the communication and supported negotiations throughout the process, which got tricky as we moved forward. I learned that it can be common for companies to make a great offer then work to erode that price with their discoveries, but Fred and the GE team kept that from happening.
Caroline Connelly, CEO, OptoTest
We were represented by Michael Goss with Generational. The due diligence was grueling and exhausting, but Michael propped us up and kept us motivated throughout the process. Debi and I continued to ask each other how we could possibly make it through this process without the assistance of Michael. Michael's professionalism and knowledge is absolutely amazing, and we are so blessed to have had him by our side as we made our future dreams come true.
Bob and Debi Lee, Owners of BL Technology, Inc and BL Tl Services, LLC
I wanted to take this opportunity to thank you for all that you have done for us. Not only did you take care of all the aspects of the sale but took extra care to make sure we knew what it looked like every step of the way. I will definitely recommend your company to anyone that is in a position to or looking to exit their business.
Shane and Johanna Kline, Owners of Vision Upfitters
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.
Ralph Noblin, President of Noblin & Associates
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
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
I decided to attend the conference and hopefully receive some guidance on how to structure an exit plan of my business. Upon arriving at the conference, I was so impressed with the presentation given by Generational Equity that I set a future appointment that week to discuss the possibility of selling my business with their Senior Managing Director David Robinson.
JoAnn Ellis, Owner of Fondren 5 Star Kennels
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
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
We had the pleasure of working with Mr. Ahmad Behjati Managing Director, M&A, for Generational Equity during our acquisition of Papa's Dodge in late 2021. Generational Equity and Mr. Behjati represented and marketed Papa’s Dodge. As our primary contact, Mr. Behjati was professional in every facet of this acquisition process, conveying valuable advice most times and assisting us in every step of the process.
Rick Greene of Dobbs Equity Partners LLC
I need to say an immense thank you to Don Ho for his stellar work ethic, attention to detail, and tireless effort. Also thank you to the whole crew at GE! Without you, Don could not do such a phenomenal job. We were shooting for closing and funding before the end of 2020, due to the uncertainty of the political landscape and taxes. I am happy to report we closed last week and will be funding tomorrow.
Dr. Caty J. Catron PhD, RN, VA-BC – Owner, Vic The Picc, LLC
The most important contribution I think Ahmad made was with his personality and work ethic. He is sincere, efficient, and very hard working. He was available to me at all times, whether it was for specific detail of the negotiation or just to talk through the bigger picture. He listened, advised, and recommended, but never forced his idea or opinions. In the time we worked together, he became a valued colleague and also a friend.
Salvo Stoch, Founder and CEO of Sleeping Partners
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.
Bil MacLeslie, CEO, ipHouse
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.
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
We thank you Eric and Generational Equity making our dream come true.
Larry Moore, Owner, A Company Portable Restrooms
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
Generational Equity’s assistance was invaluable in compiling and marketing our business.
Bil MacLeslie, CEO, ipHouse
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.
T.D., thank you so much! You are a great leader! I love how you are using your gifts and talents to better others. You are clearly a GREAT COACH! This 3 day session undoubtedly changed the future of our business, and very well may have been the sole catalyst to save my company, my health and my marriage! A genuine “thank you” from the bottom of my heart.
Bryan D. Horn, Owner, Over Under Clothing
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.
Thanks to you, the entire GE team and especially Michael Goss for driving a great valuation, coaching me and driving the process across the finish line. Please let me know if there is anything I can do to support GE going forward.
Tom Currier, Former President & CEO, Rackmount Solutions
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.
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
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
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).
Bil MacLeslie, CEO, ipHouse
The professionals at Generational Equity then helped develop a roadmap for enhancing the value of the firm and an evaluation report. This was completed by June 14, 2021. We then developed the Confidential Information Memorandum and put Taylor Studios, Inc. on the market by July.
Generational Equity’s professional staff helped me every step of the way. Their network and professionals are the only reason I sold my company this quickly. For me this is a once in a lifetime sale and I was unfamiliar with the process. I was able to lean on them with questions and concerns.
Betty L. Brennan, President, Taylor Studios