Direct Private Equity Investments for Family Offices

With the right partners, Family Offices can benefit from direct investment in private equity transactions instead of, or as a supplement to investing in funds.

Reduced portfolio risk – historically private equity returns have exhibited lower volatility than public equity markets, so portfolios that have included an allocation to private equity, all other factors being equal, have exhibited lower return volatility as markets have gone up and down, reducing risk.

Potential for higher portfolio returns—past performance is no predictor of future performance, however private equity returns over the past 10 years were more than double the returns of the S&P 500 Index. Experts say this may be attributed to rigorous investment due diligence and basing investment decisions on compelling business models.

Reduced costs of investment—by investing directly in private equity transactions, as opposed to investing in private equity funds managed by third parties, family offices and individual investors may avoid additional layers of investment manager fees and their net equity stakes may be relatively higher.

Leveraging of resources—investors in direct private equity investments managed by experienced investment sponsors will benefit from the close attention of operating executives with deep experience in the industries represented in the portfolio companies and in all company functional areas such as finance and human resources, as well as private equity experience, knowledge of the financial markets, relationships with tier one financial institutions and successful track records of managing and growing companies.