Single-family offices, the self-made super-rich, and their successors are taking a progressively direct approach when it comes to investing in promising companies. From single-family office associations to club deals to launching their own funds, the exceptionally wealthy are taking a very active approach. A strong example of this is the focus many wealthy inheritors are placing on co-investing with private justness funds.
According to Angelo Robles, founder, and CEO of the Family Office Association and author of Effective Family Office, “Many inheritors are taking a more hands-on approach to managing family wealth. Deciding not to build the requisite infrastructure, they choose to team up with all types of private equity firms as co-investors.”
“These arrangements are structured in a number of ways, but everyone involved benefits. For example, sometimes inheritors will create their own funds, and other times inheritors will provide monies on a company-by-company basis. We’ve found that a lot of factors go into determining the best ways for affluent inheritors to directly invest in private companies,” says Ellie Peters, wealth advisor at LWV/Flynn and an authority on affluent heirs and money.
“For the inheritors, the aim is to invest wisely in start-ups and growing companies and powerfully capitalize their relationships while leveraging the technical expertise of solid private equity firms,” says Peter Sasaki, managing member of CGS Associates. “I’ve found that some inheritors are presently making a concerted effort through the co-investing experience to significantly upgrade their skills.”
For wealthy successors, the traditional approach of assigning monies to private equity firms is not the primary way they choose to invest in promising companies. Co-investing with private equity funds is one approach that is gaining traction.
