Welcome to Extreme Investor Network, your go-to source for exclusive insights and analysis on the latest trends in the world of business news. Today, we’re diving into a fascinating development in the world of family offices and their investment strategies.
According to a recent survey conducted by Bastiat Partners and Kharis Capital, family offices are increasingly moving away from traditional private equity funds and opting to invest in private companies directly. In fact, half of family offices surveyed indicated plans to engage in “direct deals” over the next two years, bypassing the middleman and taking a more hands-on approach to their investments.
As family offices continue to expand in size and sophistication, they are gaining confidence in their ability to source and negotiate their own deals. Drawing on their entrepreneurial backgrounds, many family offices prefer to invest in private companies that align with their expertise, rather than relying on external fund managers.
One key challenge that family offices face as they pursue direct deals is the issue of deal flow. With the majority of potential deals failing to meet their criteria, family offices may sift through numerous opportunities before finding the right fit. Additionally, maintaining a low profile can hinder their visibility in the market, potentially causing them to miss out on lucrative investment opportunities.
To address these challenges, the survey suggests that family offices should consider building more public profiles and engaging in networking opportunities with other family offices to attract a higher quality of deal flow. Establishing boards of directors and investment committees can also help streamline the due diligence process and mitigate risks associated with investing in private companies.
When it comes to preferred investment avenues, family offices are venturing into niche and emerging asset classes such as real estate tax liens, fertility clinics, and whiskey aging. These unconventional investments offer attractive returns, cash yields, and low correlation to traditional markets, appealing to family offices seeking to diversify their portfolios.
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