Private Equity Best Practices: Understanding Family Offices – Part 3
Understanding Family Offices – Part 3
The Importance of Strategic Decision-Making
Single-Family Office vs. Multi-Family Office vs. Hybrid-Family Office: One of the key decisions a family will make is whether to select a single-family office (SFO), a multi-family office (MFO), or a hybrid-family office (HFO).
The choice often depends on factors such as the size of the family’s wealth, the complexity of their financial needs, and their preference or need for personalized attention.
Investment Allocation: Family offices should always carefully consider their investment allocations between private markets and publicly traded stocks. Ensuring an optimal allocation that aligns with their investment objectives and risk appetite. While historically, family offices have had a higher allocation to publicly traded stocks, recent trends indicate a shift towards private markets. Private equity, venture capital, and private debt investments. These asset classes have gained prominence due to their potential for higher returns and reduced volatility.
Balancing Wealth Preservation and Growth: A crucial decision is striking the right balance between wealth preservation and growth. While wealth preservation is often a primary goal, families may also seek capital appreciation and growth opportunities. Family offices should develop investment strategies that align with the specific goals and values of their clients, while also managing risks effectively.
Embracing Technology and Innovation: Family offices must stay abreast of technological advancements and leverage innovative solutions to enhance their operations. This includes adopting digital platforms for streamlined communication and reporting, utilizing data analytics for investment decision-making, and exploring emerging technologies that can optimize wealth management processes. Embracing technology can enhance the efficiency and effectiveness of family offices, leading to better outcomes for their clients.
Succession Planning: Family offices often play a pivotal role in facilitating smooth succession planning and ensuring the sustainable management of wealth across generations. They can assist families in defining their legacy and implementing strategies that align with their long-term goals. They can help establish governance structures, educate future generations, and provide guidance on wealth transfer and continuity.
Conclusion
Family offices have evolved and can offer a range of comprehensive wealth management entities, providing a wide range of services to ultra-high-net-worth individuals and families. They can serve as trusted advisors, guiding clients in financial planning, investment management, legacy planning, and lifestyle management. Family offices can help navigate complex decisions, balancing investment allocations, and embracing technological advancements. By making strategic decisions and providing tailored solutions, family offices can ensure the efficient management and preservation of wealth for generations to come.
Benevolent Capital
At Benevolent Capital we have carved a niche for our investors by seamlessly blending traditional family values with cutting-edge investment strategies. Our approach is characterized by a thoughtful fusion of innovation and prudence, ensuring that every investment aligns with the long-term vision and legacy goals of our clients.
As principals we co-invest our own money in every deal we participate in, we do not charge our investors management fees, investors receive a 100% preferred gross return on their investment. After the 100% return (a 2X) the investor will receive a 70% net return with a 30% promote to the GP. This arrangement makes Benevolent Capital a trusted partner in safeguarding and growing wealth for our investors.
Benevolent Capital includes a world-class group of partners, associates and investors, and our portfolio now spans catalytic investments in venture capital, private equity, real estate development and a diverse collection of global professional soccer franchises. Our wide range of experience from managing successful companies, to completing management buyouts, acquisitions, and a wide variety of debt and equity investments totaling over $4 billion enables us to truly partner with the entrepreneurs and management teams of our portfolio companies and provide hands-on support and guidance towards realizing their full potential. Benevolent Capital has a proven track record of successful investments. Notably, our $200k investment in seed capital for Enzymatics, a biotech firm later ultimately acquired by Invitae (NASDAQ: NVTA), has yielded over $30MM in total returns for Benevolent Capital’s investors.
What sets us apart is not just our financial acumen but also our dedication to fostering meaningful relationships. Going beyond conventional investment practices, we prioritize open communication and transparency that allows us to build trust with our stakeholders, as principals we co-invest our own money in every deal we participate in making Benevolent Capital a trusted partner in safeguarding and growing wealth for our investors.
In an ever-evolving financial landscape, our expertise, coupled with Benevolent Capital’s commitment to hybrid family office investments, paints a picture of success, where financial prosperity meets enduring values.
About the Author
Brett M. Johnson, founder and CEO of Benevolent Capital, founder and partner of Fortuitous Partners, and co-founder and chairman of Rhode Island FC. He has a bachelor’s degree from Brown University and a Masters of Business Administration from the Presidential/Key Executive program at Pepperdine University. Brett is also a graduate from the Harvard Business School’s President’s Leadership Program in 2014. An active member of the Young Presidents Organization.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Always consult with a qualified financial advisor or wealth manager before making any investment decisions.
