[fusion_text]There is a boom in single-family offices in the U.S. and throughout the world. They are multiplying in number as well as the amount of wealth they control. Concurrently, the number of professionals that are interested in doing business with them is also multiplying. The logic is simple. Those professionals from wealth managers and lifestyle service providers to attorneys and accountants are able to generate very substantial revenues from single-family office clients.
Many senior executives of single-family offices recognize the dynamics between their organization and the professionals they engage. A large percentage of these senior executives tend to be very astute — if not clever — negotiators. They often adopt an “I win, you whatever” perspective. This does not mean they are not looking for a win-win solution. However, it is essential that they create relationships with providers where they “win” however they have pre-defined winning.
Some single-family offices engage — what can be conceptualized as — false flag negotiations. According to Angelo Robles, founder and CEO of the Family Office Association, “We have seen times when providers were unaware they were dealing with single-family offices. There are a number of reasons for operating this way including the desire to maintain privacy. Providers not being aware of who they’re dealing with is increasingly common where single-family office consortiums are negotiating with investment professionals especially when the consortiums initiated contact.”
While single-family offices are often excellent negotiators benefiting from their advantageous position, senior executives are motivated to create strong ongoing relationships with professionals. Consequently, professionals must be very focused and understand the bargaining strategies of the single-family offices they seek as clients.
“In providing various services and products to single-family offices, it’s usually essential to think in terms of gross dollars and margins as opposed to revenue numbers. It’s also very important for professionals to recognize that from the perspective of the people running single-family offices, all professionals are replaceable,” says Rick Flynn, founder and Co-CEO of LVW/Flynn, and author of The High-Functioning Single-Family Office. “We’ve found that many executives at billion dollar single-family offices to think along these lines enabling us to provide them with a range of exceptional capabilities at a cost that works very well for them and is still profitable for us.”