Single-Family Offices Clandestine Investments In Private Companies

By Russ Alan Prince

A pronounced and growing tend is that single-family offices and the super-rich are increasingly directly investing in privately held companies. According to Angelo Robles, founder and CEO of the Family Office Association and author of Effective Family Office, “Sometimes single-family offices are teeming up with other family offices in the form of ‘club deals.’ At the same time, an increasing number of single-family offices are forming consortiums to invest in private companies.”

While a substantial percentage of single-family offices are investing in privately held companies a small but growing number of them are doing so secretly – at least to start. “For reasons ranging from confidentiality to being able to better manage the investment process including getter better terms, some single-family offices are using ‘false flag’ approaches to connect with and select private companies to invest in,” says Rick Flynn, managing partner of FFO Business Management & Family Office and author of The High-Functioning Single-Family Office. “Another strategy being used to approach entrepreneurs clandestinely is when single-family offices use retained intermediaries. These ‘cut-outs’ are proving very effective in sourcing diverse providers and investment opportunities for larger single-family offices, and are likely to become more common as less wealthy single-family offices embrace using them.”

As more and more single-family offices are participating in conclaves where entrepreneurs congregate, they are joining these gatherings while not disclosing they are single-family offices. According to Miguel Forbes, vice chairman of Forbes Family Trust, “It is increasingly the case that some single-family offices are participating in mastermind and CEO groups. One of the major reasons for them joining these groups is to meet successful business owners that could benefit from the monies, expertise, and connections their single-family offices could provide. By not sharing that they’re a single-family office, they can often get a better read on the business owner and his or her business. They can also potentially cut a better deal for themselves.”

The world of single-family offices while extensively expanding in number and the amount of wealth they control is opaque by design. This characteristic of single-family offices is only going to intensify as it regularly serves them well.


This article was originally published May 14th, 2018 on The original article can be found here.