Tyler T Tysdal confirms that family private equity firms will deal in private equity businesses ran by their family. Private equity is investments that are made though private companies. Family private equity is when the family and their employees become the company and the business will invest the family assets or returns from their business. There are over seven thousand private equity managers across the globe who deal with over three trillion dollars of assets. They cover a large broad range of strategies they offer all of the usual benefits of investments but can often have much more beneficial charging structures.
They are attractive to those looking for risk adjusted returns. They are usually for high net worth individuals and now more commonly families who can pool their investments, especially when attached to an asset that is a family business. If the business is owned by a few family members it is a way in which they can all get their say on where and in what their money is invested. It can also give several or particular members of the family the chance to learn about the investment business. As the business will be small then all parts of the process will need to be dealt with by the small company. This means that it is a steep learning curve and you will need some professionals or employees with previous knowledge to help you at least at first. This has actually led to many companies setting themselves us as initial boutique advisers especially for this scenario. They will offer their services to the family to train them and get them started for a one-off fee. Then they will move onto another company. Quite often if they have done well for one family they may recommend them to another family who they are business associates with and they can restart this process. Everyone is happy and prepared for the arrangement.
They have top quality managers and are renowned in having top performing investments, capable of performing way above the benchmark and investing in a diverse portfolio. Costs are kept low as the families will not charge themselves a commission or finding fee. On top of this the asset class can also bring about great returns. Instead of having pooled funds in investments the family may decide to just go for one or two funds. This can be either advantageous or very risky and will all depend on the performance of the funds.
When a family decide that they want to sell their joint owned family business then they will potentially have a large amount of joint cash to invest. They often want to avoid exposure to the local markets or industries preferring to invest in funds that are offered by investment banks or private equity firms. Quite often those private equity firms are also ran by other family offices as co investors.
They do however carry a higher degree of risk due to their nature, they are not marketed the same as other investment products or quoted securities. However, when they do hit the big time everyone can win big.