‘Modern Family’: The Resurgence of Family Office Enterprises

Olshan corporate partner Edward Taibi published a New York Law Journal article (subscription required) entitled “‘Modern Family’: The Resurgence of Family Office Enterprises” about how family offices—private investment organizations managing wealth for high-net-worth families—have seen a significant resurgence in the past 10 to 15 years and how they now rival traditional private equity, venture capital and hedge funds. Their importance has only continued due to unprecedented wealth accumulation and diversification, Ed writes, and these offices have since moved toward direct investing, reducing reliance on external funds and associated fees while gaining control over investments. “Family offices offer ‘patient’ capital, meaning they are not beholden to contractually defined holding-period models of private equity firms,” he explains. “Employing a long-term view diminishes the reliance on debt-focused financing structures, which allows family offices to invest in opportunities when debt markets are inaccessible to shorter-term investment funds.” Ed adds that family offices interested in growing direct and controlled investing pursuits must engage with experienced outside counsel for advice on transactional and financing matters, and also to help assemble the best-suited team to evaluate and execute on investments pre- and post-transaction. Furthermore, legal counsel should also advise on regulatory and compliance matters relating to direct investment efforts to better ensure preservation of family integrity and good standing. “As a long-time transactional professional,” he writes, “I have found working with family offices to be amongst the most intellectually and professionally stimulating initiatives as there are many more profound layers of thought and creativity required, which also comes with the trust of advising within the inner sanctum of decision-making and mission-creation of the family enterprise.”