Family Offices – What They Look for When Buying a Company

About the Episode

In a return discussion of family offices, Alejandro Levy takes a deeper dive into the nuances of the family office and how they structure their investment strategies. Since family offices are major buyers of middle market companies, it’s important sellers understand what they look for in an investment and who the decision makers are within a family office. The discussion includes direct investments, investment trends in the secondary market, and the differences between family offices and independent sponsors.

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“When a family office is looking to buy a business, they want to see that a company has the possibility to make an impact on their particular industry. They will look at the cash flow – they want to know there is a strong probability the company will be profitable within a short period of time. If you can show that your business can grow without you personally being there, that is a plus. And, they want to know that you, as a business owner, have put your knowledge and money into this particular business”

Alejandro Levy

In this Episode

3:42 What changes have there been since mid-2022 in how family offices make investments? How does this impact business owners in the middle market? 
7:39 How often do family offices use debt as part of their overall deal structure? 
11:19 How risk-averse are family offices vs. other investors? 
14:16 How is the appetite in family offices changing for making direct investments versus investing as a limited partner in private equity funds? 
16:05 What are the investment strategies for wealthy individuals who are starting a family office? At what stage do family offices start to make direct investments? 
21:54 Who are the decision-makers in forming a family office’s investment strategy? 
24:38 What investment strategies and allocation decisions are typical for a family office? 
29:25 What are secondary markets for private equity investments? Why do family offices tend to like secondary market investment opportunities? 
32:56 What is the trend currently for family offices making direct investments? 
36:22 How much involvement do family offices have in acquiring private companies? What is their preference in terms of industries and size range of companies? 
39:57 How involved do the principals in a family office get with an acquisition? 
44:01 To what degree will a family office disclose what’s happening behind the scenes? 
49:04 How can a seller distinguish between a family office and an independent sponsor? 
55:40 Who is involved in making investment strategies and decisions within a family office? 
1:02:42 What are the most important takeaways for a middle-market business owner and entrepreneur who is looking to sell their company? What do they need to know about family offices? 

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Resources Mentioned in This Episode

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Acronyms or Terms Used in This Episode

  • AUM: assets under management
  • SFO: single-family office
  • ROFR: right of first refusal

Meet Our Guest

Alejandro Levy

Alejandro Levy

Family Office Consultant

Alejandro Levy is a Family Office Consultant with InvestX, a private equity investment firm specializing in businesses that have moved beyond the start-up phase. He has over 20 years of experience in the private markets. He has placed private equity deals with investors in Latin America, the Middle East, and the USA, ranging from entrepreneurs and leaders of successful private and public companies to multi-generational family groups and foundations.

Alejandro takes a holistic approach to helping clients with financial management. He incorporates advanced estate, trust, philanthropic planning, family governance, and working with the next generation of ownership. Alejandro offers advice in pre- and post-sale liquidity and objective investment management. He also supports custom hedging, monetization, and risk management strategies for concentrated asset class positions.

Location Location: Miami, Florida
Website Website: www.investx.com

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