Family offices are playing a growing role in the private market by directly investing in private companies, often bypassing traditional private equity funds, as a recent survey reveals.
According to a survey by Bastiat Partners and Kharis Capital, half of family offices plan to pursue “direct deals” over the next two years, opting to invest independently rather than through private equity funds. Many family offices, which are in-house investment firms for wealthy families, are increasingly confident in handling their own deals as they expand in size and expertise. Often established by entrepreneurs, these offices are inclined to back private companies that reflect their own business backgrounds.
More than half of surveyed family offices (52%) prefer direct deals through syndicates, allowing other experienced investors to lead—demonstrating a cautious approach. The report highlights that family offices are emerging as a significant force in private markets.
However, family offices face challenges in sourcing enough quality investment opportunities, or “deal flow.” They may assess multiple deals before finding a suitable one, with about 20% of survey respondents citing the quality of deal flow as a primary concern. Their preference for privacy also limits their access to public deal opportunities, making networking with other family offices critical. Sixty per cent of respondents consider such networking essential, and 74% are actively seeking new connections.
Another challenge for family offices is due diligence. Unlike private equity firms with large teams for thorough financial analysis, family offices often lack such resources, which can increase the risk of investing in underperforming companies. In response, many family offices are establishing boards and investment committees—54% of North American family offices now use investment committees to evaluate potential deals.
Family offices are also exploring unique investment areas, such as real estate tax liens, fertility clinics, sale-leasebacks, whiskey ageing, and litigation financing. These niche assets offer high returns, cash yields, and low correlation to the stock market, providing attractive alternatives for private investments.
