The Ultimate Single Family Office Guide

Calvin de Montestin

The Ultimate Single Family Office Guide

Investment Strategies, Organization of Family Offices and Industry Insights

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Inhaltsverzeichnis

Titel

Introduction: Why it is becoming increasingly important to understand Single Family Offices

The SFO portfolio: Investment focus of the HNWI investment companies

Single Family Offices as business contacts and investors

Impressum neobooks

Introduction: Why it is becoming increasingly important to understand Single Family Offices

Single Family Offices (SFOs) - the investment firms of wealthy families - are becoming an increasingly important phenomenon in the world’s business world. For years now, the number of billionaires has been rising in the same speed as the number of single family offices. These in turn are pushing into the financial and investment markets to invest their money above zero interest rates. As a result, more and more single family offices are becoming involved in real estate, private equity, venture capital and financial markets.

This eBook is a bridge into the single family office industry. Readers will be shown what is important in the SFO world, what Single Family Offices pay attention to, in which asset classes SFOs invest and how to approach single family offices.

What is a single family office?

First of all we should get clarity about the term "Single Family Office". The term comes from the Anglo-Saxon region and describes an investment company of a specific family. Single family offices are investing in different asset classes in order to achieve a clearly defined goal. In most cases, the SFO objective is to maintain the long-term value of the family assets and to generate steady payouts. Today, there are some billionaire families which are split into thousands of branches. Many of the branches only live from the payouts and are thus dependent on a good work of the family investment company.

The big question is: at which point are we talking about a family office? The answer to that question is: it depends. Well-known family office portals such as familyofficehub.io talk about a single family office as soon as one or more employees take care of the investment of the family assets in full or part time. The number of investment professionals depends heavily on the assets under management. A family with billions in assets can afford to employ a team of 10-100 people. A smaller single family office with assets under management in the one- to two-digit million range usually hands over responsibility to a few family members. These then often manage the family office alongside another activity - which often also lies in the business sector.

The first single family office was probably the one of the Rockefeller family. John D. Rockefeller, an American industrialist, made a large fortune in the oil business in the 19th century. The family assets were preserved by a holding company and family foundations - which can be compared with today's single family offices. The asset allocation is also comparable to the portfolio of some SFOs in the 21st century: The cornerstone was the family-owned company Standard Oil and its successors, enriched with substantial shareholdings and a substantial real estate portfolio.

How and why are Single Family Offices created?

The reason for starting a single family office is often the same: a certain amount of money is available and should be managed and increased for present and future generations. The reasons from where the assets originate can be different.

Most Single Family Office start-ups result from so-called liquidation events. This means that the family business is sold and a large sum of money is available. This effect is often particularly strong in entrepreneurial families, as the money usually remains in the company during the entrepreneurial activity and the family is therefore only "wealthy" instead of "rich". If the company is then sold - for example to a strategic investor or private equity investor - the large sum of money must be professionally managed and administered. This is what happened to the German Wirtgen family. They sold the family-owned construction machinery company to John Deere for 4.4 billion euros. This was followed by the establishment of the Wirtgen Invest single family office, which invests in energy, venture capital, real estate and financial markets.

Another common case is that the family has had assets for decades that are being managed more and more professionally. In many cases, professional investment firms or single family offices have also emerged from former family holdings. The further back the original foundation of the family dynasty goes, the more branched the family is today in many cases. Examples are the Rockefeller family in the USA or German landowners and industrialists. Exactly the same applies to families who own large real estate portfolios. The management of the real estate portfolio leads in many cases to the foundation of a SFO. A niche case are single family offices that only manage investments of a certain type for a wealthy family, such as start-up or real estate investments.