Wall Street's "Shadow Army": Family Offices Enter the Fray, Competing with Blackstone and KKR for Territory
When "billionaires" meet "professional PEs", a power shift reshaping the global capital landscape is taking place. Nowadays, family offices are no longer just low - key "wealth stewards", but have evolved into the fiercest predators on Wall Street.
From Michael Dell to Bill Gates, top billionaires are bypassing traditional funds and transforming into "permanent capital" to directly invest in industries, competing on the same stage with Blackstone, KKR, and Sequoia in fields such as AI and deep technology.
This is not only an institutionalized game of $5.5 trillion in assets, but also a "club" game about identity and influence. From the "family COO" dealing with polar salvage and art collection to the behind - the - scenes mastermind influencing listed company mergers and acquisitions, family offices are becoming the core force rewriting the economic rules of the next decade with their mysterious, patient, and highly aggressive stances.
"Do you have a family office?"
Family offices are becoming new power players on Wall Street.
More and more wealthy Americans are starting to set up family offices. On the one hand, they are responsible for asset allocation and investment decisions; on the other hand, they also coordinate matters such as taxation, law, charity, security, and family governance.
With their large scale, low - key operation, and even a touch of mystery, their influence on Wall Street and the "Main Street" economy continues to rise. Banks and various asset management institutions are also increasing their related services, and entrepreneurs and fund managers are vying to enter their "transaction radar". As family offices become more institutionalized, a lot of funds are starting to get more deeply involved in industries through direct investment, mergers and acquisitions, etc.
According to Deloitte's estimate, families with family offices currently manage about $5.5 trillion in wealth, a 67% increase from five years ago. It is expected to rise to $6.9 trillion this year, exceed $9 trillion by 2030, and is expected to surpass the management scale of hedge funds in the next few years.
Nowadays, setting up family offices has spread from a few top billionaires to "near - ultra - wealthy" families.
In addition to the leading family offices that have long managed billions of dollars in assets, many families with tens of millions to hundreds of millions of dollars in wealth are also starting to set up their own family offices or turn to multi - family offices.
Deloitte says that there are now more than 8,000 single - family offices globally, about one - third more than the 6,130 in 2019, and it is expected to exceed 10,000 by 2030.
A banker who serves families with a net worth of over $75 million said: "To some extent, this has become a label for ultra - high - net - worth families: Do you have a family office? There is a certain status symbol behind this."
"The next private equity"
"This is not just growing, but expanding explosively," said a partner at a law firm that specializes in serving family offices. "I really think the family office sector will become the next private equity."
This "firepower" is changing the way capital participates. More and more super - rich people are no longer satisfied with being LPs of other funds. Instead, they are turning their family offices into more "institutionalized" investment platforms, directly engaging in mergers and acquisitions, control - right investments, and post - investment management. Their operation methods are becoming increasingly similar to those of professional private equity institutions such as Blackstone and KKR.
As these funds flow through the economic system, they may reshape various businesses from artificial intelligence, data centers to dental clinics and medical beauty institutions. Due to the huge amount of investable funds, large - scale family offices can even compete with giants such as Apollo and Blackstone in transactions and participate in listed company merger and acquisition transactions.
For example, the family office of the late Arthur Samberg, founder of Pequot Capital, and Addison Fischer is one of the supporters of the fusion energy company TAE Technologies. TAE Technologies reached a deal in December, with a valuation of $6 billion, and plans to merge with Trump Media and Technology Group.
Another example is Michael Dell's MSD system, which started as a family office and later merged with Byron Trott's BDT to form BDT&MSD Partners.
It is no longer just managing family wealth, but is more like a professional investment bank and private equity firm, managing over $60 billion in assets: on the one hand, it provides consulting services like an established investment bank; on the other hand, it conducts long - term, large - scale direct equity investments like a PE.
In 2024, BDT&MSD Partners acquired a majority stake in the well - known food manufacturing company Badia Spices and participated as the main investor in the $1.5 billion acquisition of the parking technology company Metropolis Technologies.
Bill Gates' Cascade Investment is more like "permanent capital". Founded in 1995, its investment scope and depth far exceed those of ordinary single - family offices. Its typical approach is to "buy and hold for the long term" and does not have to be constrained by the 5 - to 7 - year exit requirement like traditional PEs. Cascade Investment holds a 71.25% stake in the Four Seasons Hotels; it also holds a large stake (about 34%) in Republic Services, the second - largest waste disposal company in the United States for a long time.
There is also a type of family capital with more strategic attributes.
For example, Bernard Arnault, the head of the global luxury giant LVMH, conducts a large number of technology and private equity investments through Aglaé Ventures under his family - controlled company Groupe Arnault. His family funds were involved in the early stages of Internet companies such as Netflix, Airbnb, Spotify, and Slack. Its core advantage is not just capital, but also the ability to use the family's top position in the luxury and consumer goods industries to provide strong brand endorsement and industrial synergy for the invested enterprises.
"Passive busyness"
The reason why family offices are becoming more and more like "the next - generation private equity" is first due to the asymmetry of regulatory and disclosure obligations.
In the United States, family offices that meet the definition are excluded from the definition of "investment advisors" under the "Investment Advisers Act" according to the SEC's "Family Office Rule", and therefore do not need to bear the registration and continuous compliance disclosure system like managers who raise funds externally.
Secondly, there are differences in capital structure and incentive mechanisms. Family offices do not have the redemption pressure from external LPs and the constraints of quarterly rankings. Therefore, it is easier for them to form "patient capital" and "permanent capital" and express long - term judgments in a concentrated manner on a few tracks or targets.
Meanwhile, this freedom also means that the institutionalized risk - control capabilities vary. A UBS survey shows that only 31% of family offices have established risk - management processes covering matters other than investments. A Citi survey also suggests that many family offices with concentrated positions have not systematically adopted strategies to mitigate concentration risks, and the overall use of leverage is relatively low (about half do not use leverage).
This difference in mechanism also explains the unique behavioral characteristics of family offices in the market. Different from public pension managers who are responsible for local teachers, firefighters, etc., and hedge funds that regularly disclose financial information to investors, the heads of family offices only need to be responsible to themselves. This gives them great autonomy. They can not only hold assets for a long time and weather severe fluctuations, but also concentrate their positions and place heavy bets on key tracks.
Some traders and advisors say that family offices often have little interest in using tools such as derivatives for hedging. It is this willingness to maintain long - bullish positions in specific stocks or industries that makes them an attractive and more "sticky" source of funds for many enterprises.
However, while the funds are highly proactive, family offices also face a "passive busyness". An entrepreneur and philanthropist said: "We receive a lot of financing pitches." He founded a family office with over $100 million more than a decade ago after selling a company.
"I dare say I receive three emails a day. Of course, I just delete them directly." The family office team has about seven people, two of whom are responsible for investments. He has also made donations to institutions such as the University of Nebraska through the family office.
In a sense, this also reflects another side of the "institutionalization" of family offices. They are becoming more like professional investment institutions, but as a result, they have become one of the most sought - after but hardest - to - impress capitals in the market.
Family office = Life steward/Family COO
Since Rockefeller established a professional team in 1882, family offices have not only been investment tools, but also management centers that institutionalize and streamline family trivial matters.
Family offices pay a large number of bills for family members and their children every year; coordinate inheritance, trust, and tax arrangements among different jurisdictions; communicate with external advisors, screen and finance the purchase of high - value assets such as private jets and yachts; and manage assistants and logistics teams, handling daily affairs such as travel bookings, luggage packing, restaurant reservations, receptions, and itinerary connections.
Some family offices also list concierge services, property/real - estate management, accounting, and human resources management as common institutionalized work contents of family offices.
In terms of the scale of family offices, some family offices only hire a few people and mainly focus on inheritance planning and investment - related work; while others have dozens or even hundreds of employees, and their job configurations extend to sub - fields such as family affairs management, property and facility management, security, health, and psychological support. The forms of single - family offices can range from "one person managing bill payments and family employees" to "a complete professional team".
Take the Walton family's family office, Walton Enterprises, as an example. In its introduction, it states that it provides support for multi - generation family members, covering personal, charitable, and business activities. Clues related to property management positions also appear in its publicly available job information.
Sergey Brin's family office, Bayshore Global Management, has positions in security, residential management, and life services.
The family office of the late Paul Allen, co - founder of Microsoft, Vulcan Inc., is often used by the outside world to illustrate that family offices not only handle the daily operations of large - scale assets but may also coordinate long - term projects such as scientific exploration.
Jeff Bezos' family office, Bezos Expeditions, is also involved in long - term engineering projects such as the 10,000 - year clock and special tasks such as underwater salvage that require approvals, logistics, and multi - party coordination.
The focus of family offices' work also varies in different regions. In Europe, some family offices place more emphasis on inter - generational inheritance, family governance, and the professional operation of specific assets (including art and collections). Some European multi - family offices also assist clients in handling matters such as children's education, living arrangements, global real - estate, and the search for scarce resources.
In Southeast Asia, family offices more often face the operation problems of cross - border mobile assets. For example, the frequent navigation of yachts in the region involves maritime laws, port berthing rights, crew visas, and social security, which require long - term, professional, and continuous management and coordination.
Judging from industry data, the service boundaries of family offices are still expanding.
A Citi survey of more than 300 family offices shows that more than one - fifth of family offices with assets of over $500 million are equipped with art advisors. Betsy Bickar, the head of Citi's art consulting, once took clients to visit the Guggenheim Museum in New York during its closed hours. This kind of arrangement is just one visible scenario, which relies on the family office's long - term overall coordination ability of people, things, assets, and external resources.
"Club"
Among ultra - wealthy investors, a more iconic change is taking place - the "clubbing" of family offices.
Many lawyers and advisors have observed that family offices are often highly curious about what their peers are looking at and what trading opportunities they have access to, and may act "in groups". When one of them smells a particularly attractive opportunity, other family offices will quickly follow up with investments, forming a joint - investment "club" funded by multiple families.
This kind of "club" is not only an information - sharing mechanism but also a bargaining tool. Family offices that are more closely connected to the family network are more likely to negotiate better trading terms. And when multi - family offices invest jointly, they can obtain larger - quota and scarcer project allocations without significantly expanding the risk exposure of a single family. Family offices like to communicate with each other very much.
The spread of this "clubbing" is inseparable from the improvement of the supply - side infrastructure. Large banks and asset management institutions are extending "family - office - style services" to ultra - wealthy people who have not reached the "billionaire level" but have tens of millions to hundreds of millions of dollars in assets.
According to data from Charles Schwab Advisor Services, currently about 800 registered investment advisors (RIAs) call themselves multi - family offices, an estimated 30% increase over the past 10 years.
For many families, setting up a single - family office may cost millions of dollars per year. So institutions such as Mercer Advisors and Corient provide similar services to clients with assets of over $25 million. Some institutions set the minimum threshold at $10 million. The expansion of supply has reduced the "organizational cost" and objectively provided a more stable service framework for cross - family collaboration, joint investment, and "club" operations.
Ultimately, the rise of family offices is not just about "more money", but about the change in the way capital is organized, from being an LP to getting directly involved, from acting alone to forming "clubs" to compete for scarce projects and better terms. In the next decade, the key to determining the influence of family offices is not just the asset scale, but who can transform trust, connections, and execution ability into continuous trading ability.
(The New Intelligence Point of Family Offices reminds: The content and views are for reference only and do not constitute any investment advice.)