Family office private equity: Navigating opportunities and challenges

When it comes to family office private equity, there’s a distinct allure and complexity that sets it apart from other investment avenues. Family offices, entities that manage the wealth of high-net-worth and ultra-high-net-worth families, are increasingly diving into the private equity pool.

This asset class offers the potential of direct ownership stakes, tailored co-investment opportunities, GP-led secondaries, and thematic funding – often not available to institutional investors, which makes family offices uniquely positioned to deploy patient, flexible capital.

In this article, we explore the nuances of family office private equity, including its benefits, structural trade-offs, operational needs, and evolving role in the private markets. We’ll also examine direct vs fund investments, governance integration, liquidity frameworks, and emerging trends that underpin this compelling asset class.

What is family office private equity?

Family office private equity refers to private market investments made by family offices, either through commitments to private equity funds, co-investments alongside fund managers, or direct investments into private companies.

These investments typically involve acquiring minority or majority stakes in companies not listed on public stock exchanges.

These stakes may span venture capital, growth equity, leveraged buyouts, and distressed assets, offering differentiated exposure across industries and deal stages.

While the goal is often to achieve outsized returns relative to public markets, family office private equity investing is also shaped by goals such as wealth preservation, legacy building, portfolio diversification, and long-term impact alignment.

Due to the illiquid nature of private equity, these investments often require multi-year capital commitments, high tolerance for risk, and the ability to weather economic cycles without forced exits.

Private equity + family offices = A strategic match

Family office private equity investing is a natural fit due to the unique characteristics of both the asset class and the family office structure. Family offices are well-suited for private equity investments because of their long-term capital base, multi-generational outlook, and ability to commit patient capital.

This flexibility enables family offices to engage in a wide range of private equity strategies, from early-stage venture capital to late-stage buyouts, and to participate in direct investments, fund commitments, and co-investment deals.

Unlike institutional investors who often face quarterly performance pressure and rigid fund mandates, family offices are not bound by external limited partners. This independence allows them to align investment decisions with family values, mission-driven goals, and long-term capital appreciation strategies.

The ability to hold positions indefinitely (without fixed exit timelines) makes family office private equity particularly resilient during volatile market cycles.

This strategic match allows family offices to leverage private equity for sustained wealth growth, asset class diversification, and active value creation. Utilizing advanced family office software like Aleta tailored for private equity investment tracking, performance analytics, and reporting can further enhance this strategic advantage by improving transparency and efficiency across the entire investment lifecycle.

Family office vs. private equity firms: Key differences

Family offices and private equity firms may both invest in unlisted private companies, but that doesn’t mean that they’re the same.

Family offices are private entities established to manage the holistic financial, operational, and personal needs of ultra-high-net-worth families. These responsibilities include investment strategy, estate and tax planning, succession governance, philanthropy, and lifestyle services.

Within this framework, family office private equity serves not only as a wealth-generation tool but also as a mechanism to align investments with the family’s values, legacy goals, and risk appetite.

In contrast, private equity firms are institutional investment managers that raise capital from limited partners (LPs) and operate under fixed timelines and performance pressures. Their primary objective is to generate high internal rates of return (IRRs) and exit within 5-7 years through IPOs, acquisitions, or secondary sales.

These firms typically follow a structured investment mandate focused on buyouts, growth equity, or venture capital, whereas family offices enjoy far greater flexibility in deal size, timeline, sector focus, and control preferences.

Family offices can engage in private equity fund commitments, co-investments, or direct deals, often using their own capital without fiduciary obligations to outside investors. This enables them to take a more opportunistic, long-term approach to investment decision-making.

Additionally, many family offices are increasingly building in-house private equity teams with former PE professionals, further blurring the lines while retaining their distinct family-centric focus.

While they frequently allocate capital to private equity, family offices also invest across asset classes like real estate, hedge funds, public equities, and commodities, creating a multi-asset, long-term strategy designed for resilience and intergenerational wealth preservation.

You can read more about the family office structure in our article: The family office structure: A comprehensive guide.

Private equity vs. family office approaches to direct investment in private companies

When comparing private equity firms and family offices in relation to their direct investments in private companies, the contrast in philosophy, execution, and objectives becomes especially clear. This distinction is central to understanding the unique advantages of family office private equity.

Private equity firms typically follow aggressive, return-driven strategies focused on maximizing value over a defined time horizon. These firms rely heavily on detailed due diligence, operational restructuring, and financial engineering. Their goal is to rapidly scale companies and exit within a few years via strategic sales or IPOs.

They often seek controlling stakes to implement their investment thesis efficiently and meet their limited partners' performance expectations within fund cycles.

Family offices, on the other hand, operate with a long-term, values-aligned perspective. They may invest directly in businesses that reflect the family's legacy, industry expertise, or philanthropic interests. These investments are often made with flexible timelines and lower pressure for quick exits, allowing companies to grow sustainably.

Family offices frequently pursue minority or majority stakes, depending on the level of involvement desired, and are often viewed by founders as “patient capital” providers that prioritize strategic alignment over short-term profitability.

In direct deals, family office private equity teams may play an advisory or mentorship role, offering not only capital but also industry connections and strategic guidance rooted in generational business experience.

This difference in approach affects both the types of businesses targeted and the investment structures used. Whereas PE firms often prioritize high-growth, scalable ventures, family offices may lean toward legacy businesses, niche industries, or impact-driven enterprises.

Family office private equity investing: Benefits and challenges

Investing in private equity comes with both benefits and challenges. Let’s take a look at what these may be.

Benefits:

• Long-term horizon: Family offices can hold investments for extended periods, allowing for potential higher returns. This aligns well with the inherently illiquid nature of private equity and enables family offices to ride out economic cycles, giving portfolio companies the time needed to realize their full potential.

• Control and influence: By investing directly in private companies, family offices can exert significant control and influence over business strategies. This hands-on involvement in governance and strategic decision-making is a hallmark of family office private equity and allows for deeper alignment between investor and business values.

• Diversification: Private equity offers an avenue for diversification, reducing reliance on public markets. Family offices typically diversify across direct investments, private equity funds, co-investments, and secondaries, helping to balance risk while maintaining exposure to high-growth private markets.

• Access to unique opportunities: Family offices often have access to exclusive investment opportunities not available to the general public, allowing them to invest in high-growth potential companies early on. These proprietary deals often arise from family networks, business relationships, or club deals with other family offices and strategic investors.

• Alignment with values: Family offices can choose investments that align with the family’s values and philanthropic goals, fostering a sense of legacy and purpose. This includes impact investing, ESG-focused private equity funds, and mission-aligned direct investments that contribute to both financial and social returns.

Challenges:

• Illiquidity: Private equity investments are not easily liquidated, which can be a drawback if sudden cash needs arise. Liquidity planning and cash flow forecasting are therefore essential components of a robust family office private equity strategy.

• High entry barriers: Significant capital is often required, limiting access to only the wealthiest families. This includes minimum commitments to top-tier PE funds and the resources needed to vet and execute direct deals independently.

• Complex management: Managing private equity investments requires specialized knowledge and expertise, which might necessitate hiring skilled professionals. Many family offices now build in-house private equity teams or outsource to dedicated advisors with backgrounds in investment banking, private equity, or venture capital.

• Risk of capital calls: Family offices must be prepared for capital calls from private equity funds, requiring them to maintain liquidity to meet these obligations. Effective capital allocation frameworks are critical to avoid shortfalls and to maintain exposure across multiple investment vintages.

• Valuation challenges: Private equity investments can be challenging to value accurately, leading to potential discrepancies in portfolio valuation and performance assessment. Leveraging family office software like the Aleta platform tailored for private equity can streamline portfolio monitoring and reporting, improving transparency and decision-making.

Why family offices are increasingly turning to private equity

According to a UBS survey of 317 family offices from all over the world, 21% of family office assets are allocated to private equity investments (UBS 2025). In the US, the share is an impressive 27%.

And more than a third of the surveyed family offices even plan to increase their allocation to private equity.

J.P. Morgan has also carried out a global family office survey with responses from 190 single-family offices and found that 86% of them have invested in private equity, and that 17% of their assets are allocated to this asset class (J.P. Morgan 2024).

Deloitte reports similar findings. They’ve surveyed 354 single-family offices from around the world as well as carried out interviews with 40 senior family office executives (Deloitte 2024).

They found that private equity has surpassed public equity as the number one asset class family offices invest in with an average of 30% of assets allocated to private equity. Almost 30% of the surveyed SFOs even plan to increase their allocation to the popular asset class.

This increasing preference for private equity across global family offices signals a significant shift in long-term asset allocation strategies, reaffirming the central role of family office private equity in wealth preservation and growth.

According to UBS' 2024 survey, 71% of the family offices that invest in private equity are doing so to diversify their portfolio, and an equal amount (71%) believe that long-term returns on private equity investments are better than on public equity investments.

But these are not the only reasons why family office private equity investments are so common. Other factors driving family office private equity investing are:

Control over investments: Family offices appreciate the ability to directly influence company management and strategy.

Legacy building: Investing in private companies can align with the family's values and long-term vision, contributing to a lasting legacy.

Customization: Private equity allows family offices to tailor their investment strategies to the specific needs and preferences of the family, ensuring alignment with their broader financial goals.

Exclusive access: Family offices often gain access to unique investment opportunities that are not available in public markets, providing a competitive edge.

Philanthropic alignment: Family offices can invest in private companies that align with their philanthropic goals, promoting social and environmental impact alongside financial returns.

Long-term growth: The extended investment horizons in private equity match the long-term financial planning goals of family offices, fostering sustainable wealth growth.

Additionally, family office private equity investing provides a platform for next-generation engagement, offering a way for younger family members to participate in entrepreneurial ventures, portfolio company oversight, and impact-oriented projects.

As private markets become more sophisticated, many family offices are building internal investment teams or partnering with external advisors to enhance their capabilities in sourcing, evaluating, and managing private equity deals.

Maximizing success in family office private equity

To succeed in family office private equity investing, it’s essential to consider the following strategies:

• Due diligence: Conduct thorough research and due diligence before committing to any investment. For family offices, this means going beyond financials to assess cultural fit, operational scalability, ESG alignment, and the strategic potential of each deal, especially in direct investments.

• Skilled management: Hire or consult with professionals who have expertise in private equity and can navigate its complexities. Many high-performing family offices now build in-house private equity teams composed of former investment bankers, PE professionals, and industry operators to strengthen decision-making.

• Diversification: Spread investments across different sectors and geographies to mitigate risk. Successful family office private equity strategies often include a blend of direct investments, co-investments, and fund allocations to achieve optimal diversification.

• Long-term planning: Align investments with the family’s long-term goals and risk tolerance. Family office private equity investments should be governed by a clearly defined investment thesis that reflects both generational values and measurable financial outcomes.

• Family office software: Leveraging purpose-built family office software platforms can also significantly improve transparency, performance tracking, and compliance in private equity operations which is essential for long-term success.

• Peer networks: Engaging in peer networks, private equity consortiums, and family office clubs can enhance deal flow and offer benchmarking insights to refine the family’s private equity strategy over time.

Conclusion

Family office private equity presents a compelling opportunity for high-net-worth families to achieve substantial returns, exert control over investments, and build a lasting legacy.

As private equity increasingly becomes the centerpiece of modern family office portfolios, understanding the evolving landscape – from direct deals to co-investments and fund allocations – is essential for maintaining a competitive edge.

With strategic planning, thorough due diligence, skilled management, and the utilization of advanced family office software, family offices can navigate the complexities of private equity investing.

Embracing technology and institutional-level governance structures can further enhance the operational efficiency and investment rigor required to thrive in the private equity arena.

However, one must not forget that private equity investments come with a price, and that price is illiquidity. It's crucial to keep this in mind before investing in the popular asset class.

As the boundaries between family offices and traditional private equity firms continue to blur, families must remain agile, educated, and intentional in how they deploy capital to preserve wealth and expand their impact across generations.

Sources

Deloitte (2024): Top 10 Family Office Trends

J.P. Morgan (2024): Global Family Office Report

UBS (2025): Global Family Office Report

UBS (2024): Global Family Office Report