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RSM US LLP

Private equity outlook raises investment considerations for family offices

September 9, 2022

ARTICLE | August 24, 2022

Authored by RSM US LLP

Family offices and alternative investments: Benefits and considerations

While the trend continues toward direct investing, many family offices still have significant wealth allocated through private equity funds, which are facing a new reality: If inflation persists and the economy declines, value creation and exit strategies will become increasingly challenging.


In RSM US LLP’s fall industry outlook for private equity, Kennedy Chinyamutangira, an RSM financial services senior analyst, predicts sponsors may use stalling tactics to help mitigate the looming market shift.


“For private equity funds at or nearing the end of their term and have to sell in this market, giving back some of the unrealized gains built up over the past couple of years will be a tough pill to swallow,” he writes.

“Most families are looking for operational excellence around their technology, their people and processes, and the way they invest; they are getting more sophisticated about how they invest.”

Tony Wood, RSM principal and national family office leader


Conversely, family offices have the luxury to choose when to deploy capital, allowing for a much longer-term perspective and flexibility in decision-making. This value proposition is why so many high net worth families are considering their options when investing in the private markets.


“We’re hearing from families that they want to be in alternatives but don’t want to pay the fund structure, so they co-invest and direct-invest with opportunities,” says Tony Wood, RSM principal, and national family office leader.


By circumventing reliance on third-party managers, family offices can save on fees. Having more control over their investments provides family offices the flexibility to focus on strengthening the enterprise to gain higher returns.


“Most families are looking for operational excellence around their technology, their people and processes, and the way they invest; they are getting more sophisticated about how they invest,” adds Wood.

For more insight, read RSM’s inflation snapshot for private equity.


This article was written by Tony Wood, Kennedy Chinyamutangira and originally appeared on 2022-08-24.
2022 RSM US LLP. All rights reserved.
https://rsmus.com/insights/services/family-office/private-equity-outlook-raises-investment-considerations-for-family-offices.html


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Hylant is a proud member of RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.

Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources.

For more information on how ​Hylant can assist you, please call 800-249-5268.