Why the Family Office is Excellent for Careers in Private Equity

Chris Gilbert
4 min readOct 20, 2020

Private equity aspirants are of various kinds. A common category is of a candidate beyond the age of 30, working in an unrelated field but with an interest in private equity and some sort of qualification in finance.

Typically, the best approach to follow for someone like this who wants to become a private equity investment professional is to first target a field having some overlap with private equity — such as real estate or a search fund — and networking with people already 🔗working in private equity.

👉 What is a family office?

Among the lesser-known types of private equity operations, this is a great way to make a transition into a career in private equity. A family office invests the assets of a family or families, as against raising funds from outside investors.

👉 A family office could be of two types:

  • Single-family office (SFO): Invest the assets of one family
  • Multi-family office (MFO): Invest the assets of multiple families and individuals

👉 How does a family office operate?

There can be differences in terms of how the fund operates. There are small offices that do not do any direct investment but instead invest in funds and operate as funds of funds. Then, there are also institutional offices, operating in a similar fashion as 🔗top private equity firms and large hedge funds and offering highly-structured processes, training, and internships.

An MFO tends to operate as a fund of a fund, given how any individual family is scarcely large enough to open its own office. On the other hand, an SFO typically has sufficient resources to set up a big team for direct investment, often hiring from top private equity firms and 🔗investment banks.

👉 Here are some highlights of how a family office might operate:

  • Investments: Could engage in growth equity deals, co-investments in 🔗leveraged buyouts along with mega-fund private equity firms
  • Fund sources: Invest annual cash flows of the family-owned business, focusing on absolute returns and good opportunities across asset classes
  • Due diligence: Seek findings from external partners along with preparing internal memos for investments
  • Industries: Bigger role in family-owned businesses, but investing across industries

👉 How is the workday at a family office?

Work hours are the typical 9 am to 6 pm on days when there is no active deal. The day starts with preparing for scheduled meetings and reviewing news on portfolio companies. From 10 am, private equity investment professionals get into meetings with bankers, fund-seeking companies, or portfolio companies. Next comes due diligence on active deals and work on term sheets or models. The afternoon could be the time for meetings of internal investment committees. If a deal is active, the hours could go beyond 6 pm, with work on weekends too.

👉 There are many upsides to working at a family office:

  • No cold emails or cold calls due to multiple inbound deals
  • High exposure across industries
  • Work experience across different parts of deals
  • Supportive lifestyle with no compulsion to stay in office for long hours

👉 What are some tips to keep in mind to get selected?

The interview for a candidate looking to begin a 🔗career in private equity at a family office may not be as it is in large private equity firms. The idea is to find someone with potential and who can be guided to become a top performer. Being trained elsewhere may not be too helpful as family offices often look to train a candidate from the start.

Interviews for the aspiring 🔗private equity investment professional could largely be behavioral, looking at the thoughts on investments and private equity, along with past work experience. There may be a simple model and investment memo exercise. Larger family office interviews could be on the lines of those at traditional private equity firms. Standout candidates show initiative, an understanding of how investors think, and very importantly, a fit with the culture.

👉 A great way to improve candidature is to pick up a good private equity certification, such as the 🔗Chartered Private Equity Professional (CPEP) from the United States Private Equity Council (USPEC). CPEP™ is great for students graduating in accounts, business, or finance, and shows the candidate has the latest skills and knowledge and the desire to grow.

Original Source: Why the family office is excellent for careers in private equity

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