Family Office Expansion Equals Opportunity, Competition for Alts

The continued rapid growth in the number of family offices and the wealth they control could represent both an opportunity and an emerging form of competition for private equity firms and private fund managers more broadly.

According to a September survey report from Deloitte Private, family offices worldwide are expected to grow to 10,720 by 2030, a 33% increase from 8,030 in 2024 and a staggering 75% from 6,130 in 2019. This growth in family offices is closely linked to the rise in global family wealth, with Deloitte estimating family offices’ assets under management (AUM) will increase to $5.4T by 2030, up 73% from $3.1T today. 

Meanwhile, North America is expected to nearly double its family offices by 2030, while Asia Pacific is forecasted to experience the fastest growth of global regions. Deloitte says this surge in the number of family offices reflects broader trends in wealth accumulation, generational wealth transfers, and the growing sophistication of family office structures.

The Shift to Private Markets and Increased Competition

With public markets continuing to shrink and private markets going the other way, it’s no surprise that family offices are also increasingly investing in alternatives, with a May 2023 survey from Goldman Sachs estimating alts make up, on average, 44% of family office portfolios. Similarly, a May 2024 survey report from Deloitte Private found that private equity has officially surpassed public equity as the top asset class in family office portfolios, with private equity now accounting for 30% of family office investments, up strongly from 22% in 2021. Public equities have taken the opposite tack, falling to 25% of the allocation in family office portfolios from 34% in 2021. 

“Increasingly [family offices] are putting their money into private markets … and moving away from public equities, and their favored allocation for this year is private credit, followed by real estate and private equity.” CNBC wealth editor Robert Frank reported in April. “All of Wall Street is trying to tap this market. Private banks, wealth management companies, private equity firms all have these new family office groups targeting this group for capital.”

But family offices may also be a growing source of competition in buyout and private credit deals, Frank said. 

“They're also replacing traditional private equity in many big deals, increasingly large deals in fact,” he said, referencing as evidence Michael Dell's family office’s participation in the blockbuster $13B deal to take entertainment, sports, and media company Endeavor Holdings private in April, and a family-office-led private consortium that acquired oil and gas company PureWest for $1.8B in May 2023. He added that family offices’ favorite sectors for direct investment at the moment include biotech, artificial intelligence (AI), and health care.

That lines up with a June survey of family offices by BNY Mellon Wealth Management, where a majority of respondents reported making at least six direct investments, either buying a stake in a private company or providing credit. And Deloitte’s May survey found that family offices increasingly prefer direct private equity investments, which now boast an average allocation of 17% of their portfolios, over investing in private equity funds, with an average allocation of 10%. 

In the end, it could be something of a "rising tide lifts all boats” scenario for private equity firms and private fund managers, where there is both increased competition with family offices for deals but also increased capital flows from them. Family office survey respondents told Deloitte they intend to increase their allocation to private equity investments more than any other asset class in 2024, with 27% expecting to increase their direct private investments and 25% their direct lending, while 29% intend to increase their allocation to private equity funds. 

Dakota Marketplace: Family Office & International Data

Dakota maintains data on over 4,000 single- and multi-family offices and has added over 1,000 family offices to the Marketplace platform in 2024.

To view newly added family office accounts in Dakota Marketplace, book a demo here!