In December last year, we launched PwC’s Global Family Office Deal Study 2023, “From Wealth to Opportunities”, reflecting on the increasing importance of family offices within the global capital markets.
The return of inflation following a decade of ultra low interest rates and loose monetary policy met, in response, with a sharp rise in interest rates, has inevitably led to significant market uncertainty and reduced transactional activity.
A combination of asset repricing, rising finance costs and concerns over the outlook for economic growth, combined with geopolitical uncertainty and structural and technological change has resulted in institutional investors, especially debt buyers, sitting on the sidelines for much of 2023 and a material uptick not expected until H2 2024.
Often esoteric in nature, family offices have been well placed to exploit this hiatus. They’re no longer competing with private equity or institutional debt buyers, and also have the benefit of underwriting on a more flexible risk adjusted basis. This new headroom, coupled with the absence of investment committees and wider stakeholder engagement, means that family offices can often move quickly to exploit mispricing, distress or counter cyclicality and lead a broader based recovery in deals volume as we move through 2024.
Bringing the global focus nearer to home, these trends have been observable here in the UK but a deeper dive into the data reveals several interesting trends:
Real estate continues to be a sector that resonates strongly with family offices, which are expected to be first movers ahead of a more broad based deals recovery, whether that be looking for distressed opportunities, countercyclical opportunities, repurposing strategies or private debt;
Family offices have become an increasingly important part of the UK venture capital ecosystem over the past decade, accounting for 74% of investment into startups in the UK in 2023 and accounting for nearly a third of investment in the sector. Within this, a preference for SaaS, Fintech, AI and Machine Learning businesses is underpinned by strong fundamentals;
UK family office club deals have nearly doubled in nine years, allowing investors to diversify risk or benefit from the expertise of partners but also participate in more ‘thematic’ investment cases which require scale or larger private equity M&A transactions.
"Real estate continues to be a sector that resonates strongly with family offices, which are expected to be first movers ahead of a more broad based deals recovery..."
Globally, we expect to see continued growth of private wealth and, with this, an increase in the number of family offices of increasing complexity and sophistication, established to manage this wealth.
As a result we expect that family offices will continue to become an increasingly important force in the global capital markets, in particular investing in emerging sectors, new technologies or leading through structural change. With significant wealth transfer to the next generation, family offices will be an important force for driving impact investment and philanthropic causes.
If you’d like to understand how we’re supporting Family Offices at all stages of the establishment, deal processes and beyond; including succession and tax planning and governance then please don’t hesitate to get in touch.
