Why family offices are spy opportunities in corporate finance –

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Family offices spy on new opportunities in corporate financesays Rasika Sittamparam

Even in large mergers and acquisitions, the fees banks can expect to collect are falling. Refinitiv data shows that investment banks working on global transactions saw fees drop 15% from the same period in 2018, to $11 billion.

This echoes the fall in M&A activity in Europe, which fell 67% in the first quarter of 2019. These mechanisms have created a niche for family office services, which want to pick up where merger shops -acquisitions are struggling to cope. Many are trying to include an in-house corporate finance offering to complement the service offering for UHNWs, as family capital becomes increasingly visible in these markets.

“A new ecosystem is emerging,” says Paul Staples, who heads the corporate finance arm recently launched by multi-family office Sandaire. “It is made up of people who are trying to raise between £1m and £10m in institutional fundraising, who have identified family offices as a very important investor base for this type of opportunity.” Covering the family office space, which requires long-standing relationships that are not transaction-oriented, is a tough game for M&A boutiques and investment banks to play. Even bigger players like Morgan Stanley, Citigroup and Lazard don’t seem to have someone with the title of “head of family office M&A,” he observes.

“A lot of them would say, ‘Well, we’ve thought about covering family offices, but that’s kind of difficult,'” Staples says. us and when we may generate a fee.”‘

Richard Hill, partner at Stonehage Fleming, says the international family office has long understood the need to provide financial services to businesses. He thinks the market is “definitely growing”, but feels that the positioning of family offices within it is not meant to be too disruptive. “We see ourselves as collaborative,” he says, because it’s often important for advisers like him to help families choose the right outside investment bank — when needed.

There is, however, an opportunity for family offices to grow even further in this space. “Over the next 5-10 years, I don’t see too many reasons why family offices can’t become a fairly effective competitor to lower- and middle-market private equity firms,” ​​Staples predicts.

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