Family Offices Poised for Investment Surge as Valuations Align

Family offices are gearing up for a surge in acquisitions and investments in the coming year, buoyed by a growing perception that company valuations are becoming more reasonable. A study conducted by fund administrator Ocorian reveals that investment-grade credit is the most sought-after asset class among family offices, although alternatives and global equities also remain popular choices.

The research, which surveyed 301 senior executives at firms with annual turnover exceeding $250 million, indicates a strong appetite for expansion. An overwhelming majority of family office professionals (94%) anticipate increasing their acquisitions and investments in 2024 compared to the previous year. Moreover, 18% of respondents expect a significant uptick in activity, while 6% anticipate maintaining similar levels.

The survey identifies several factors driving this trend, with 62% of respondents attributing the rise in acquisitions to more realistic and appealing company valuations. Additionally, 60% cite the escalating cost of debt as a catalyst for companies seeking investors.

Amy Collins, head of family office at Ocorian, comments on the strategic shift underway within the family office sector, noting that nearly half (49%) of respondents aim to bolster direct investing efforts. She highlights a growing interest in private equity and direct investment opportunities, particularly among younger or differently minded generational principals.

Collins emphasizes the significance of alternative investments, stating, "Many family offices had largely held back from the markets and wider investment during the pandemic and its aftermath before changing course during 2023 and increasing investments across a range of sectors and particularly the alternative fund sector."

Looking ahead, Collins expresses optimism for increased activity in 2024 but raises the question of whether this trend will extend into subsequent years. She suggests that the positive outlook may persist beyond 2024, reflecting evolving investment strategies within the family office sector.

By fLEXI tEAM