Family Office Deals Study 2023

In this report, the latest in PwC's ongoing series of research studies on family offices’ evolving investment strategies and behaviours, we draw on our unique global database of family offices and their investments to highlight key macro trends over the past decade, with a particular focus on the past year. The three pivotal asset classes of direct investment/M&A, real estate and start-ups were analysed in greater detail.

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Changes on Macro Level

• Rising sophistication, professionalism and risk orientation:

As family offices become increasingly professionalised and their governance continues to improve, they’re making smarter and more sophisticated decisions on investments and on the balance between potential risks and returns. Examples include their ongoing reallocation of family capital away from real estate and towards start-ups offering a higher upside. However, most of their money still flows into direct investments.

Direct Investments/M&A Strategy

• Targeting smaller and club deals to manage and share risk:

In combination with rebalancing their deals mix from direct investments to start-up deals, family offices are also embracing smaller direct deals while scaling back their involvement in large and mega deals, and increasing their use of club deal structures all aimed at gaining better control and visibility over risks, including through risk sharing. And they’re maximising potential return by targeting tech-driven industries such as computer software services, while focusing particularly on the US and India.

Real Estate Investments

• Applying an adaptive and opportunistic approach to tap into specific pools of value:

In parallel with dialling down their overall real estate investments, family offices are pivoting them towards a combination of smaller deals and strategic large and mega deals. And they’re using club deals selectively to mitigate and spread risk on some investments, while also being prepared to go it alone when they think the upside opportunities justify it with high-end hotels and Paris real estate being particular focus areas at the moment, as real estate investments in Europe reach a new all-time high.

Start-up Investments

• Targeting opportunities more selectively, writing bigger checks and sharing risks:

While family offices’ start-up investments are declining in volume and overall value, they’re now once again increasing their average deal size and continuing to make heavy use of club deals. They’re also targeting high potential sectors like SaaS and AI ML, while maintaining a major share of deal value in industries like mobile and FinTech. It all adds up to a smart and considered approach to this high risk, high reward asset class. Meanwhile, Europe is becoming less attractive as a target region for start-up investments, and the US remains the dominant cross border target market by a wide margin.

Family offices are truly coming of age and playing an increasingly influential role as key players in global investment markets across a range of asset classes. Now is the time for them to embrace that future and help to turn it into reality.