Family offices may prefer direct investing because it gives them more control over deal selection, structure, and oversight. It can also let them invest in opportunities that fit their strategy and work more closely with a company or asset. Direct deals require the office to assess risks and manage complexity itself.
What direct investing means
Direct investing means a family office invests in a company, property, or other asset itself, rather than buying exposure through a pooled fund. The office can choose which opportunities to pursue and negotiate terms around its own priorities.
That flexibility can matter when a family has a clear view about a sector, location, or investment horizon. A direct deal may also offer more visibility into the underlying asset and more involvement in important decisions. But the office takes on more responsibility for diligence, monitoring, and managing the investment. A direct investment does not automatically mean lower fees or better returns.
Control, alignment, and fees
A family office considering a direct deal can negotiate its rights and reporting expectations with the operator. It may also be able to set terms that match its goals and time horizon. This can make incentives and accountability easier to evaluate.
Fees are part of the comparison, but they do not tell the whole story. At a Family Office Club event, a speaker described looking first at the opportunity, its location, and whether it fit their investment themes, then considering fees. The speaker said unusually high fees could make a deal less compelling, though fees were negotiable. That illustrates why offices may compare a direct deal with a fund on the full package: strategy, performance history, terms, transparency, and the work required to oversee it.
What to weigh before investing directly
Direct investing can demand substantial time and expertise. The office needs to source opportunities, evaluate managers or management teams, assess legal and financial risks, and keep track of performance after investing. It may need outside advisers or operating partners to fill gaps in its own team.
The choice is therefore not simply direct versus indirect. A family office might invest directly when it has the knowledge and capacity to assess a specific opportunity, and use funds or other managers when it wants diversification or specialist expertise. The right approach depends on the family's objectives, resources, and willingness to take an active role.
From Family Office Club events
We never start looking at fees. We start looking at the opportunity. I think if I'm scanning. If I'm skimming. Something I'll look at the opportunity, the locations and align with our thematic.
Sources
- Family Office Club event transcript
- No external statistics used.
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