Compared to usual investment companies, single family offices have a unique organizational structure. Single family offices consist of various, large investment teams and only a few back office employees. We give a detailed overview of single family office organizational structures. Many European single family offices follow the introduced organizational structure.

Executive Team at our Single Family Office organizational chart

Usually, the core team of a single family office consists of a few partners in key positions. A Chief Executive Officer (CEO) who leads the whole investment firm,  a Chief Investment Officer (CIO) who is responsible for investment decisions and a Chief Financial Officer (CFO) who is responsible for tax and financial topics and a Chief Operating Officer (COO) who is responsible for daily operations. The partners are directly in touch with family members or a representative family board. Smaller single family offices even only consist of the executive team, while larger SFOs with billions of asset under management have several sub-divisions. You can read more about the executives at single family offices in this article.

Investment Teams at Single Family Offices

As stated before, larger single family offices have for each asset class a specialized team. The teams source deals and investment opportunities, execute possible transactions and monitor their performance. The interesting thing in family offices is that investment professionals closely work together although their asset classes might be really different. While for a large investment firms it might be the case that the private equity and real estate teams are located in different buildings or even cities, in single family offices they might sit in the same room. Of course, the teams are smaller than in large investment firms: no in-house lawyers, less interns, less back-office staff. Therefore, family offices also often rely on trusted, professional advisors or partners.

Usually, the specialized investment teams are led by directors who already served many years in leading positions at investment firms. They are, in turn, working together with a few talented investment associates and analysts. The Chief Investment Officer (or CEO, depends on the size and structure of the SFO) supervises the investment teams and is in steady exchange with them. Investment decisions are either made or – when the deal size is larger – brought to the family investment committee / investment board.

Which investment teams exist and how they are structured heavily depends on the investment focus of the family office. Very often, the following teams exist:

  • Financial Investments: Managing investments in financial markets, either through external asset managers or own professionals (or a mix of both forms). To determine the best asset managers, so-called „Beauty Contests“ are hosted. Often, the financial investment teams is working together with dozens of asset managers. Investments are made in stocks, bonds, resources or derivatives. A main function is also risk management (together with the accounting and risk management team), reporting and financial market research. Since the main function of the family office is wealth preservation, the investments have to be steadily watched and in case of too high volatility the SFO has to intervene directly.
  • Real Estate: The real estate division of family offices are mainly dealing with the asset management of existing properties and the acquisition of new objects. The real estate team is working together with various external firms: estate agents, asset managers, property managers, lawyers. Some family offices also engage in real estate mezzanine capital financing or project development. Some family offices are – through their background – mainly focused on real estate investments and asset management.
  • Private Equity and Venture Capital: Most investments of family offices in private companies are done through larger private equity and venture capital funds as so-called „Limited Partners“ (LPs). Lately, many single family offices also invest directly in funding rounds of startups and private equity deals. Many SFOs are working closely together with some PE & VC funds – and also engage in co-investments. The PE & VC team is also controlling and reporting the family office investments. Often, the team leads (or the Chief Investment Officer) are holding board positions at the portfolio companies. Sometimes, the PE & VC team is also responsible for the monitoring of the family business.
  • Other Investment Teams: There are many more possible asset classes which have their own investment teams: renewables, arts, impact investing, etc.

Back Office Functions at Single Family Offices:  Accounting, Public Relations, etc.

The back office supports the daily work and necessary operational functions of family offices. Smaller SFOs have a few employees (or external providers) who work on the tasks, larger SFOs have their own dedicated teams. Possible teams are:

  • Accounting, Tax and Risk Management: This team closely works together with the CFO and is a core function of a SFO: tax statements, income statements and balance sheets have to be created, payouts made to the family members, the portfolio value has to be steadily monitored and family members have to be consulted in tax issues. Since often family members are located in different countries, tax issues can get very complicated. In smaller SFOs, accounting is sometimes completely done by external firms. This team also deals with payable bills and the internal finance operations.
  • HR & Operations: This is usually a smaller team, concerned with hiring qualified employees (working together with headhunting firms) and running the daily operations. Some single family offices also have their own concierge services, dealing with flight bookings for family members, education topics for the kids, organizing family events and so on.
  • Public Relations: Self-explanatory: dealing with press coverage about the family office, often the main focus is to reduce public coverage and to clarify wrong reports.
  • Portfolio Management: As stated before, the main asset of many family offices is the holding of the family company (or companies). These holdings have to be closely tracked, board meetings prepared, sometimes own strategic planning has to be made. Sometimes this division is also incorporated in the private equity investment team.
  • IT: Heavily depends on the size of the family office, but larger SFOs have their own IT specialists, working on IT security, the homepage, equipment of the investment teams. Often also outsourced.

This article is part of our single family office career section. 

Picture Copyright: Feel free use our organizational chart, but please reference us as the source.

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Why it makes sense to be part of a Multi Family Office

For a HNWI (a high net worth individual) it can definitely make sense to become member of a Multi Family Office. These Offices are usually managed by very experienced asset managers, and provide a substantial network. As a member you will gain contact with other HNWIs or entrepreneurial families, strengthen your professional network, or gain possibilities for future business deals or lucrative investments. Multi Family Offices also offer the possibility to become part of a club deal, where a homogenous circle of investors pool capital to realise the acquisition of premium assets, for example, prime real estate. These deals are not offered if you are just another client at your (private) bank where the attention of an asset manager is split among many more wealthy clients.  On the other hand, in relation to a Single Family Office, where you have asset managers only structuring and managing your assets,  the costs of a Multi Family Office are much lower, since you share your managers with other wealthy families.

This is the minimum fortune of a HNWI person to join a Multi Family Office

Usually Multi Family Offices do not have an explicit financial threshold to become eligible as a member. Regarding our experience, the usual fortune of a person to join a Multi Family Office are 8 digits or more. This is an amount of capital when it makes sense to pay specialists and highly qualified asset and tax managers to help you most effectively to structure and manage the family or personal fortune. Some Multi Family Offices also allow people with a lower net worth to join a Multi Family Office, but this remains the exception. Lower entry requirements sometimes occur in bank-related Multi Family Offices, when banks open their own Multi Family Office to retain wealthy clients.  On the other end are also no limits, specialised and very wealthy family offices have even much higher entry barriers or only allow invited members to join their office. Since Multi Family Offices are not a protected term, therefore everyone can open one, making it harder to get to a clear cut definition.

How to become part of an exclusive Multi Family Office in Europe?

The usual process is to reach out to a Multi Family office as a wealthy client and to engage in a conversation about how you want to structure your assets. Depending on your strategy, your fortune and also the capacity of the Multi Family Offices you can reach a joint conclusion it makes sense to join or regarding your needs you are better served at a traditional bank or a private bank.  Depending on if you want your assets actively managed or rather prefer only an advisory role of the Multi Family Offices there are a great variety of alternatives to reach out to. Our lists, the links you can find below this article, help you to find the adequate Multi Family Office, which best serves your needs. Some Multi Family Offices are closed for new members, in these cases, it is not possible to join them.

Photo source: Austin Distel

Why are Multi Family Offices (MFO) so relevant?

familyofficehub’s research team has been dealing with the investment scene in Germany and Europe for years. We analyse deals and identify the most important players in sectors that are difficult to understand. With our lists, we enable uncomplicated access to companies that often operate in secret. Multi Family Offices (MFO) are particularly important in this context, so that we offer a list of the largest German Multi Family Offices as well as a list of the most important European Multi Family Offices. But what makes these MFOs so relevant? First of all, they offer direct access to the richest families in Germany and Europe. They are in close contact with High Net Worth Individuals (HNWI), who are very frequented not only because of their financial strength. The influence of the richest families in a country extends over the economy, culture, politics and many other areas. Furthermore, multi-family offices are of great importance as they actively participate in asset management and are responsible for investments in millions of euros. Especially in the course of fundraising, MFOs should be observed and approached.

Basic Definition: Multi Family Offices as Asset Managers for High Net Worth Families

Multi family offices can be defined as companies that manage the assets of very wealthy families. In contrast to single family offices, MFOs serve several families simultaneously. The number of clients in a multi-family office varies greatly between different companies and ranges from a few to a double-digit number of HNWIs. Although the range of services offered may vary widely (see below), these companies share a discrete approach and a responsible approach. The word “Multi Family Office” is not protected, so that any company can basically describe itself as such. The inflationary use of the term has led to more and more companies using the term for their services. What distinguishes Multi Family Offices from traditional asset management companies and banks can be found below in our definition.

Distinction between asset manager, private bank and multi family office

Family assets are not only managed by MFOs, but also by traditional asset managers and some exclusive private banks. Most of the larger banks also have a department specialising in HNWI. But how can multi-family offices be distinguished from these institutions? We use two criteria for this. On the one hand, the families’ assets must be extraordinarily high and usually amount to at least eight figures. On the other hand, according to our definition, multi-family offices have the aim of being comprehensively and profoundly active for the families they advise. This means that their services go beyond pure investment advice, are geared to the long term and are characterised by a close, trusting cooperation. In contrast to the traditional banking environment, they actively support the family’s “day-to-day business”.

A wide range of MFO activities: These services are offered by Multi Family Offices

A clear definition of a multi-family office is particularly difficult due to its diversity. In principle, MFOs can be divided into those that offer financial services and those that offer non-financial family office services. Some multi-family offices are active in both areas and offer “holistic” family office services. Financial services include asset management, portfolio monitoring and cash flow management. Active investment activities such as real estate investments or private equity or venture capital deals can also be classified as financial services. Furthermore, reference is made to topics such as risk controlling, tax consulting or succession planning. The non-financial services are just as diverse and range from legal advice, travel planning, art management, chauffeur management and (educational) planning for children to general administrative activities. There are no possible limits in this field, and it is difficult to include all components of the service portfolio in our definition.

How are Multi Family Offices created? Explanations and examples

Multi family offices typically arise from three different occasions. Traditionally, Multi Family Office services develop out of an asset manager’s offering. Asset managers are particularly keen to appeal to high-net-worth HNWIs, as this is where the greatest leverage is possible. If a company can establish itself in that industry, the entire business model is often geared to wealthy families. The change from an investment advisor and manager to a multi-family office is therefore comparatively common. An example of a multi-family office that was previously a classic asset manager is the Tonn Family Office in Hamburg (see also our article on the largest multi-family offices in Hamburg). Another origin of Multi Family Offices lies in the management of the assets of an initial family. In order to be able to work with even more managed capital and pass on the experience to other clients, additional families are taken on and looked after. The Bad Homburg Family Office HQ Equita is a good example of an MFO that emerged from a wealthy family. The third typical case of a multi-family office is the establishment of a new HNWI asset management company by experienced family officers and client advisors from private banks. Years of experience in advising high-net-worth clients have given these managers the opportunity to set up their own multi-family offices.

Picture source: Annette Schuman

In the European business world, single family offices have become more known in recent years. SFOs are playing an increasingly important role in investments and transactions in the European and wordlwide economy. As the leading research provider in the Single Family Office sector, familyofficehub has deep knowledge about that sphere. Our database of the largest European single family offices comprises over 400 entries and covers many countries and sectors. But the question arises: what are single family offices anyway? Our definition: Single Family Offices are the investment companies and advisory services of wealthy families or HNWIs. For these, they take over investment management, asset controlling and reporting as well as other related activities. The highest priority is to maintain value and increase assets. Single family offices are available in various sizes: some SFOs employ hundreds of investment professionals and are large professional investors, while others consist of only a few employees and specialise in specific areas.

What are the tasks of Single Family Offices?

As already stated, we define single family offices as the investment companies of the HNWI families. SFOs exist to preserve the assets of families, increase them over generations, and make steady dividends to the family members. Accordingly, one of the main areas of responsibility is investment management. This includes establishing an investment focus and investing according to this focus. This can take many different forms. Subsequently, the investments must be controlled and be risk-managed. Also important are related tasks such as the consideration of tax aspects or the preparation of regular reports. Some Single Family Offices also provide secretarial services for family members: booking flights, buying gifts, organising appointments. Foundation work and Charity or Pro Bono investing are also central components of the work of some Single Family Offices. For example, the Family Office of the Jacobs family distributes all its profits to the charitable family foundation.

What do Single Family Offices invest in?

As already mentioned, Single Family Offices are active in various areas. Family investment companies are often built around a family business. For example, the family’s assets may be pooled in a holding company, which in turn manages the family businesses. The profits from the group of companies are then distributed to the family members. However, many Single Family Offices are also pure investment companies. The basis of their assets is often a large portfolio of financial products such as shares, funds and bonds. Real estate is also very popular with Single Family Offices: secure steady dividends and the assets invested are more stable than in shares, for example. Recently, SFOs have increasingly focused on alternative asset classes: private equity, venture capital and investments in renewable energies. The role of family offices is very different here. Some have their own investment teams in the field or specialise only in private equity, while others rely mainly on external managers. Some SFOs are also involved in the arts or invest in agricultural and forestry land.

Reasons to set up a Single Family Office

  • The basic prerequisite for setting up a Single Family Office is the existence of considerable assets. There are some basic reasons that often lead to the establishment of family offices:
  • Sale of a business: The family business is sold, the money must now be invested.
  • Professionalization: Through the own company or the own activity considerable liquid funds are available which must be invested. By founding the Single Family Office, the investments are organized and professionalized.
  • Generation change: The previous generation leaves the family business, the assets are to be handed over to future generations in an orderly manner.
  • Property ownership: The family owns considerable land. The establishment of the SFO professionalises, monetises and expands the portfolio.

What is the minimum amount of assets under management of a SFO?

The sizes of Single Family Offices vary. Large investment companies with several employed investment professionals only make sense with assets over 100M€ – otherwise the personnel costs eat up the possible return. In our opinion, however, even smaller investment companies can be counted as Single Family Offices. For example, if a family has outsourced its investments and now some family members take care of it in addition to their actual activities. The investment focus of these SFOs is usually somewhat more pointed. The smaller Single Family Offices are often specialists in a certain area, such as venture capital investments.

Picture source: Henrique Ferreira

When you have spare billions, you usually don’t bring your money to your bank. You build your own bank, or, in other words, your own single family office. But: why do high net worth individuals like Jeff Bezos or the German Quandt family use family offices for their investments?

#1: Mistrust in banks and trust in the personal family office

With an increasing amount of money in the bank account you get more and more interesting for banks, asset managers and other market participants who want to have a share of your wealth. Understandably, you will also get more and more skeptical towards fee-hungry advisors. As a consequence, many HNWIs are relying on trusted companions to manage their wealth. In German single family offices whose wealth developed from traditional family-owned businesses, you can often watch how the ex-CFO gets the new “Head of Family Office”. That’s also the reason why you see many lawyers – who are generally a trusted professional group – in the family office business.

#2: Realization of own investment strategy

When working with banks or asset managers, you are often exposed to limited investment opportunities. It’s hard to get your own private equity vision realized by banks or to develop your own real estate portfolio. That’s the reason why many ex private equity, real estate or venture capital professionals are joining family offices. In family offices, leading family members are often only a phone call away or even occupying top positions.

#3: The highest degree of secrecy

Two things are the most important for many family offices: value preservation and secrecy. Lots of HNWIs want to remain hidden from the public eye. So the way to go is to establish your own family office. Thereby you can control what comes to the public and what stays under the radar. That’s also the reason why many sfos are in countries with high standards of secrecy like Switzerland, Luxembourg or Liechtenstein.

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Picture Source: Nikola Knezevic

Relevant European Single Family Office Lists

Family Offices are very discrete institutions responsible for managing funds of propertied single individuals or families. Some of them function as Multi-Family-Office for multiple people or families. The tasks of those family administrations are not limited to managing funds as they often do beneficent activities or function as mediators in family conflicts as well. In specific cases it might happen that they are taking over the life organization and planning as well.

Nevertheless, the most important activity of Family Offices is to secure and further develop the assets of their clients. The focus lies on successful investments with a long-term perspective. On this account many family offices do not only count on secure investments in the capital market, but also on Startup funding. By offering seed capital and investments for a specific period the firms function as incubators for innovative companies.

In this article we introduce five German Family Offices which strategically invest in young companies.

1. Alstin – Maschmeyer Group

After selling his company AWD to the Swiss company Swiss Life, Carsten Maschmeyer has organized his business activities jointly under the umbrella of the Maschmeyer Group. The firm undertakes tasks of a regular Family Office but is further open for third parties such as partners or friends of Mr. Maschmeyer. The Alstin- Alternative Strategic Investments – GmbH do investments in innovative Startups for a limited time period. In the course of its investment activities the Family Office focuses on digital business models promising an above-average growth perspective.

2. Astutia Ventures – Investments under the aegis of Rodenstock

While the name Rodenstock is normally associated with optic and glasses, the youngster of the family has set-up his own business. Benedict Rodenstock has established the venture capital company Astutia Ventures ten years ago after his job as a partner with the Family Office Lucitas. The fonds focuses on investments in innovative Startups by minority equity investments in the founding or early growth phase. The – hopefully profitable- exit takes place after a time period of three to five years.

3. Reimann Investors – Strategic Investments with a perspective

The history of the entrepreneurial family Reimann is linked closely to the growth of the chemical company Benckiser. The family members of the Reimann-Dubbers part have sold their shareholdings of the Joh. A. Benckiser company and have established the Munich-based Family Office Reimann Investors to manage the family wealth.

The Family Office has two pillars. One is to invest on the capital market focusing on value preservation. The other one is to invest in shareholdings. Thereby Reimann Investors focuses on young, strongly growing companies preferably in the digital and FinTech branches. The Family Offices sees itself as a strategic investor with a long-term perspective.

4. DVH Ventures – Venture Capital by Dieter von Holtzbrinck

Georg-Dieter von Holtzbrinck is one of the most prominent publishers in Germany. Back in 2014 the entrepreneur established his own independent Venture Capital Fonds called DVH Ventures. The investments focus on FinTech and InsurTech Startups. Additionally, the VC spends capital to young companies in other technology fields such as Artificial Intelligence, Big Data, Cyber Security, Internet of Things or Mobile Advertising. A few cases also show investments in non-digital business models.

5. SKion GmbH – A company of Susanne Klatten

Susanne Klatten is said to be the wealthiest woman in Germany. Under the umbrella of the SKion GmbH the business woman manages her industry shareholdings. These are amongst others shares of Nordex, SGL Carbon and Avista Oil AG. Furthermore, SKion holds 100% of the chemical company Altana.

Besides SKion GmbH does investments in companies with a sustainable and long-term business perspective. Thereby the special focus lies on young companies in the water technology sector. Basically, Susanne Klatten counts on investments in future-oriented technologies as well as in innovative business models in the industry and service sector.

Picture source: Roman Kraft

Lists related with this article

In the international venture capital industry and startup world, family offices are getting more attention nowadays – for a couple of good reasons. Recently, Crunchbase published a compilation of the “family offices with the most VC deals”. The list is headed by Omidyar Network (family office of the eBay founder Pierre Moidyar) and Kapor Capital. We think that family offices are good startup investors for every company for a couple of reasons.

1) Family offices are long-term oriented

Usually, venture capital funds have a certain time horizon. So, they try to maximize their returns in this period through higher valuations, a M&A deal or an IPO. As a consequence, many startups are growth driven, striving for higher revenues at any price. Family offices are (often) investing in a different way: they try to support companies in a more long-term oriented way, sustainable growth instead of hockeysticks. This might not be the ideal investor for everyone, but we’d state that in most cases it gives the supported company a better chance of growing a lasting business.

2) Family offices have a strong network and good industry knowledge

Often, family offices evolve from already existing family businesses. As a consequence, they have a good network in the specific industry and know how things are working. Especially in rather traditional fields like finance, real estate or the industry it is essential to cooperate with big companies and to rely on a strong network. Often family offices can offer that.

3) Family offices are Evergreens

Besides a limited time horizon, usual venture capital funds also only have limited funds. This means that they can finance startups only in limited rounds. Family offices trump VCs at this point. Through their evergreen structure and frequently substantial assets under management, they can accompany startups over multiple funding rounds.

Picture source: Al ghazali

Our answer on this question: yes, family offices definitively invest in startups, but that’s a rather new development. If you imagine “old money” family offices, it probably wouldn’t strike your mind that they are investing in startups, but nowadays more and more family investment groups are allocating an increasing part of their assets in venture capital. There are multiple reasons for this trend.

One of them is that through the global low-interest rate environment investors are looking for alternative asset classes which are still bringing adequate returns. Especially in Europe, which is known for it’s underfinancing of young companies, there are plenty of promising investment opportunities. Often the family investment groups are active in the industry of their family business. This makes sense, because the family knowledge and network can be transferred.

Another reason is that in many families a change of generations is taking place. The heirs are taking over the the control of the family investment group, thereby often changing the investment style and approach.

If you are interested in real-world examples of family offices investing in startups, we introduce 5 German family offices that are active as venture capital investors. Click here and learn about five venture capital funds that are backed by wealthy German families.

Picture Source: Venveo

Our answer on this question: The primary goal of family offices is the preservation of wealth and the maintenance of steady payouts to the family members. This also determined their investment style for a long time: quite safe asset classes with low risk and low (but steady) payouts were prioritized: real estate, blue chip stocks, bonds. But, in the current low interest environment, also alternative investments like private equity or venture capital arise. Often, the investment focus is also based on the roots of the family: someone who sold his startup is likely to invest in startups, heirs of a real estate dynasty will likely also invest in real estate in the future.

Regarding possible family office investment types, the UBS Global Family Office report is an interesting read. They outline the following asset classes (and the shares of European FOs which invest in this asset class):

1) Real Estate, 23%

Can be different types: office, residential, logistics, light-industrial, hotels, retail, retirement homes and so on. Family offices with a background in real estate are also often developing projects on their own. Interesting point: in Europe, 23% of the FOs are investing in Real Estate, while in North America it’s only 13%.

2) Private Equity, 7% (Funds), 14% (Direct)

Private Equity investments are either done by direct inhouse PE investment teams or by PE funds. The focus can range from investments in traditional mid-sized industrial companies to growth financing for “grown-ups” (former startups). PE investments usually mean higher risk but also the chance of higher returns.

3) Fixed Income, 13% (Developed Markets), 2,5% (Developing Markets)

Fixed Income investments range from US Treasuries, sovereign bonds to corporate bonds. Usually, they are safe but (especially today) bring low return.

4) Equity, 21% (Developed Markets), 3,9% (Developing Markets)

5) Cash, 6,8%

6) Gold, 1,1%

7) Other commodities, 0,4%

8) Agriculture, 1,4%

9) REITs, 0,4%

10) Hedgefunds, 5%

Picture source: Sharon McCutcheon

Our answer on the question: Single Family Offices (SFOs) are taking care of the fortune of one single family, multi family offices (MFOs) are pooling the wealth of multiple families. In most cases, multi family offices are managed by third-parties or are founded as a SFO which opens their services to other families in the course of business.

That also causes a different philosophy and team setup. SFOs are often close to the families roots (e.g. a real estate dynasty often also invests in real estate through their investment firm), while MFOs are developing an investment strategy based on the risk / return profile of their clients. Also, MFOs are often just structuring and controlling the development of wealth. The real investment decisions are taken by third-party asset managers which are determined in so called “beauty contests”.

In SFOs, the team mainly consists of high-profile ex-consultants and / or investment bankers. MFOs are often a pool of former associates of private banking divisions or other multi family offices.

Picture source: Paweł Czerwiński