A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox. Family offices making direct investments in private companies may be taking on more risk than they realize, according to a new survey. Direct deals, when family offices buy stakes in private companies directly rather than through a private equity manager, have become hugely popular with family offices and account for a growing share of their portfolios, according to the 2024 Wharton Family Office Survey. Yet many are failing to take advantage of their strengths as investors. And they increasingly fall short on their monitoring and deal sourcing. According to the survey, only half of family offices making direct private investments have private equity professionals on staff who are trained to structure and identify the best private deals. What’s more, only 20% of family offices doing direct deals take a board seat as part of their investment, according to the survey, suggesting they lack forceful oversight and monitoring. “The jury is still out on whether this strategy will work,” said Raphael “Raffi” Amit, professor of management at The Wharton School, who founded and leads the Wharton Global Family Alliance. Direct deals have become one of the hottest investment trends for family offices. Half of family offices plan on conducting deals in the next two years, according to a recent survey from Bastiat Partners and Kharis Capital. Many family offices see direct investing as a path to the higher returns traditionally offered by private equity but without t …
