Reinventing the Family Firm - Chapter 1

DEFINING THE FAMILY BUSINESS PORTFOLIO FIRM

Family Offices Family offices have been established at a high rate in the past few decades in order to strengthen the management of family-owned portfolios. These tend to be of two types: ♦ Single-family office, which manages the assets of a single family. ♦ Multi-family office, which manages the assets of several families. This type of organization might be seen as quite similar to the way in which many venture funds are organized. A multi-family office will typically have more resources at its disposal, and thus also be able to employ a larger cadre of professionals than the typical single-family office. Family offices are typically seen in the instances where families have disposed of their legacy business and moved toward portfolio diversification. But there are exceptions. Some families may set up a family office while continuing to own and run their heritage business. In some of these cases, they might also have a considerable number of additional diversified assets. The primary focus of the present book is one of outlining and discussing the key managerial tasks facing the various types of family offices, especially in the context of the portfolio business. Conclusion This chapter has set the context for this book: namely, how to develop and manage a successful family business portfolio. As we have seen, it is often difficult for firms to evolve from a position as a single-business legacy entity to that of a multi-investment portfolio firm. However, overcoming the potential difficulties is critical as it is perhaps the most realistic way for families to protect and further add to their asset bases in the long run, i.e. with a stewardship focus. In Chapter 2, we discuss the strengths and weaknesses of family business portfolio firms.

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