Cracking the network of rich families isn’t easy because it requires uncovering people who don’t necessarily want to be sold to, said Lawrence Calcano, a managing partner at iCapital Network, an online marketplace for private equity funds.
“They don’t have to buy things, unlike pensions that may need to hit a specific return target each year to fund payouts to retirees,” Calcano said.
Vetting Deals
Private equity firms want wealthy families for more than just their money.
Family offices bring expertise in buying companies, usually have fewer regulatory restrictions and can take bigger risks than pensions or endowments, Michael Arpey, a managing director at Carlyle who oversees fundraising, said in an interview.
William Heitin, who works for families including the founders of fitness company Reebok International Ltd. and Stacy’s Pita Chip Co., was invited by Blackstone last year to an event at the Waldorf Astoria hotel followed by time in the company’s New York headquarters with senior executives.
Many of his clients are entrepreneurs who have built and sold their own businesses so they can help private equity managers vet deals, said Heitin, whose Waltham, Massachusetts- based Windrose Advisors manages more than $2 billion.
Investment Opportunity
“We have a client that started and sold a major food company,” said Heitin, Windrose’s chief investment officer. “If the private equity firm is looking at a deal with a food company, we put them in touch and then there may be a co- investment opportunity for the family.”
Private equity firms -- once they track down family offices -- face intense competition to woo them from both larger and smaller rivals.