Key Takeaways
- • Kellogg Insight researchers Matt Allen and Jose Liberti label a growing model "legacy equity," in which family offices directly invest in private businesses using a private-equity-like approach but on their own terms.
- • The article cites a projection that by 2030 there may be more than 10,000 family offices controlling $9.5 trillion in wealth, though not all of it will go to direct equity investment.
- • Family-backed platforms without fixed fund lives or outside redemption demands can offer entrepreneurs longer horizons, but Liberti cautions this does not necessarily mean cheaper capital or softer terms.
- • Allen and Liberti argue that governance, accountability and talent acquisition, not purpose alone, will determine how consequential legacy equity becomes.
Summary
Family offices, private entities set up to manage the assets of one or more wealthy families, are increasingly moving beyond co-investing alongside private-equity firms and building their own teams to source, evaluate and manage direct investments. According to Kellogg Insight, Matt Allen and Jose Liberti have labeled this approach "legacy equity." Allen, the John L. Ward Clinical Professor of Family Enterprises and executive director of the Ward Center for Family Enterprises, said family-office assets under management are expected to grow substantially over the next decade or two. One group projects more than 10,000 family offices controlling $9.5 trillion in wealth by 2030.
Allen and Liberti say legacy equity is distinguished by the family's purpose, which connects founders' entrepreneurship and values to future generations. Purpose may take the form of philanthropy or social impact, such as Lukas Walton's Builders Vision, which focuses on agriculture, oceans and renewable energy, or it may center on continuing a tradition of commercial business ownership. The article cites Carlson Private Capital Partners, launched by the Carlson family in 2018, as an example that pairs family capital with professional investors and a flexible ownership horizon.
The structure can offer entrepreneurs flexibility over investment duration and transaction structure. Pritzker Group describes its "permanent capital base" as enabling alignment with management teams and flexible deal structures, and Premji Invest, the single-family office of Wipro founder Azim Premji, says its "evergreen capital structure" allows it to remain with companies from inception through public offering. Allen noted that "in some cases, family offices are filling gaps that private equity won't necessarily fill."
Liberti cautions that this flexibility does not necessarily mean cheaper capital, softer terms or less demanding performance expectations. If a family office accepts outside capital, new investors may introduce return targets, reporting obligations, liquidity expectations or additional decision rights. Liberti advises entrepreneurs to examine who makes decisions, what support the team provides, how future funding is handled and what happens if family priorities change.
The article also highlights talent as a constraint. Family offices need teams capable of diligence, oversight and capital allocation, and interest from investment professionals is growing, including from candidates with "two plus two" backgrounds in investment banking and private equity. Allen warned that employees must balance family needs with investment discipline. Liberti concluded: "A clear purpose alone is not enough to ensure that these investments succeed. Governance and accountability are the challenges that will determine how consequential this approach becomes."
Allen and Liberti say legacy equity is distinguished by the family's purpose, which connects founders' entrepreneurship and values to future generations. Purpose may take the form of philanthropy or social impact, such as Lukas Walton's Builders Vision, which focuses on agriculture, oceans and renewable energy, or it may center on continuing a tradition of commercial business ownership. The article cites Carlson Private Capital Partners, launched by the Carlson family in 2018, as an example that pairs family capital with professional investors and a flexible ownership horizon.
The structure can offer entrepreneurs flexibility over investment duration and transaction structure. Pritzker Group describes its "permanent capital base" as enabling alignment with management teams and flexible deal structures, and Premji Invest, the single-family office of Wipro founder Azim Premji, says its "evergreen capital structure" allows it to remain with companies from inception through public offering. Allen noted that "in some cases, family offices are filling gaps that private equity won't necessarily fill."
Liberti cautions that this flexibility does not necessarily mean cheaper capital, softer terms or less demanding performance expectations. If a family office accepts outside capital, new investors may introduce return targets, reporting obligations, liquidity expectations or additional decision rights. Liberti advises entrepreneurs to examine who makes decisions, what support the team provides, how future funding is handled and what happens if family priorities change.
The article also highlights talent as a constraint. Family offices need teams capable of diligence, oversight and capital allocation, and interest from investment professionals is growing, including from candidates with "two plus two" backgrounds in investment banking and private equity. Allen warned that employees must balance family needs with investment discipline. Liberti concluded: "A clear purpose alone is not enough to ensure that these investments succeed. Governance and accountability are the challenges that will determine how consequential this approach becomes."
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