Why Family Office Private Equity Investments are Gaining Traction in 2025

Discover the reasons behind the rising popularity of family office private equity in 2025.

Family Office Private Equity Investments: The Rise in 2025

Private equity is no longer the exclusive territory of Wall Street firms. Over the past decade, family offices have become some of the most active investors in private markets, using direct investments and co-investments to reshape outcomes. They seek:

• Diversification across asset classes, with private equity now recognized as a significant asset class for building resilience and long-term growth.
• Attractive valuations in private markets where competition is less intense.
• Alignment with family values, embedding long-term vision into every decision.
• Greater control over investment portfolios and governance structures.

Data confirms this trend. UBS’s 2024 Global Family Office Report shows private equity allocations rising to 27% of family office portfolios, overtaking hedge funds and real estate. Private equity is now considered a core asset class within the investment portfolio of many family offices. The change is structural, not cyclical. Family offices deploy patient capital, free from exit timelines, which allows them to:

• Hold private companies through market cycles.
• Capture operational improvements that traditional private equity firms often overlook.
• Build investment portfolios designed for growing wealth across generations.

Family Offices Investment in Private Equity: Their Expanding Role

Family offices are no longer passive allocators. They are reshaping the private equity investment landscape, competing directly with traditional private equity firms while staying true to family values. This shift reflects a broader change in investment strategy, moving away from short-term returns and toward building resilient portfolios across generations. The momentum is measurable. In Campden Wealth’s 2023 Family Office Report, more than 70% of single-family offices reported active participation in private equity, with many establishing internal teams to manage direct investments. Dedicated family office managers now mirror the sophistication of traditional private equity firms while retaining flexibility unavailable to limited partners. Three factors explain this expanding role:

• Patient capital: Free from quarterly reporting, family offices can hold portfolio companies longer, capturing operational improvements and sustainable growth.
• Dedicated teams: Single-family offices are hiring in-house professionals to lead due diligence, governance, and co-investments, bringing discipline once unique to institutional investors.
• Broader scope: Families now allocate across multiple asset classes, including private equity funds, direct investments, and venture capital, diversifying risk while securing attractive valuations.

The outcomes are clear:

• More substantial alignment between investment strategy and family values.
• Control over investment decisions without external constraints.
• Portfolios are designed for succession planning and long-term vision.

Unlike traditional funds that measure success in quarters, family offices measure success in decades. Their expanding role is setting new standards of discipline, governance, and wealth creation in private markets.

How Family Offices Use Direct Investments in Private Equity

Direct investment refers to the strategy of family offices acquiring private companies directly, taking larger stakes, and participating actively in governance, rather than investing through funds. Instead of relying solely on private equity funds, wealthy families increasingly choose to invest directly in portfolio companies, bypassing traditional structures. This approach gives them control, flexibility, and closer alignment with family values. The rise is not marginal. Campden Wealth reports that two-thirds of family office investors now pursue direct private equity investments. UBS adds that direct allocations now account for over 40% of the typical family office private equity sleeve, a sharp increase from a decade ago. This momentum is reshaping the investment landscape in three critical ways:

• Greater control: Families select specific portfolio companies, rather than inheriting exposure through blind-pool funds.
• Flexibility: Minority stakes allow participation in growth without taking on full operational risk.
• Diversification: Direct deals stretch across alternative asset classes, from venture capital to family-owned businesses.

The benefits are real, but so are the challenges. Direct investors face:

• Significant risks if due diligence is weak or governance is thin.
• Cash flow pressures when capital calls collide with family liquidity needs.
• Complexity in managing investment decisions across generations and family members with differing risk appetites.

Direct investments are not just about chasing attractive valuations. They are about rewriting the rules of private equity investing, giving family offices the strategic advantage to mitigate risk while shaping industries over decades. For many families, direct private investments also serve a deeper purpose: embedding succession planning, family values, and sustainable growth into the portfolio. By linking capital deployment with generational continuity, family offices turn direct investing into the cornerstone of long-term wealth creation.

How Deal Flow Shapes Family Office Investment Strategy

For family offices, proprietary deal flow has become the backbone of their investment strategy, giving them an edge over traditional private equity firms and institutional investors. Rising interest rates are influencing family offices’ deal flow, asset allocation, and risk management strategies in private equity, prompting them to adjust their investment approaches to navigate increased market volatility. Deloitte notes that family office allocations to private equity rose from 22% in 2021 to 30% in 2023, with private equity now overtaking public equity in portfolios. This growth reflects one reality: deal flow drives influence in private markets. Why Deal Flow Matters Family offices use proprietary deal flow to:

• Source direct deals in mid-market private companies.
• Take minority stakes that limit exposure to significant risks.
• Syndicate with other family investors and investment banks for larger transactions.
• Diversify across asset classes and different asset classes, including venture capital and alternative asset classes.

Structural Advantages of Family Offices

• Family office structure: Single-family offices often build internal teams to control sourcing, while multi-family offices leverage networks to expand reach.
• Governance edge: With fewer reporting pressures, family office managers can vet opportunities on long-term vision, not quarterly earnings.
• Strategic lens: By aligning investments with family values, offices can weigh not only financial returns but also sustainable growth and succession planning.

The Competitive Edge BNY Mellon reports that two-thirds of family offices with over US$1 billion in assets plan to increase exposure to private equity in 2025. PwC adds that many are now leading direct deals, requiring stronger governance and staff. Deal flow is no longer a pipeline issue. It is the strategy itself that defines how family offices set the bar for long-term, resilient investing.

The Strategic Benefits of Co-Investments in Private Equity

Co-investments have become a defining feature of family office private equity investing. By partnering with institutional investors and private equity firms, families share risks, lower costs, and strengthen governance while retaining control over outcomes. A Bastiat Partners/Kharis Capital study found that 40% of family offices expect private equity to become a core component of their strategy, and more than half plan direct investments or co-investments. Why Co-Investments Appeal to Family Offices

• Cost efficiency: Co-investments reduce management and performance fees charged by private equity funds.
• Risk-sharing: Partnering with larger firms helps mitigate significant risks during periods of economic uncertainty and geopolitical tensions.
• Diversification: Families access a broader set of asset classes and private market investments without over-concentrating capital.
• Access to scale: Syndication enables participation in transactions that would otherwise exceed the capacity of a family office structure.

Strategic Outcomes

• Alignment with investment thesis: Families choose opportunities consistent with long-term objectives.
• Resilience in volatile markets: Co-investments spread exposure across regions and industries, reinforcing stability.
• Competitive financial returns: PwC notes that family offices increasingly lead co-invested deals themselves, often achieving outcomes comparable to private equity funds.
• Intergenerational wealth building: Co-investments support growing wealth while embedding governance discipline for future family members.

Key Differences Between Family Offices and Private Equity Firms

Family offices and private equity firms may chase the same deals, but a private equity firm operates under a different set of rules compared to a family office. The contrasts in risk, process, and purpose define how they operate in the investment world. Core Distinctions

• Risk appetite: Private equity firms rely on leverage and quick exits. Family offices deploy patient capital and take measured risks that protect wealth.
• Investment process: Private equity firms raise money from limited partners and face strict return cycles. Family offices invest their own money, free from external deadlines.
• Governance: Private equity firms impose standardized structures for institutional investors. Family offices adapt governance to family members, succession priorities, and other factors unique to multigenerational wealth.
• Time horizon: Private equity firms hold companies for 3–7 years. Many family offices think in decades, aiming for sustainable growth rather than short-term capital gains.

Strategic Positioning

• Alternative asset managers vs. family offices: Both invest in private market investments, but their intentions differ. Private equity firms pursue benchmarks. Family offices align every deal with family objectives.
• Flexibility: Many family offices can pivot across asset classes quickly, unbound by the mandates that restrict institutional investors.
• Beyond returns: For family offices, success is measured by financial returns and continuity, characterized by stability, resilience, and the ability to grow wealth across generations.

Why Private Capital Appeals to Family Offices

For family offices, private capital is more than an allocation. It is where control, resilience, and growth intersect, a space that high-net-worth families view as central to their future.

Why Families Choose Private Capital

• Flexibility: Build strategies around family priorities, not external mandates.
• Diversification: Gain access to private investments, nontraditional assets, and private market investments often missed in public markets.
• Attractive entry points: Private markets can offer valuations unavailable in listed equities.
• Resilience: In times of economic uncertainty and geopolitical tensions, private capital provides stability through more extended holding periods and reduced volatility.

A Different Model of Investing

Family offices are not alternative asset managers chasing benchmarks. They bring:

• Influence: Direct stakes in private companies with governance shaped by family members.
• Alignment: Capital is deployed into sustainable investments that reflect family objectives.
• Agility: Freedom to pivot across asset classes as conditions change.

For family offices, it is the arena where strategy, governance, and legacy meet, turning private market investments into the cornerstone of growing wealth across generations.

Key Strategic Advantages of Family Office Private Equity

Family offices bring unique advantages to the private equity landscape that traditional firms and institutional investors can’t easily replicate.

Long-Term Vision and Generational Wealth Transfer

Family office portfolios often emphasize succession planning, sustainable investments, and alignment with family values, ensuring continuity across future generations. Family offices embed succession planning and intergenerational wealth transfer into their investment thesis, ensuring continuity beyond the founding family members.

Patient Capital and Risk Resilience

Exit timelines do not bind family offices. They utilize patient capital to navigate cycles and capture value in both public and private markets. Freed from short-term liquidity pressures, family offices invest with long-term investment horizons, unlike institutional investors bound by quarterly reporting.

How Family Offices Are Reshaping the Investment Landscape

From Capital Allocators to Market Shapers In 2025, family offices are no longer passive allocators. Roughly 43% of portfolios now include private equity, up from 39% two years ago. Single-family offices and multi-family offices increasingly resemble alternative asset managers, using patient capital to stretch across asset classes such as private markets, venture capital, and private companies. Unlike institutional investors tied to rigid mandates, family offices can act with agility over longer horizons. The Rise of Direct Investments and Proprietary Deal Flow The relationship with private equity firms is increasingly hybrid. Roughly two-thirds of family offices co-invest alongside funds, hedge funds, or venture capital, sharing diligence and expanding reach. Yet many also compete directly with buyout funds and investment banks for control deals. This dual role, as collaborator and competitor, has amplified the influence of wealthy families and family office investors across the investment world. Competing and Collaborating with Private Equity Firms The relationship with private equity firms is increasingly hybrid. Roughly two-thirds of family offices co-invest alongside funds, hedge funds, or venture capital, sharing diligence and expanding reach. Yet many also compete directly with buyout funds and investment banks for control deals. This dual role, as collaborator and competitor, has amplified the influence of wealthy families and family office investors across the investment world. Why This Matters for the Future of Private Markets The transformation is structural, not cyclical. With 60% of family offices extending horizons beyond 10 years, they bring patient capital, succession planning, and sustainable growth strategies that contrast with capital gains-driven exits of traditional funds. The result is evergreen funds, flexible investment vehicles, and hybrid governance models redefining private equity. Even traditional firms are borrowing from the family office model, experimenting with longer hold periods and family-style governance to stay competitive. Private equity once belonged to institutions. Today, family offices are setting the pace, investing on their own terms, across their own timelines, and with priorities that go beyond returns. The firms that survive the next decade will be those that learn from them.