Family office venture capital reshapes dealership investments

In recent years, the dealership market has witnessed a notable shift in the types of investors entering the space. While private equity firms have long been recognized as the standard, family office venture capital is becoming more influential. The unique structures, long-term investment horizons and flexible approaches found with a family office are reshaping how dealership transactions are financed and managed.

In this month’s episode of Up to Speed, Mike Mader, Principal with Baker Tilly’s dealership advisory services team, is joined by Joe Mowery, Managing Director at Stephens, to discuss how family office venture capital differs from other investment sources, and why dealerships might choose a family office to support their growth, succession planning and cultural continuity.

What is a family office?

Unlike private equity firms, which pool funds from institutional investors, family offices typically invest capital derived directly from wealthy families. This distinction gives them greater flexibility in their investment strategies and allows them to focus on industries they understand and where they can add value. Family offices come in different forms:

• Single-family offices manage the assets of one family.
• Multi-family offices, where several families pool resources to invest collectively.
• Holding companies and private equity-backed firms that have similar philosophies to a family office when it comes to holding investments long-term.

Long-term perspective and passive management

One of the most significant differences between family offices and private equity firms lies in their investment length. Private equity typically seeks to exit investments within three to seven years, aiming for quick returns. Family offices, by contrast, often adopt a much longer-term outlook, sometimes with the intention of holding assets indefinitely.