Why Family Offices Need More Than Capital to Succeed in Private Equity

Over the past two decades, family offices have steadily shifted away from conventional investments like real estate and public equities, increasing their capital allocations to private equity in pursuit of higher returns and greater diversification. This shift has driven both the professionalization and institutionalization of their operations. 

Yet success in PE requires more than capital and investment acumen. As these offices expand into new sectors, many are recognizing that operational excellence and the right leadership are just as vital as capital and strategy. 

So how can they navigate these unfamiliar waters? The key is building executive leadership teams with the right mix of experience, insight, and cultural alignment to lead them forward. 

Family Offices and Private Equity: A Growing Partnership 

The substantial growth of family offices in recent years has made these entities serious players in private markets – and the numbers tell the story: Deloitte projects that the number of global family offices will reach 9,030 by the end of 2025 and 10,720 by 2030. Collectively, these offices manage $3.1 trillion in assets, with an estimated total family wealth of $5.5 trillion. If this trajectory continues, their assets under management could grow to $5.4 trillion and total family wealth could reach $9.5 trillion by the end of the decade.

This expanding scale has emboldened family offices to take a more hands-on approach. Many are investing directly in companies rather than remaining passive participants. In fact, PE emerged as the top asset class for family offices, accounting for 30% of the average portfolio, a 22% increase from 2021. Research from Bastiat Partners and Kharis Capital found that 40% of family offices consider PE a “core component” of their strategies in the next two years. 

As these offices evolve into full-fledged investment platforms, their ability to identify and empower the right leaders will determine whether their PE bets fall flat or deliver sustainable value.  

Two Must-Haves: Industry Expertise and Cultural Alignment  

Family offices may have the funding to move into PE, but many lack the industry expertise, exposure, and connections to build and scale companies effectively.  For example, an office that originally built its wealth in oil and gas may want to invest in artificial intelligence, cybersecurity, or another growing sector. Without deep sector knowledge, family offices risk hiring executives who lack the experience or cultural fit to lead effectively. Assembling a C-suite that can take charge, build connections, and offer informed guidance is essential for success.  

Because these offices represent the founding family’s interests, having an executive team that aligns with their values makes leadership selection about more than business performance alone. No two are alike, and each requires executives who balance commercial drive with respect for legacy, heritage, and reputation. Loyalty is also key. They need assurance their leaders will stand by them for the long haul, not sign on with an exit strategy already in mind. But knowing what you need and actually finding it are two different challenges. 

Where Specialized Expertise Matters 

Family offices operate much differently from traditional business or investment firms. Leadership responsibilities typically fall on a family principal, a financial advisor, or a legal team – individuals who may not have the expertise to build a high-performing executive team. Beyond that, most family offices lack a dedicated recruitment function. Even when one exists, internal teams can benefit from having a partner with the necessary market reach and understanding of what PE success requires.   

Partnering with an experienced executive search firm that specializes in PE can offer the strategic guidance to help family offices determine which roles they need to prioritize based on their goals, target industry, and investment strategy. For families entering new sectors, this clarity is invaluable. Executive search partners help shape the talent strategy, giving stakeholders a clear understanding of the leadership roles needed to build a growth-ready team. Just as importantly, they dedicate the time to rigorously vet candidates through extensive reference checks and cultural assessments, providing assurance that leaders will deliver lasting impact. 

Capital Opens the Door, Leadership Builds the Legacy 

As family offices step more boldly into PE, the playbook is evolving. The most successful will be those that treat leadership as the first lever of value creation, not an afterthought. Aligning the right executives with the right investment thesis early on ensures every dollar of capital is guided by clarity, capability, and conviction. For family offices, the difference between growth and legacy often comes down to who’s in the room when the real decisions are made.

Is your family office building a leadership team for your private equity portfolio?  Learn how we help family offices find executives who combine industry expertise with cultural alignment.