KIRBY ROSPLOCK, PhD, is founder and CEO of Tamarind Partners, a consulting firm that advises family offices, ultra-high-net-worth investors, and the wealth management industry. She is a researcher, scholar, educator, and well-respected speaker around the globe on family wealth, family office, and family business. She is also the author of The Complete Family Office Handbook. For more on Dr. Rosplock and Tamarind Partners, visit [...]

Foreword xvii Preface xxi Acknowledgments xxi Part I: Direct Investing and the Family Office Test Chapter 1 Introduction to Direct Investing 3 2008: A Wakeup Call for Investors 5 Role of the Family Office and Private Investors 6 The Opportunity 9 Best Practices 10 Key Considerations 12 Conclusion 15 Notes 16 Chapter 2 The Emerging Presence of Private Capital in Direct Investing 18Contributing Authors: Nathan Hamilton and Sara Hamilton The Family Office Marketplace 19 The Unique Benefits of Private Capital 21 Increased Interest in Private Equity 24 Conclusion 30 Chapter 3 Co-Investment Strategies in Direct Investing 32 Defining Co-Investing and Providing Context 32 Insights on the Popularity of Co-Investing 33 Interest in Co-Investment Strategies 33 Roles of the Co-Investor 35 Going Solo: Why Co-Investing May Not Be Your Choice 40 The Perils and Pearls of Co-Investing 41 Vetting Co-Investors 44 Club Deals 46 Mini Case Study 51 Conclusion 51 Notes 52 Chapter 4 Private Equity Strategies: Characteristics and Implications 54Contributing Author: David McCombie What Is Private Equity? 55 Real Estate 58 Venture Capital 62 Growth Capital 72 Buyouts 75 Mezzanine Financing 78 Distressed Assets 81 Conclusion: Putting It All Together 85 Notes 86 Part II: Direct Investing in Action Chapter 5 Family Office Considerations to the Direct Investment Process 91 Source of Wealth: Lens of the Family Office 92 SWOT Analysis for Direct Investing 93 Three Phases to the Direct Investing Process 94 A Three-Phase Direct Investing Process 97 Case Study 111 Conclusion 113 Notes 114 Chapter 6 Designing a Direct Investment Thesis 115 Defining the Direct Investment Thesis 115 Asset Mix and the Direct Investment Thesis 117 Family Pathways and the Direct Investment Thesis 119 The Barbell Approach and the Direct Investment Thesis 122 Entrepreneurial Orientation and the Direct Investment Thesis 124 Family Investment Style and the Direct Investment Thesis 128 Case Study 132 Conclusion 137 Notes 138 Chapter 7 Sourcing, Deal Flow, Screening, and Deploying Direct Investments 141Contributing Author: Euclid Walker Industry Professionals and Thought Leaders 142 Investment Bankers/Business Brokers 143 Professional Service Providers 144 Commercial Banks 144 Private Equity Funds/Family Offices 145 Screening Process 146 Due Diligence 151 Investment Memorandum 154 Investment Decision Process 155 Conclusion 156 Notes 156 Chapter 8 Direct Investments: Deal Structures, Terms, and Portfolio Construction 157Contributing Author: Jolyne Caruso How to Get Started 158 Portfolio Construction 159 The Capital Stack 160 Equity Transactions 162 Types of Debt Instruments 165 Mezzanine Debt 166 Case Study: Early-Stage Solar Energy Finance Company 168 A Primer on Important Term Sheet Items 170 Conclusion 175 Chapter 9 Investment Monitoring, Exit Strategies, and Harvesting Returns 177Contributing Author: Adam Goodfriend Introduction 177 Alignment of Objectives 178 Monitoring Direct Investments as a Minority Stake Owner 178 Why Timing of an Investment Exit and Not Just the Investment Return Is Critical 179 Importance of Company Lifecycles with Respect to Timing and Harvesting Returns 181 Exit Valuations and Multiples 184 Maximizing Liquidity of Illiquid Investments through Pre-Negotiated Rights 186 Exit Value Drivers 188 Common Exit Strategies 189 Mergers and Acquisitions 192 Working with Investment Bankers and Key Advisors to the Exit Strategy 192 Conclusion 194 Notes 195 Part III: Direct Investing Perspectives Chapter 10 The CIO Perspective 199Contributing Author: Robert G. Blabey Sourcing Top CIOs to Oversee Direct Investing in the SFO 200 What's the Edge? 202 What Defines Success for the CIO? 203 The CIO Fit 207 Risk Management at the Investment Level and Portfolio Level 209 CIO Compensation 211 Conclusion 216 Chapter 11 The Millennials and Direct Investing: A Look at Impact Investing 218Contributing Author: Temple Fennell Who Are the Millennials and What Do They Care About? 219 Millennials' Respect for the Senior Generation 220 Growing Interest in Impact Investing 222 Making the Case for Impact Investing 222 How to Source Impact Investments 227 Experiential Returns: Intangible Benefits of Impact Investing 231 Common Challenges and Barriers to Impact Investing 232 Systems Thinking: Creating and Sustaining Family Knowledge 235 Conclusion 238 Notes 239 Chapter 12 SCIE: Sustainable Cycle of Investing Engagement 242Contributing Author: Temple Fennell The Purpose of SCIE 244 The SCIE Framework 246 Family Purpose, Values, and Mission 247 Framing Strategy 249 Developing Strategy 253 Implementing Strategy 259 Capture and Communicate Learning 264 Conclusion 269 Notes 269 Chapter 13 International Direct Investing 271Contributing Author: Anna Nekoranec Why Consider International Direct Investing? 272 Key Differences between Investing Abroad versus Investing in the United States 274 How to Determine Where to Invest 276 How Population Change Can Impact Target Market Opportunities 278 Keys to Success in International Direct Investing 282 The Role of a Partner in International Investing 284 Common Mistakes Made by Investors Venturing Abroad 286 Risk Mitigation 288 Foreign Families in the United States 290 Conclusion 291 Notes 292 Appendix a Private Equity Strategies Summary 293 Appendix b Sample Due Diligence Checklist 299 Appendix c Glossary 306 About the Author 316 About the Chapter Authors 318