Selling a Small Business to a Family Office
Family offices are private organizations that manage the wealth and investments of high-net-worth families and entrepreneurs. Their main goal is to protect and grow the family’s wealth across generations using their own capital, not money from third-party investors. They oversee asset management, planning, and direct investments that support long-term financial goals.
There are two types of family offices:
- Single-family offices manage the assets of one wealthy family.
- Multi-family offices serve several families and offer shared advisory services, such as asset management, wealth management, estate planning, and tax planning.
In recent years, many family offices have become more active in the small business market. As buyers, they look for stable companies, not risky opportunities. Unlike private equity groups or strategic buyers that raise capital from outside investors, family offices invest their own money and tend to take a longer-term view. They don’t flip companies for quick profit, and they don’t owe returns to limited partners. Family offices often appreciate shared values as much as financial performance.
Why Family Offices Buy Small Businesses
Family offices buy small businesses for many of the same reasons other investors do, but their motivation is usually more personal. They want to own something tangible, like a business that produces steady income. They’re also looking to grow personal wealth and build a legacy. Direct investments in operating companies also give them more control over risk and return than investing only through funds.
Common reasons include:
- Asset diversification. Spreading risk beyond stocks and real estate into operating companies.
- Preference for cash-flowing businesses. Steady profits can fund other investments or support family members.
- Interest in generational wealth. Companies that can be passed to the next generation align with their values.
- Direct control. Owning a company gives them more say in how capital is used and how the business is run.
- Alignment with family values. Businesses can reflect the family’s mission or interests and support other goals.
Characteristics of Businesses That Appeal to Family Offices
Family offices are selective. The best candidates are companies that are profitable, well-run, and have room to grow. The right match often depends on the family’s industry expertise, investment strategy, and comfort with the company’s decision-making culture.
To determine whether a family office is a realistic buyer type for your business, consider:
- EBITDA. Does your business have strong, consistent earnings before interest, taxes, depreciation, and amortization?
- Industry stability. Are you in a predictable industry with low disruption risk?
- Management team. Do you employ capable leaders willing to stay after the sale and support thoughtful decision-making?
- Cultural fit. Could the values and long-term goals of your company align with another family’s vision?
- Scalability. Is there room for organic growth without heavy capital needs?
Remember: A family office might not chase the highest return like a private investment firm. Instead, it seeks balance through steady results and a clear fit with its broader investment opportunities.
How to Prepare Your Business for a Family Office Buyer
Preparation is always important before a business sale. A few targeted steps can make your business more attractive to family offices.
Keep in mind that these investment management groups value transparency, organization, and clear communication. Being ready signals professionalism. Transparency builds trust. Following best practices can increase business valuation.
As you get ready to sell your business, focus on:
- Cleaning up financial statements. Organized books make buyer due diligence smoother.
- Succession planning. Show how leadership transitions could work.
- Building a strong management team. A capable team adds confidence that the business will thrive post-sale.
- Cultural alignment. Highlight shared values or community impact; potential buyers often look to align with a company already on track to make a difference.
- Legal and compliance checks. Fix outstanding legal issues before going to market and document your governance and decision-making processes.
Negotiation and Deal Structure Considerations
Family offices approach negotiations differently from private equity firms or corporate buyers. They sometimes move slower and often ask more questions. They’re relationship-driven and will take extra time to understand your business, goals, and management team, so negotiations will likely last longer.
During due diligence, expect a deep dive. The high-net-worth individuals behind the family office might be heavily involved in the purchase, but they will lean heavily on mergers and acquisitions (M&A) advisors and external professionals to evaluate risks and support their decision-making.
Family offices tend to be flexible about deal structure. They might use earnouts, seller financing, or deferred payments to balance liquidity and investment goals. That flexibility can help bridge gaps in valuation and timing for both sides.
Unique Buyer Type Characteristics for Family Offices
Family offices are a distinct type of buyer in the lower middle market. Their investment style blends patience and personal interest, and they’re always focused on long-term outcomes.
Main traits include:
- Relationship-driven. Trust and alignment matter as much as numbers.
- Flexible deal terms. They can adjust structure, timing, and ownership levels.
- Post-sale involvement. Some hope that a seller or existing leadership will remain actively involved, whether as a consultant or by serving on the board of directors.
- Long-term investment horizon. Holding periods often exceed ten years.
For business owners, selling to a family office can mean a smoother transition and a continued legacy. While private equity buyers focus on exit strategies, family offices focus on stewardship and the ongoing management of the investment for future generations.
Next Step: Talk to a Broker
A broker can help you:
- Prepare financials and buyer materials
- Set a realistic valuation range
- Structure a process that appeals to long-term buyers
- Run outreach while keeping your business protected
Browse BizBuySell’s Broker Directory to find an advisor to help you market and position your business for family office buyers.