After the political, health, and economic upheavals that almost every country in the world has faced, living in uninteresting times is beginning to sound appealing. However, let’s consider the incredible resilience, adaptability, and creativity that is emerging from Family Office principals and CEOs. They have much to share and learn about the strategic and operational challenges facing them today and on the journey to the new reality. Here are a few examples of what KPMG member firms see emerging in the first stage of the new reality.
Diversify, cash out, or stay the course?
Some Family Offices see an opportunity to diversify their business, geographic, or investment positions. Others are seeking liquidity or are selling some of their assets by taking advantage of the strong multiples driven by demand from private equity investors.
In the face of the COVID-19 whirlwind, the world of work demonstrated its resilience. Overnight, businesses introduced advanced technology solutions and capabilities that allowed the world to communicate from a distance, employees to continue to work from home, and consumers to purchase essential items from a host of new online stores.
Technology is likely to remain at the forefront of the business agenda, and we are already seeing significant increases in funding for innovative technology start-ups coming from Family Offices.
We also expect that Family Offices will direct more attention to strengthening their own digital infrastructure for their operations and to cyber security to protect their businesses and families.
The power of culture
For Family Offices, culture is often the most important and unique selling point for attracting and retaining top talent from outside the family. This requires strong family ambassadors and long-held contacts with friends and referrals. Increasingly, though, there is also a need for professional recruitment professionals who can accurately represent the Family Office culture.
Knowledge and experience within the core functions that are critical to the continuity of the Family Office are becoming more and more important. The next generation will require a clear path for interacting with the operating business and the resulting wealth that is managed by the Family Office. This is the time to bring fresh perspectives from the next generation, to encourage them to challenge the status quo, and to introduce innovations.
In summary, I believe the outlook is positive for those Family Offices that continue to be resilient and that make prudent decisions to protect their organizations today, while also keeping an eye on the future in the new reality.
We at KPMG Private Enterprise understand the implications of COVID-19 for private companies and Family Offices. I encourage you to follow our regular KPMG Private Enterprise series of blog posts as we share insights from across the global network of member firms on the impact that COVID-19 may have on your business strategy and operations, and how to embrace the new reality of a post COVID-19 world.
For additional views on KPMG’s outlook for Family Offices in 2020, please request a copy of our full article entitled “Eye on the Big Picture – Predictions for 2020” in Volume 2 of The Journal of the Family Office Community.