Private Equity Experience

Is "Family Capital" the New Private Equity?

• Emily Sander • Season 1 • Episode 28

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In this episode of the Private Equity Experience, Emily Sander, Ed Barton, and Rory Liebhart dive into the secretive and rapidly growing world of family offices. Think Private Equity is the only big player in town? Think again. In our latest episode of the Private Equity Experience, we’re pulling back the curtain on the $5.5 trillion world of Family Offices

From 40-year investment horizons to the "poaching" of top Wall Street talent, family offices are changing the rules of the game for founders and investors alike.

In this episode, we discuss:
💰 Why family offices are becoming direct competitors to PE firms.
⏳ The "Generational Wealth" advantage: Why patience is their superpower.
📉 The $100 Million Breakpoint: When does it make sense to bring management in-house?.
🤝 Why founders might prefer a family office partner over traditional institutional capital.
Whether you're a founder looking for growth capital or an investment pro curious about the "buy-side" of family wealth, this is an episode you can't afford to miss.

Key Discussion Points
 - Defining the Family Office: A professional money management entity designed to oversee and grow the wealth of a specific family.
- Family Office vs. Private Equity: Unlike PE firms that manage external capital for Limited Partners (LPs), family offices own the capital they deploy, allowing for unique flexibility in tax treatment and liquidity.
- The "Generational Wealth" Advantage: Because they aren't bound by 10-year fund cycles, family offices can maintain a 40-year investment horizon, offering founders more patience and less pressure to "churn" deals.
- The Cost of In-House Management: Ed explains the "breakpoint" for starting a single-family office, noting that it typically requires roughly $100 million in investible assets to remain cost-effective while hiring top-tier talent.

Why Founders Should Pay Attention
For founders looking for an exit or growth capital, family offices offer a compelling alternative to PE:
 - Flexibility on Terms: They are often more willing to make smaller investments (under $10M revenue) that traditional PE firms might find too small.
 - Seamless Transitions: Founders who have previously made money for an investor often find a "warmer" and more trusted partnership within that investor’s family office.

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Who Are We?

Three insiders. One mic. All things private equity — explained. Hi 👋 We’re Ed, Rory, and Emily — a CEO, a CFO, and a Chief of Staff — here to demystify the world of private equity. Between us, we’ve sat in the founder’s chair, run PE‑backed companies, and worked on the deal side, so we know the wins, the pitfalls, and the jargon (and we’ll explain it).

Through the Private Equity Experience Podcast, our book On‑Ramp to Exit, and a library of free tools and templates, we share real‑world stories, practical strategies, and insider insights to help you navigate every stage of the PE journey — whether you’re leading a portfolio company, joining a deal team, considering PE, or just PE‑curious.

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emily-sander_1_12-30-2025_140405:

All right. Our Pex boys, our Pex Boys with Sexy Pex boys.

sweebe--wtf-_1_12-30-2025_140405:

Yeah.

rory-liebhart_1_12-30-2025_140405:

I'll take that. Sure.

emily-sander_1_12-30-2025_140405:

Here we go. Here we go. Um,

rory-liebhart_1_12-30-2025_140405:

at it?

emily-sander_1_12-30-2025_140405:

this'll drop in 2026, but because we just kind of got past the holiday season,

rory-liebhart_1_12-30-2025_140405:

Yeah.

emily-sander_1_12-30-2025_140405:

um, few little, few little catch up questions, um, for us to get started. Who are you most yourself around? People at work or your own family.

rory-liebhart_1_12-30-2025_140405:

Hmm. Somewhere in between my friends.

sweebe--wtf-_1_12-30-2025_140405:

I was gonna say the same thing.

rory-liebhart_1_12-30-2025_140405:

Yeah,

emily-sander_1_12-30-2025_140405:

Okay. Okay.

rory-liebhart_1_12-30-2025_140405:

family's great and we love'em, but you know, there's a little bit of weirdness sometimes, but, and then the work is, I dunno, for me personally, I, I'm kind of a different guy outside of work than I am, at least in the roles that I've traditionally had at work for sure.

emily-sander_1_12-30-2025_140405:

Yeah, like a CFO and a CEO for a PE firm is like a, can be like a very specific persona.

rory-liebhart_1_12-30-2025_140405:

Yeah. I mean,

sweebe--wtf-_1_12-30-2025_140405:

I don't play the persona well.

rory-liebhart_1_12-30-2025_140405:

Yeah.

sweebe--wtf-_1_12-30-2025_140405:

I, I

emily-sander_1_12-30-2025_140405:

No, you don't, ed, you're Ed wherever you go.

rory-liebhart_1_12-30-2025_140405:

Ed's been authentically ed as long as I know. I feel like I've put a, a mask on at times in my life, but I'm getting old enough to like say F it, you know? I'm who

emily-sander_1_12-30-2025_140405:

Yeah.

rory-liebhart_1_12-30-2025_140405:

you know? So.

emily-sander_1_12-30-2025_140405:

Good for you. Would anyone in your family be able to work at one of the companies you've worked at? Rory is like shaking his head no.

rory-liebhart_1_12-30-2025_140405:

No. My, my family, I, I do not come from a background of like business people per se. I mean, I was first to go to college, first to graduate college. Um,

emily-sander_1_12-30-2025_140405:

Were you? I didn't know that.

rory-liebhart_1_12-30-2025_140405:

Yeah. Very blue collar family. I mean, great, great upbringing and all that stuff, but definitely I was the first one to kind of like do the business thing. So.

emily-sander_1_12-30-2025_140405:

Yeah. And you, you and I went to the same alma Mater, university of Washington Bow down to Washington.

rory-liebhart_1_12-30-2025_140405:

Also

emily-sander_1_12-30-2025_140405:

did,

rory-liebhart_1_12-30-2025_140405:

We

emily-sander_1_12-30-2025_140405:

yeah. Jackson School of International Races. Yeah.

rory-liebhart_1_12-30-2025_140405:

I miss those

emily-sander_1_12-30-2025_140405:

Oh my gosh. Oh my gosh. Okay. Um, and then what's the, what's another one?

sweebe--wtf-_1_12-30-2025_140405:

You didn't let me answer.

rory-liebhart_1_12-30-2025_140405:

Yeah. I wanna hear

emily-sander_1_12-30-2025_140405:

Oh, sorry,

sweebe--wtf-_1_12-30-2025_140405:

So

emily-sander_1_12-30-2025_140405:

sorry.

sweebe--wtf-_1_12-30-2025_140405:

had the kids working in the businesses. So I've had,

rory-liebhart_1_12-30-2025_140405:

right.

sweebe--wtf-_1_12-30-2025_140405:

I've had, uh, Julia has worked for me at here, at, uh, at, at, uh, center Bridge. She's done courier work and some filing work and

rory-liebhart_1_12-30-2025_140405:

right.

sweebe--wtf-_1_12-30-2025_140405:

a few of that, a few of those kind of things. Um, Alex hasn't really yet, but. Yeah, she's, she's a really good worker. So the, the kids I think are good workers now. Neither one of'em is a scholar, so, you know, they're not, I'm not expecting

emily-sander_1_12-30-2025_140405:

is a little bit weird given their father like started going to school in kindergarten and has never stopped Gonna.

sweebe--wtf-_1_12-30-2025_140405:

is, it's true. but they, they're, they are definitely their own people. Um, so,

rory-liebhart_1_12-30-2025_140405:

Yeah.

sweebe--wtf-_1_12-30-2025_140405:

so.

rory-liebhart_1_12-30-2025_140405:

is cool. Yeah.

sweebe--wtf-_1_12-30-2025_140405:

So, so they, uh, so I'm proud of both of'em because they're both good workers. Um, but both of'em, you know, I, I, I don't see either of them doing the, the law slash accounting thing. Um, but Julia is very talented artist, so she could have worked at Fusion Zone as a graphic designer. She's got,

rory-liebhart_1_12-30-2025_140405:

Yeah,

sweebe--wtf-_1_12-30-2025_140405:

those, she's got those chops. Um, she's just, you know, kind of figuring out what she wants to do right now.

emily-sander_1_12-30-2025_140405:

I remember when they were little, little, and they would run around the office to everyone's whiteboard and do little doodles, and Julia's drawings were actually quite good, so it's not surprising. She grew up to be an artist, but they were

rory-liebhart_1_12-30-2025_140405:

long enough to know when they were like both born

emily-sander_1_12-30-2025_140405:

Whoa,

rory-liebhart_1_12-30-2025_140405:

Yeah, I

emily-sander_1_12-30-2025_140405:

whoa.

rory-liebhart_1_12-30-2025_140405:

Ed was like first time dad when I first knew Ed.

emily-sander_1_12-30-2025_140405:

Wow.

rory-liebhart_1_12-30-2025_140405:

Yeah.

emily-sander_1_12-30-2025_140405:

Wow. Yeah. I remember them playing hide and go seek my office, but not, they were already born. Um, uh, yeah, I was trying to have a client call too, and I was like, they're kind of noisy, but they're the boss's kid. And then you came around the corner. I was like, oh, good. He's gonna be like, Hey, hey girls. Like, let, let's em let Emily have the call. And you joined in and they started spoiling and giggling and I was like, this is, this is great. Um.

rory-liebhart_1_12-30-2025_140405:

hear you answer your own question, Emily, on that one. Uh, unite we don't have kids, so it's not about, like, I guess I wouldn't recruit my parents into working for me, like kind of

emily-sander_1_12-30-2025_140405:

My, my, so my mom who's passed away was like super smart, like super smart, uh, was in finance for her whole life and then made her own business. So

rory-liebhart_1_12-30-2025_140405:

Oh,

emily-sander_1_12-30-2025_140405:

she did consulting for.

rory-liebhart_1_12-30-2025_140405:

some of that DNA. Yeah.

emily-sander_1_12-30-2025_140405:

For like founders, small to medium businesses, high net worth individuals, and she like got their stuff like organized in an order and she was really good with people. Uh, my dad is like. I don't know, like you, you've met my dad once, ed, at least once, intellectual powerhouse, like just does pension firm stuff. I can't even describe what he does fully, but I know he's extraordinary at it. So yeah, they could definitely, definitely work in any place I've been and probably run circles around me.

rory-liebhart_1_12-30-2025_140405:

Wow. Powerful powerhouse

emily-sander_1_12-30-2025_140405:

Yeah. Yeah, it's funny, like, I mean, like true confessions. I, I can say I'm a smart person now, like I'm smart.

rory-liebhart_1_12-30-2025_140405:

I can say that. You are as well.

emily-sander_1_12-30-2025_140405:

When I was a teen. When I was a teenager, I like legit, did not believe that

rory-liebhart_1_12-30-2025_140405:

Yeah.

emily-sander_1_12-30-2025_140405:

because I grew up with them as examples and I went to a private school, so I was like the well-rounded one at the private school and I didn't understand that. Like

rory-liebhart_1_12-30-2025_140405:

an oldest child by chance?

emily-sander_1_12-30-2025_140405:

I had an older brother, so I'm youngest actually. But um, but yeah. Cool. Um, okay. Flippy flop question. Anyone you've worked with, would they be like a good family member? Do you think they're a good family?

rory-liebhart_1_12-30-2025_140405:

Oh, yeah, yeah,

emily-sander_1_12-30-2025_140405:

Person. Yeah.

rory-liebhart_1_12-30-2025_140405:

plenty of people. I, I mean, I can, have so many people that I've worked with in the past that. I almost like family. They're really

sweebe--wtf-_1_12-30-2025_140405:

Mm-hmm.

rory-liebhart_1_12-30-2025_140405:

and Yeah, for sure. Definitely.

emily-sander_1_12-30-2025_140405:

Cool. Cool.

sweebe--wtf-_1_12-30-2025_140405:

tend to not, I tend to not let any of the good ones disappear.

emily-sander_1_12-30-2025_140405:

You collect them?

sweebe--wtf-_1_12-30-2025_140405:

do. Well if they're good people, you,

rory-liebhart_1_12-30-2025_140405:

and value

emily-sander_1_12-30-2025_140405:

Yes.

sweebe--wtf-_1_12-30-2025_140405:

Yeah.'cause if you're, if you find good people, one, there's just, I mean, a lot of people are good people, but when you find good people, you resonate with. You know, it's, that's what life's all about, right? You,

emily-sander_1_12-30-2025_140405:

Yeah.

sweebe--wtf-_1_12-30-2025_140405:

you like and, and they're good human beings. And then when they're also good employees, I just keep rehiring them over and over and over again.

emily-sander_1_12-30-2025_140405:

Good Hu Like being a good human I think gets you a long way in this world. Like just, just that alone. And then if you have the skillset for the particular company and the team and the role, like that's money. But good hu good human is like a really good foundation.

rory-liebhart_1_12-30-2025_140405:

Yeah, I completely agree with that. It's a good, great point. Point.

emily-sander_1_12-30-2025_140405:

So we're gonna talk about family offices. So we've talked about private equity and you know, private companies, but there, there is a whole piece of this where it's, you know, family office and similarities. There's some overlaps, but there's also some distinctions. And we just thought it would be cool to share that side of the PE world and equation. And Rory, you came across, um, a really good article on this, so maybe kind of what caught your eye there.

rory-liebhart_1_12-30-2025_140405:

And it's not, you know, I'd say the topic of family offices, while by no means family offices, anything new, but you don't see a lot of coverage on it in, in business publications. And there's a lot of, it has to do with how privately held they are. Um, but I think the numbers are getting so big there needs to be more coverage on it. And like by big I'm saying I think by some recent counts or estimates, there's over five and a half trillion, which. enough, the, the word trillion actually doesn't even mean that much to me anymore. It seems like it's such a, you, you know, oh, it's only, only a trillion. But, uh, anyway, there's, you know. A lot of money being held by family offices to the point where, you know, it's relevant to cover on its own. And you know, I guess taking that number further, 5.5, that's looking to like almost double in the next five years. But, you know, think about what family offices are and then kind of get into it is really, it's, it's a, it's a, it's a money management office that. Basically oversees family wealth. And so if you think about just the logic behind that, many people have grown their assets over the last decade. In particular just the run up. Think about your own stock portfolio in the last couple years, how much it's gone up. Well, if you have lots and lots and lots and lots of money and that growth is pretty steep, that you're gonna have a ton of money on your hands and ton of capital to have to manage. And so you have to learn to do that professionally. And when you're talking about big numbers, it becomes. of an institutional game and now you find yourself where, you know, in addition to, you know, private equity funds and, and other level investors, there's also family offices that have an allocation in their management strategy to private basically private investments. So the same things that private equity companies buy, same things that private credit funds lend to. You know, that's enticing to a family office. So. It was a cool article put out by the Wall Street Journal, made me think, Hey, this is something we ought to talk about.'cause I bet people really don't even know anything about these, these entities.

sweebe--wtf-_1_12-30-2025_140405:

Yeah, the, what was interesting I think is not only, not only is this an emerging area, but really kind of rolling the clock back, let's call it 15 years. That's how Rory got his start in capital raising.'cause we were looking to do, we were looking to do some, some private capital raising during the. And immediately following the financial crisis in 2008, um, because there was a lot of opportunity by distressed assets. We were private equity owned,

rory-liebhart_1_12-30-2025_140405:

Mm-hmm. Yeah.

sweebe--wtf-_1_12-30-2025_140405:

private equity folks were basically stre. They had, they had blown all their capital, I shouldn't say blown it. They had invested all their capital and distressed assets and they're like, okay, well we're gonna try and get something else, which is, you know, we're, we've got a, a bunch of family offices and things that we're gonna go meet with. And Rory and I went, flew down to, to Texas and. out and drove around from, from family office to family office, pitching, pitching, uh, for additional money. And so it was, I mean, and that was, you know, 15 years ago. That's

rory-liebhart_1_12-30-2025_140405:

Yeah.

sweebe--wtf-_1_12-30-2025_140405:

almost, almost 20 years ago now. So family offices aren't new. Um, but they're the amount of money that they control. And really where they're starting to intersect with, compete with, and in some cases private equity as an investment alternative is, is I think a more recent, you know, last five to 10 years, um, event. And I think it's gonna continue to accelerate.

rory-liebhart_1_12-30-2025_140405:

totally agree. Yeah. Yeah.

emily-sander_1_12-30-2025_140405:

is it a replacement or in addition to, or it just depends.

rory-liebhart_1_12-30-2025_140405:

I think it's a, it's a, it is in addition to. But again, you're thinking about, okay, there's so many, so many deals out there to go do.

emily-sander_1_12-30-2025_140405:

Yeah.

rory-liebhart_1_12-30-2025_140405:

a private equity fund that might be competing against private equity funds for deal flow is now competing with family offices and multi-family

emily-sander_1_12-30-2025_140405:

Yes.

rory-liebhart_1_12-30-2025_140405:

And let me just draw a quick distinction there. A family office is simply like family wealth that's being, let's call it professionally managed now. How does that, how does that happen at scale? Well, in some cases there are multi-family offices that get created so that you maybe have an investment management function that oversees the wealth of, let's say or five different families that maybe they

emily-sander_1_12-30-2025_140405:

Hmm.

rory-liebhart_1_12-30-2025_140405:

maybe they don't. But it's like, again, the point is you can almost think of, um, the family office as its own lp. Versus a private equity fund or private credit fund that has external LPs. So, you know, pension funds, endowments, all of those types of groups that we've talked about, sovereign wealth funds, et cetera.

emily-sander_1_12-30-2025_140405:

So.

rory-liebhart_1_12-30-2025_140405:

it gets kind of down to some of the, the differentiating factors within the different types of entities, like what are the, the kind of outcomes that matter to those types of entities. And there's a whole litany of those. But the other things too, to think about is. you're a founder, what kind of partner do you want? And there's reasons to think about a family office as a partner versus a private equity fund, a partner. And then lastly, if you're working for either directly or indirectly for a family office versus private equity fund. Also other things to consider and I've, I've had the opportunity to work indirectly, I would say, for both family offices and, uh, private equity funds. And they're different. They're definitely different.

emily-sander_1_12-30-2025_140405:

Yeah, so family office owns the capital. PE firm manages the capital. Slightly different dynamic.

sweebe--wtf-_1_12-30-2025_140405:

I think with, with one caveat. So I, I think that's, that's the case, except that the family office, we've talked a lot about how the private equity, how private equity is structured, how their fee structure works. So they've got, you know, the two and 20, well, in a family office, once you're starting to get nine figures worth of investible. At that point, the family office is going, look, I can hire a couple of these PE guys and instead of giving up 20% of my profits and 2% of my capital, uh, on management fees, I can capture all that

emily-sander_1_12-30-2025_140405:

Ah.

sweebe--wtf-_1_12-30-2025_140405:

I can hire some really good folks. And the difference in family offices, and I know we'll get into this a little bit more, is there, as Rory noted, there's a, there's a difference in both, know, patients. And what their investment profile looks like and how liquid they have to be. And so you may have a family office where really they're going, look, we're managing for generational wealth,

rory-liebhart_1_12-30-2025_140405:

That's

sweebe--wtf-_1_12-30-2025_140405:

so we don't need a lot of liquidity. I don't need to continue to raise funds, so I don't need to continue to cash stuff out. If, if I like this investment, I could hold it for 40 years because

emily-sander_1_12-30-2025_140405:

Okay.

sweebe--wtf-_1_12-30-2025_140405:

kind of raise additional capital. I, I've got the family capital.

rory-liebhart_1_12-30-2025_140405:

Yeah,

emily-sander_1_12-30-2025_140405:

Okay. And that makes a world of difference to a potential founder or, yeah.

rory-liebhart_1_12-30-2025_140405:

ways. I mean, you know, private equity fund is. I would say largely dependent on use of leverage to make investments because of the return profile as it delivers to LPs. Whereas the family office, you know, may or may not use leverage at all. Most of the time if they have real estate holdings and stuff. You gotta

sweebe--wtf-_1_12-30-2025_140405:

Yeah, regular. Yeah.

rory-liebhart_1_12-30-2025_140405:

sense to the world and

emily-sander_1_12-30-2025_140405:

So,

rory-liebhart_1_12-30-2025_140405:

thing, but more moderately used for sure.

emily-sander_1_12-30-2025_140405:

Hmm. So you mentioned, uh, a family office goes, Hey, I wanna hire someone or multiple people to run this for me. So is it kind of like in, in, in football terms, is it like the owner and the gm and like the coach, like, I'm gonna hire a gm, like run the operations for me? I don't wanna think about it.

rory-liebhart_1_12-30-2025_140405:

I think Ed hit it on the head. I mean, if I, if I was, let's just say, and I don't have one, sadly, I don't have my own family office,

emily-sander_1_12-30-2025_140405:

yet.

rory-liebhart_1_12-30-2025_140405:

if I had a family office, probably the first kind of hire I'd make would be some sort of a chief investment officer. Probably coming from like a PE type background because, well, I, I take that back. I would say, know, if, let's just say I had a desire to be in private investments a lot, that's what I would do now, no, make most, no mistake that. A family office has similar strategies as, say even a hedge fund where it's more private, uh, public equities and, you know, and, and debt securities and things like that. But let's just put that aside for a moment and say you would want the expertise and the experience coming

emily-sander_1_12-30-2025_140405:

Connections.

rory-liebhart_1_12-30-2025_140405:

um, investment management. Um. come to life you wouldn't want. I have seen it where it's like family offices are kind of homegrown, and so have somebody that was pretty successful obviously in certain things, but then tries to manage money in other asset classes and they don't do as well because they don't, they don't know it. But if you're, if you're serious about getting into private investments, go to where the, the talent pools churned out some real winners, you know, poached from the private equity side.

emily-sander_1_12-30-2025_140405:

And I mean the, the family can. Decide what type of investments they want. So if they're like, Hey, we're really into this part of philanthropy, or these types of companies,

rory-liebhart_1_12-30-2025_140405:

a good

emily-sander_1_12-30-2025_140405:

we're gonna go in this space. We're like, no, we want like the highest return for whatever they can. They can decide that.

sweebe--wtf-_1_12-30-2025_140405:

the,

emily-sander_1_12-30-2025_140405:

Yeah. They choose.

sweebe--wtf-_1_12-30-2025_140405:

challenge. The challenge there if you're the investment professional, is it's the family.

emily-sander_1_12-30-2025_140405:

Yeah.

sweebe--wtf-_1_12-30-2025_140405:

so you're, so you're dealing with a family and, and I, I go back to when we, when I initially joined Beeline back in 2001, we had essentially a family office that was our lead investor, which was, which was a partnership That was really where the lead partner was. Herman Sarkowski since passed away a

rory-liebhart_1_12-30-2025_140405:

Yeah.

sweebe--wtf-_1_12-30-2025_140405:

tremendous man here in Seattle. He was, he was a. I don't know how much he was worth, but it was a lot more than me. And he had, he basically had a family office set up that made these private company investments, minority interest in most cases to be able to, you know, kind of, and it, it was mostly local, so mostly Washington, um, based, although some on the west coast and he had race horses and he had real estate and he had, but all the stuff that interest him, kind of like, to

emily-sander_1_12-30-2025_140405:

Yeah. Yeah.

sweebe--wtf-_1_12-30-2025_140405:

point. Um, and he grew that and we actually took his. What, what I would say was his kind of number three guy became our chief legal officer at Beline. because, you know, Herman was at the point where he

rory-liebhart_1_12-30-2025_140405:

of the best lawyers I've ever worked

sweebe--wtf-_1_12-30-2025_140405:

Oh yeah. Because phenomenal, uh, like graduated number one in his class at Harvard Type.

emily-sander_1_12-30-2025_140405:

Okay.

sweebe--wtf-_1_12-30-2025_140405:

And, but Herman was winding that piece down, so he was like, look, I want to get, I'm basically gonna go passive on this stuff, so I wanna, I wanna start

emily-sander_1_12-30-2025_140405:

Okay.

sweebe--wtf-_1_12-30-2025_140405:

in his eighties at the time, and. His other, his other guy who was basically the one running it, George went and ran a different company for him out in Eastern Washington. He ran it from, from Seattle, but the company was based in Eastern Washington. And so it was just, you know, kind of a, it was. I got exposure to that. But it is the family. the investments are, yep. If they like race horses, if they like hotels, if they like, you know, if they think it's a monopoly and they wanna buy park place, that's what they're gonna do. Um, and as the investment professional, you've gotta balance what that fam, what the family wants with what. know, kind of your models and your instincts are telling you, and, and it's a different level of involvement, different level of engagement, different level of communication than you find with a typical private equity LP type relationship where, you know, the, have very limited partners and they're, you know, kind of doing their thing. In this case, the general partner family office is.

rory-liebhart_1_12-30-2025_140405:

Yes.

sweebe--wtf-_1_12-30-2025_140405:

the family. And so, and then you may have limited partnerships underneath that for various in the family who are gonna get something down the road or trusts, um, that have those, have those limited partnerships, but it's a very different dynamic for the investment professional and something that they've really gotta balance.

rory-liebhart_1_12-30-2025_140405:

Yep.

emily-sander_1_12-30-2025_140405:

Would a, would a PE firm approach a family office and say, Hey, do you wanna stake in this investment? We're

sweebe--wtf-_1_12-30-2025_140405:

Oh

emily-sander_1_12-30-2025_140405:

going on over here.

rory-liebhart_1_12-30-2025_140405:

Yeah. Yeah. That's a really, really good question. So family offices are LPs and other funds. So yes, that is absolutely the case. Um, you know, but if the more, let's just say like, you know, the, maybe I don't even know if size is really the reason, but like. Sort of the broad mandate and desire to invest by a family office is, I mean, these are sophisticated investors on their own. Maybe because they stock their, their, their, their office with really good professionals. But like at one, at a certain point, you have to ask yourself, do I want to keep paying other external managers to make good investments or can I just bring that function in house? Because if you really get down to it, the fee structure. Related to private equity, to a private equity fund, that's revenue a family office. That's a cost,

emily-sander_1_12-30-2025_140405:

Yeah.

rory-liebhart_1_12-30-2025_140405:

know, and so you really have to weigh the economics of that and also the sort of the desire you want to have with respect to, as Ed said, liquidity, as tax treatment, all these things that when you're an LP in a private equity fund, you're not really probably dictating those terms unless you're. The pension fund or the cornerstone investor. But, uh, you know, if you're not, if you're just along for the ride, you're not gonna necessarily have your, um, you know, your objectives optimized, where if you run it all yourself, you do whatever the hell you want. And however, however you wanna structure that tax wise, wealth transfer wise, liquidity wise, you name it.

emily-sander_1_12-30-2025_140405:

How does the investment manager get paid?

rory-liebhart_1_12-30-2025_140405:

Um, typically it would be something I would say the, in the manager in Vista, the, would get paid some way. You know, probably a really strong salary, but some sort of incentive based on performance. I mean, that could be skinned a lot of different ways.

sweebe--wtf-_1_12-30-2025_140405:

it's gonna be competitive. The Wall Street, the, the one person that I know that operated in that environment,

rory-liebhart_1_12-30-2025_140405:

Yeah.

sweebe--wtf-_1_12-30-2025_140405:

a base plus very sizable bonus based upon performance. So if they hit away on a, it was like a$1.8 billion family office. If they hit away, they could make seven or$8 million that year.

emily-sander_1_12-30-2025_140405:

Wow. Okay.

rory-liebhart_1_12-30-2025_140405:

Not

emily-sander_1_12-30-2025_140405:

Okay. Not bad. Um. Is this typically someone the family knows'cause you're trusting them with your, or is it just like, no, I'm gonna go on the street and find.

sweebe--wtf-_1_12-30-2025_140405:

the experience, the experience I've had in the last, it was funny when, when we were prepping for this, the, the last company one, my, what I would say is my largest client right now was family office owned. Um, so, you know, I've talked about'em as private equity'cause they're, they masquerade is private equity, but it's basically three families, um, that has this, you know, it's a multi-billion dollar set of funds, but it's three families, um, out of Silicon Valley and eastern Washington. That that. Kind of made that investment and the folks that they hired were generally the, kind of like what I was talking about on our chief legal officer at, at Beeline, they were cream of the crop type of investment professionals. Really, really smart.'cause they can, they can make potentially as much or more in a family office as they can in a private equity firm. They've gotta be able to have a little bit, there's a different dynamic, but if they could manage that dynamic, they're, they do extremely well. And so they would, they would go out and try and poach the best folks and bring them in and go, you've got a lot more latitude here. You don't have the pressure of having to churn deals. You've got, you can, you know, manage longer term. The one thing that. The family offices that I've been exposed to don't bring to the table that private equity tends to bring to the table. Two things. One, a deep Rolodex and two operational experience. So they are really more investors as opposed to private equity, which really extracts a lot of value or infuses a lot of value into their portfolio companies through operational excellence, financial engineering, you know, the things we've talked about where private equity brings a a lot of value. tended to see that in the, in the family office environment, they've been far more of a minority interest investor, passive, more of a passive investor, and they don't bring a big Rolodex of operators if things start going wrong.

emily-sander_1_12-30-2025_140405:

It can a family office be, I mean, I, I, I know the answer to my question, but can they be as involved as they want? I mean, if they. Back a company and they own a company, like I wanna like be in the day-to-day operations then

rory-liebhart_1_12-30-2025_140405:

especially if they took a control position of, you know, a, a majority share, you know,

emily-sander_1_12-30-2025_140405:

Wow. Okay.

rory-liebhart_1_12-30-2025_140405:

I, I, I have worked for a company or a family office, if you will. You know, basically many, many years ago, effectively bought a factory and they're very active. Like

emily-sander_1_12-30-2025_140405:

Hmm.

rory-liebhart_1_12-30-2025_140405:

one of the, I guess children, but older person now is effectively their CEO of that operating company. So it can be done. Absolutely.

emily-sander_1_12-30-2025_140405:

Yeah.

rory-liebhart_1_12-30-2025_140405:

yeah, no, no question about it. Anything kind of goes, it really just comes down to, you know, again. If you're looking for specific asset classes or deals, you know, is it going to meet your goals as a family office? You wanna, you wanna, maximize capital preservation, uh, you want to defer income for tax reasons, all this kind of stuff to make sure that next generation's taken care of, which is just gonna be. Potentially different than a private equity fund's objectives that I need to basically buy companies in a five-year window hold for another seven and close out this fund in within 10 years. Like, you know, those are pretty strict guidelines versus a family offset has much more of a, you know, um, of, you know, maybe not even guidelines really stated at all is like, just make sure it's a good investment, you know, and fits his profile.

emily-sander_1_12-30-2025_140405:

This might sound weird, but how would a family go about determining their goals? It's like, yeah, I don't wanna lose money, but I also like, don't wanna not make money, and so I can slice and dice my portfolio in a number of ways.

sweebe--wtf-_1_12-30-2025_140405:

That second, that second and third. So normally you're first gen, I mean, my, my experience has largely been with first generation.

rory-liebhart_1_12-30-2025_140405:

Yeah. There you

sweebe--wtf-_1_12-30-2025_140405:

So, so that you know that whether it was Herman or whether it was some of these other folks that I've dealt with, they made the money, they made the rule and they said, this is how things are gonna be. And they were fairly active in the decision making process as well. So like, when Rory and I were down in Texas, I remember the one we walked out, we're pitching to the guy. I mean, it's, it's not like, you know, it's, it's some fluky in the,

rory-liebhart_1_12-30-2025_140405:

not

sweebe--wtf-_1_12-30-2025_140405:

the,

rory-liebhart_1_12-30-2025_140405:

of faceless people, you know? Yeah,

sweebe--wtf-_1_12-30-2025_140405:

got one, one of our. Clients'. Clients is, it's a multi-billion dollar company that's family owned, so it operates, it's now third gen. And basically it's run by a series of trusts with trustees that were, where the documentation basically says, the trust documentation basically says, here's what's allowable, here's what's not allowable. It really, I don't wanna say a dead hand control from the, from the original. You know, grandfather, but there's a lot of guidelines there that were put in the original trust documents that basically go, you can do this, you can't do that. You can't, you know, the investments need to be made in certain types of things and they can't be done in early stage companies. They can't be, you know, so there's a lot of it. I think once you get past that first gen, you tend to see it become more structured with trusts and other, and other, you know, both tax advantage structures to that will also provide some semblance of control.

emily-sander_1_12-30-2025_140405:

Do those trustee requirements have a statute of limitations?

rory-liebhart_1_12-30-2025_140405:

Ooh.

sweebe--wtf-_1_12-30-2025_140405:

there there is this concept called a rule against perpetuities

emily-sander_1_12-30-2025_140405:

Whoa.

sweebe--wtf-_1_12-30-2025_140405:

says you can't have the, A trust can't last forever. So there's gotta be, there's, there's

emily-sander_1_12-30-2025_140405:

Some point at some generation, someone can change those rules.

sweebe--wtf-_1_12-30-2025_140405:

so there's, there's a

emily-sander_1_12-30-2025_140405:

Uh.

sweebe--wtf-_1_12-30-2025_140405:

perpetuities and it's not, it's not something I tend to run into, but it's basically 50 years, you know, like in, in Washington, I think it's 50 years after, um, the death of the, the original founder or so, or the original. Uh, trust grantor, something along those lines. A trust has to be distributed to the beneficiaries, but there's also rules around that. So, and

emily-sander_1_12-30-2025_140405:

Okay.

sweebe--wtf-_1_12-30-2025_140405:

is different. Trust. Trust law is state law, so it's each state's different.

rory-liebhart_1_12-30-2025_140405:

Yeah. Yeah.

emily-sander_1_12-30-2025_140405:

How, how much so you, at the top of the episode, RO, you said like, here's the market, like, you know, trillions of dollars, et cetera, but for a single family office, how much do you have to have? Just like I'm a family office now, does it have to be billions, million multimillions?

rory-liebhart_1_12-30-2025_140405:

no, I've seen, this is my assessment. I mean, I've, I, I think it kind of starts at like 10 million or somewhere around there in investible assets where you would. Probably set up some sort of a kind of professional internal operation, let's say, and maybe even less if you are joining up with a multi-family office strategy where you're working with, um, you know, registered investment advisor takes care of multiple families. I think the stat that I saw recently was there's like 800. Register RIAs, so registered investment advisors that are basically listed the SEC as professional money managers on behalf of family offices. So it's, it's pretty prolific. And about all these folks, we, we, we all think about, oh God, tech, tech billionaires and all these folks that are like, made new money, they gotta do something with that. I mean, you know, you're not gonna put it just in a money market fund for forever, you know? So, um, so that's when people decide to say, Hey, I need, you know, and I'm not gonna go to Charles Schwab and just be one of. You know, a few

emily-sander_1_12-30-2025_140405:

Yeah.

rory-liebhart_1_12-30-2025_140405:

they, they need professional management, and at a certain point, the, the scale of the cost and like, it, it becomes more of a cost effective endeavor to do that. You know, you pay somebody a few million dollars if you're a billionaire, like that's not that much, you know,

sweebe--wtf-_1_12-30-2025_140405:

Yeah, I, I've tended to see the breakpoint significantly higher. So I've got a number of clients that are, you know, worth. Between five and 40 million. And none of them are family offices, although they, they run themselves like a business, which is kind of that unique, you know, families that do well run like a business financially. And so there's not a lot of

rory-liebhart_1_12-30-2025_140405:

Yeah.

sweebe--wtf-_1_12-30-2025_140405:

going on in there. Um, the, the number that I've seen is right around a hundred million now. So at a hundred million is when you've got the, the size of investment that both. having professional like day-to-day, full-time financial management. And aren't going to kill your return by paying that financial manager. So if you figure a financial, a top notch financial manager is gonna cost you about half a million to a million dollars a year, that's half a point to a point on a, on a hundred million and on 10 million. That's a lot.

rory-liebhart_1_12-30-2025_140405:

yeah,

emily-sander_1_12-30-2025_140405:

Hmm.

rory-liebhart_1_12-30-2025_140405:

yeah. Exactly. Yep.

emily-sander_1_12-30-2025_140405:

So, so if. Okay. I have so many questions. Lemme ask this one. If you're, if you like, if you became Bill Gates, I mean he's got like his philanthropy and he's doing malaria and he's doing like, where does this fit like in your portfolio, because you could do so many things. Where does this private equity or private investment.

rory-liebhart_1_12-30-2025_140405:

I, it's, it's really a, a piece of the overall, let's call it financial and wealth management strategy for the family. So you think about the investment in private assets, that's just one of. Many, many things that are a concern to a family from an overall management perspective. So you called out a really big one, and there's real advantages to philanthropy for a lot of reasons that, so philanthropy is one thing, you know, investment management is another thing. Um, you know, um, you know, like. Asset, you know, basically like, um, you know, all the planes and the jets and shit that you buy. I mean, that's another component of it that's not, it may not fit into your investment class, but it's also sort of a, you know, a component of how you manage your life. So it's, think about it as a component of like managing a complex life that comes from having a lot of money. You know, so it's just one piece of the puzzle,

emily-sander_1_12-30-2025_140405:

If, if you two had, let's, let's do two. If you had$10 million of investible assets or capital and then a hundred million, what would you do if you had 10 million? Would you like self-manage that? Just given what you two know?

rory-liebhart_1_12-30-2025_140405:

10 for, 10 for, for us. Yeah. I

emily-sander_1_12-30-2025_140405:

Okay.

rory-liebhart_1_12-30-2025_140405:

this is what we do. know, if you, if you were somebody that really had no business background, but hit it. Hit it off with, um, because you're an awesome content creator or something, like, you might need some professional help to do it, but a hundred million, I think I'd probably need some help, you know, because I, my, it would be more complex, more things to deal with and I'm just one person. And if I had that kind of wealth, I probably would. I'd just be, I don't know, doing something that's like not working basically. Like

sweebe--wtf-_1_12-30-2025_140405:

Yeah, really.

rory-liebhart_1_12-30-2025_140405:

somebody else could manage it for me.

sweebe--wtf-_1_12-30-2025_140405:

Yeah, at, at the 10 million, that's an easy one for me. That's what I've self-managed with, you know, probably with Vanguard, which is where I do everything now, it's just, uh, it's just a little bit more than what I'm currently managing.

rory-liebhart_1_12-30-2025_140405:

Right.

sweebe--wtf-_1_12-30-2025_140405:

uh, the a hundred million, probably bringing someone else in, but that may also be the, you know, I kind of view myself as reasonably well qualified to actually do that.

emily-sander_1_12-30-2025_140405:

Yeah.

sweebe--wtf-_1_12-30-2025_140405:

job. And so it then becomes one of those, does that become the job? Kinda like what Rory saying, does that, does that become the job? And I go, okay, now I'm running my family office and I'm making those investments and I'm managing it full-time, or largely full-time because one, I enjoy it. Two, I fairly good at it, and three, I think it's, it's, you know, I, I don't, I would probably get frustrated with someone else now when you start

emily-sander_1_12-30-2025_140405:

Yeah.

sweebe--wtf-_1_12-30-2025_140405:

above that, and then you're gonna need help. But, but you know, a hundred million, I think I can, I can manage that one too.

rory-liebhart_1_12-30-2025_140405:

Yeah. You know, one thing that we didn't talk about is the, so support structure we've talked about in our book and. you know, I've talked about on our podcast for the people that serve private equity funds, whether that's lawyers, investment bankers, you name it, different advisors, those all still apply to family offices. Family offices is getting a deal done. They're also gonna speak with an uh, you know, investment bank if they're gonna have. The need for lawyers to help get deals done. I mean, there's, all of those things still apply because the sort of, the objectives from an investment standpoint are similar, can be. So yeah, all of those trappings need to be managed and, and all that stuff too. So yeah, you do, you need kinda like the, sort of the overlap of how that's overseen basically.

emily-sander_1_12-30-2025_140405:

Gotta build your ecosystem. Similarly,

sweebe--wtf-_1_12-30-2025_140405:

Hmm.

rory-liebhart_1_12-30-2025_140405:

put it. Exactly right.

emily-sander_1_12-30-2025_140405:

what else do people need to know about family offices?

rory-liebhart_1_12-30-2025_140405:

Well, it's good to have one. I mean, you know, you've done some few things, right? If you do, so there's that. But I think the one thing that we didn't really talk about is. You know that we, you know, a theme throughout our book and some of the things we talk about is founder's perspective, right? Like, so why would a founder wanna work with a, uh, you know, a

emily-sander_1_12-30-2025_140405:

Hmm.

rory-liebhart_1_12-30-2025_140405:

office as like a primary part, Hey, I'm selling my business for the first time. You know, I know I'm gonna make a lot of money, uh, but I still wanna be involved. Why would a, why would a founder wanna work with a, with a, you know, a, family office as a, as your lead investor or a PE group, um, as their lead investor? You know, et cetera. I mean, there's a lot of reasons why we've talked about the PE perspective ad nauseum. But maybe to put a, um, contrast to that, we working with a family office as a, the investor one, know, if they were a, a control investor. The likelihood of as much, um, interaction would probably be less, at least from what I've seen. And so you may have more flexibility as, as like a, you know, owner slash operator in, in that go forward company than you would working directly with pe. That's, that's the first one. And time horizons, um, to deliver. Is another one. and I'm sure Ed, you've probably got more as well, but those are some big ones,

sweebe--wtf-_1_12-30-2025_140405:

Yeah.

rory-liebhart_1_12-30-2025_140405:

maybe a little bit more patients on the part of the family office

sweebe--wtf-_1_12-30-2025_140405:

I think the other piece is family offices are also likely to be more flexible on terms

rory-liebhart_1_12-30-2025_140405:

Yeah.

sweebe--wtf-_1_12-30-2025_140405:

they're willing and able to make smaller investments on balance.

rory-liebhart_1_12-30-2025_140405:

Yep.

sweebe--wtf-_1_12-30-2025_140405:

it, in a lot of cases where companies, you know, let's say under 10 million of revenue aren't gonna be attractive for private equity, um, because they're too small and you gotta go through it, they've got, you know, limited partners that they've gotta keep happy and they've gotta put. big chunk of money to work the family offices, especially those family offices. And again, I go back to the Sarkowski where they were really focused regionally. And so you, you're gonna have family offices that are focused regionally or are focused on your particular industry. And as kind of like we were talking, they've got an interest and so. to those folks, you may find that you've got more flexibility in terms they're willing to do smaller investments, um, that private e larger, especially larger private equity firms just aren't gonna talk, talk to you about. And you've got the, uh, as Rory noted, you've got the. The ability to kind of have some patience and so go, okay, as a founder, here's my vision. And that vision might not be, I'm gonna grow three x four x, you know, over the next five years it might be. Look, I, my, my vision here is I need a little bit of growth capital and I want to grow, you know, 20% a year, 15% a year, I'm gonna have, be spinning off a fairly high cash flow because I've got, you know, I've got a nice, uh, I've got a nice, uh. business, and I'm never gonna sell for eight x revenue. I'm gonna probably sell for seven x EBITDA at some point in the future when I retire. But in the meantime, you know, it's spinning off nice cash. Uh, there's family offices where they go, yeah, that's exactly the type of investment I'm looking for. Where private equity is generally going, no, probably not. I'm looking for a much more aggressive growth pattern and a much larger investment. So I think it's a, they fill a need that I think private equity actually did fill. 20 years ago, 25 years ago. And they've now gotten so large in most cases that they don't fill it anymore. And the family offices have come in on private investments. And for founders, they should not be discounted as, as you know, and they sometimes you gotta go find them.'cause the investment bankers may not, one small transaction, investment bankers aren't gonna be as interested because they get paid on a percentage and two. They might not have the connections so, you know, this is one where founders have to do a little bit of legwork, but they could save themselves some transaction fees and get themselves a pretty good deal.

rory-liebhart_1_12-30-2025_140405:

Yeah. One other thing I would add, and this is a little more sort of qualitative, but it's, I'll give you a tangible way to think about it, is like. Let's say deals and, and sort of partnerships are based successfully on like real trust and like real commitment to, you know, one another, um, harder to actually achieve than you might think. But let's paint an actual picture that's very real. I've seen it. I've seen it happen. let's say, you know, you had a CEO that basically you worked for, you helped them grow this business, sell it go public. They became a, you know, very, very wealthy from that. Um, you were instrumental in that, but maybe you were a few rungs below and you didn't really quite see that kind of wealth, but. Down the road, they have a family office. They know how you are as an operator. Maybe you go do your own thing, you cultivate a startup, et cetera. You come to realize you need external capital. First person I'm gonna go to is the person I made a shitload of money for, and they know I made a shitload of money for them. And if they're still interested in you and you have that relationship, may be a more seamless transition to having them as a investment partner, than, you know, than, um. know, going fresh to a private equity group, you've never worked for. I, I had, I've on a much, much smaller scale. I have a side business that is effectively a private equity fund that I'm part of, that was originally seated by guys that I worked for, you know, and so came with that trust. It was an easy transition. You know, 15 years later we're still doing it, and those things can work over a long period of time. So. Um, you know, there's a lot of reasons why knowing who you're quote unquote, getting into bed with out the gate is important. You know, it's not the end all, be all. You can pro sometimes get a better deal or whatever with private equity, but that is a real thing, is who you know and who you've worked with before in that regard.

emily-sander_1_12-30-2025_140405:

So it sounds like there is a pocket of the market and certain profiles and just characteristics where family office would, would be.

rory-liebhart_1_12-30-2025_140405:

Yeah.

emily-sander_1_12-30-2025_140405:

than PE in

rory-liebhart_1_12-30-2025_140405:

Yeah,

emily-sander_1_12-30-2025_140405:

situations.

rory-liebhart_1_12-30-2025_140405:

definitely.

emily-sander_1_12-30-2025_140405:

Yeah,

rory-liebhart_1_12-30-2025_140405:

the flip side, you know, I

emily-sander_1_12-30-2025_140405:

sure. Interesting.

rory-liebhart_1_12-30-2025_140405:

I think like the biggest deals are still owned by the private equity groups for sure.

emily-sander_1_12-30-2025_140405:

Right,

rory-liebhart_1_12-30-2025_140405:

Yeah.

emily-sander_1_12-30-2025_140405:

right. Interesting.

rory-liebhart_1_12-30-2025_140405:

Yeah.

emily-sander_1_12-30-2025_140405:

Alright, well 2026 is upon us. We'll see if we can make family office foundations happen.

rory-liebhart_1_12-30-2025_140405:

Yeah. For ourselves. Yes, I agree.

emily-sander_1_12-30-2025_140405:

Yes, we should. We're family. We're family guys. We can start an office.

rory-liebhart_1_12-30-2025_140405:

have, uh, you know, created the need for, for family office, for our

sweebe--wtf-_1_12-30-2025_140405:

That would be great.

rory-liebhart_1_12-30-2025_140405:

hey, let's, let's actually get economies of scale and the three of us forming multi-family office

emily-sander_1_12-30-2025_140405:

I was just gonna say, we're like family. We could pool our phones together and create a thing.

rory-liebhart_1_12-30-2025_140405:

Yeah. Pay less

emily-sander_1_12-30-2025_140405:

And you can manage it, and I can operate, it'll be great. Like we have all the talent right here. I'm not even, I'm like only half joking. But anyway,

rory-liebhart_1_12-30-2025_140405:

That'll be a

emily-sander_1_12-30-2025_140405:

yeah, let's go.

rory-liebhart_1_12-30-2025_140405:

Let's go

emily-sander_1_12-30-2025_140405:

All right.

rory-liebhart_1_12-30-2025_140405:

in Q1. All right.

emily-sander_1_12-30-2025_140405:

All right. Pex boys. Sweet Eddie. B. Thank you.

sweebe--wtf-_1_12-30-2025_140405:

Thanks.

emily-sander_1_12-30-2025_140405:

Big red. Thank you. See

rory-liebhart_1_12-30-2025_140405:

you m Appreciate you guys. What a,

emily-sander_1_12-30-2025_140405:

you next time.

rory-liebhart_1_12-30-2025_140405:

Yeah. We'll see you soon. I.