Family offices have boomed in North America and Europe in the last 20 years, but have yet to take hold in much of the rest of the world. But, despite the number of billionaires and ultra-high net worth individuals growing almost exponentially in the Middle East and Asia, don’t expect a boom in the growth of family offices in these regions anytime soon.
Putting a reliable figure on the number of single-family offices in the world is a bit like trying to guess how many stars there are in the universe – very inexact and somewhat futile. But it’s probably safe to say that from a per capita basis of the world’s rich, family offices are under represented in the Middle East, Asia, Africa and Latin America.
There’s some obvious reasons for this – many of the very successful and profitable family businesses in these regions are still run by the first generation who feel no compulsion to set up a family office. Their businesses are going along nicely and giving them and their families a very satisfactory living without the need to set up an investment office. Indeed, many of these business owners don’t see a difference between their holding companies and a family office. The two management investments and so why bother duplicating the task of one with a family office – so the argument goes.
But, even when the business passes on to the next generation, there might be little desire to set up a family office. In most cases, businesses in these regions will be reluctant to list their companies. And even when they do take their business public, most families will still retain a stake, if not a majority stake in the business. They won’t do what many successful entrepreneurs do in the West, sell the business and in many cases walk away from it and set up a family office to manage their sizeable windfall.
Of course, there are exceptions and family offices are catching on in Asia in particular. But, don’t expect a boom in the growth of family offices in regions outside of North America and Europe anytime soon.