One of the big themes emerging in the global investment world is family businesses as an increasing number of investors look for returns in new areas.
Just this week, one of Switzerland’s oldest private banks Mirabaud said it would be launching its first private equity fund that would invest in “living heritage” businesses – small to medium-sized family businesses.
Mirabaud partner Lionel Aeschlimann told the Swiss-based finews.com that the bank would target family businesses, specifically in luxury sectors like watches, gastronomy, and perfumes.
Mirabaud isn’t the first to be targeting such businesses, nor will it be the last. Privately-controlled family businesses, particularly those with annual revenues of around $100 million to $200 million, with net profits of anything over $10 million are very popular among investors right now. Outside the private equity world, family offices might be the investors targeting these businesses the most as they look to weigh more of their portfolios towards private companies.
Typically, family offices are willing to hold on to these investments over the long term and seek some performance upside like a share of profits rather than flipping them over the short term in the classic private equity method.
Nevertheless, although there is plenty of money from an ever wider investor base targeting family businesses, the question is whether the supply is meeting this demand. Mirabaud’s Aeschlimann is optimistic and he reckons many family businesses are looking for finance to expand their companies abroad, especially in emerging markets.
And certainly, many family businesses are looking to expand and need the finances to do so. But whether there is enough of them to satisfy an ever burgeoning investment base that is targeting them remains to be seen.