Investment bank Greenhill & Co. (GHL) recently got its executives together to think about how to take better advantage of its relationships with this growing group of deep-pocked new buyers, according to CEO Scott Bok.
"We had a few situations where it was somewhat surprising to us that an individual family might be interested in buying quite a large asset that we were selling and were thinking it was more appropriate for some of the corporate world," Bok says.
That realization caused Greenhill to "go through the process of collecting: what are our collective relationships as a partnership. You know what you find of course is people in different sectors, different regions -- San Francisco, Chicago, London, Sao Paolo, etc. -- you have a collection of major families you deal with -- so we've kind of pulled that together and are thinking about how we access that group for acquisition opportunities more often."
Corporate acquisitions by wealthy families, of course, aren't exactly a new phenomenon, points out John Tsui, who manages his own family's assets through a New York-based company called Peninsula House.
"If you dig underneath where they built their wealth through generations, it's companies -- and real estate."
But the numbers keep growing, with lots of new fortunes being added to the mix. High net worth individuals had $56.62 trillion in assets for investment in 2013, up 14% from the previous year, according to a report from CapGemini and RBC Wealth Management.
Big investors such as Steven A. Cohen and George Soros, who used to manage money for others, now operate as family offices. But they remain major players in the markets while facing fewer regulatory requirements.
Tsui says wealthy families such as his look to firms with global resources that can help them achieve broad objectives rather than simply pushing products.
"Whether it's a credit fund, a long/short hedge fund, whatever -- two and 20 this, two and 20 that -- people are tired of it," Tsui said.
Two and 20 refers to a once-standard fee structure among top hedge funds, which charge investors 2% commissions and 20% of profits.
Some examples of firms looking to cater to people like Tsui are Credit Suisse (CS) , which has created a Direct Equity Partners Program. The division allows wealthy individuals to back individual buyouts, Bloomberg reported in July, citing a regulatory filing.
Blackstone Group (BX) has also stepped up its efforts to focus on wealthy individuals. Its Blackstone Total Alternatives Solution Advisors unit primarily targets family offices or wealthy individuals, according to a filing cited first by Bloomberg. The unit will advise several Blackstone funds, investors in which "primarily consist of high net worth individuals, their related family planning vehicles and family offices," the filing states.
Blackstone spokesman Peter Rose had no response in time for publication of this story.