Citi Private Bank gathered leading family offices from around the world – representing $434 billion in wealth – to hear cutting-edge insights, share experiences and build connections. Here is an article with a selection of key takeaways from their discussions with family office executives.
As a partner to many affluent families around the world, we gain privileged insights into the unique practices and cultures of each family, their family office, foundation or private investment company.
But while they vary in size, structure and needs, the most successful and longstanding entities have one thing in common – a constant desire to learn best practices, make connections with their peers and keep abreast of transformational trends.
That is why in 2016 we established our Family Office Leadership Program, an annual event bringing together prominent family office executives, industry experts and thought leaders for a comprehensive exploration of challenges, opportunities, and best practices.
The 2023 program saw 140 participants from 24 countries – some traveling from as far as Australia – gather over three days in Ossining, New York. Attendees had an average net worth of $3 billion and collectively represented over $420 billion in wealth (1).
The program featured 17 sessions with 25 prominent practitioners, founders and experts sharing their insider insights. Topics included opportunities in public and private investments, state of credit markets, macroeconomic and geopolitical trends as well as family and family office management and governance.
What follows below is a summary of the key takeaways and actionable insights from a few select sessions of our program:
Will tech recover lost ground? What should family offices consider before investing?
Artificial intelligence could add up to $7 trillion of market value creation over the next few years and will be one of the key drivers of the technology sector rebound that we are already witnessing. Consider the 3Ts before seeking to invest in the tech sector:
Team: Talent and capability of the founders and of the operating team;
TAM: Total addressable market size and proven ability to scale; and
Traction: Demonstrated support of the staying power and growth of the business
Have private market valuations bottomed?
Private valuations will likely continue to decline in the near term and the degree of stress will be substantiated by transaction comparables (vs mark to market) as companies that have been holding out will need to raise capital. There will likely be substantial challenges and risks of default for many venture/growth businesses which are unable to secure additional capital to survive. At the same time, opportunities to take advantage of market stress, capital dislocations and asset repricing are very prevalent.
Are there potential opportunities in dislocated credit
On the back of a robust due diligence process, family offices can seek to capitalize on the secondary debt market, near- to medium-term debt maturities on favorable terms and conditions across the board, premium double-digit yields, capital structure seniority, contractual cash flows, downside protection and favorable covenants, reasonable pro forma leverage profiles, and equity upside in certain situations. Alternatively, seek out fund managers with a proven track record in high yield and distressed markets to potentially enhance portfolio returns.