Are family offices ready to invest without intermediaries?

Family offices have become increasingly influential pools of private capital. Their growing significance lies not only in the scale of capital they control, but in the flexibility with which they deploy it. Unlike traditional institutional investors, family offices are often less constrained by fund mandates, redemption pressures or short-term performance expectations. They can move quickly, hold assets for longer and align investments with broader family priorities beyond pure financial returns. That makes shifts in family office behaviour strategically significant.

S&P Global Market Intelligence data, showing that direct investments by family offices rose 123.3% in 2025 to $12.9 billion across 158 transactions point to a meaningful change in private capital behaviour. According to the period reviewed by S&P Global Market Intelligence, this was the highest level of direct family office investment activity recorded since at least 2021. North America accounted for $6.5 billion of activity, Europe contributed $5.3 billion and Asia Pacific represented approximately $1 billion. Technology and telecommunications attracted $3 billion across 36 transactions, reflecting continued conviction in digital infrastructure and long-term technology adoption. Materials drew $4.8 billion, driven largely by the acquisition of Verallia, a French glass packaging manufacturer, highlighting continued appetite for industrial businesses with durable cash flows and tangible asset bases.

The numbers are notable, but the bigger issue lies elsewhere. This is not simply a story about increased transaction activity. It reflects a broader reassessment of how wealthy families want to own, govern and deploy capital.

For decades, the dominant model in private wealth was intermediation. Families seeking exposure to private markets typically allocated through private equity funds, venture capital partnerships, infrastructure vehicles, specialist real estate managers or, more recently, private credit platforms. External managers sourced transactions, underwrote risk, governed underlying assets and managed exits. Families supplied capital and paid for access, expertise and institutional execution. That model remains entirely rational. But as private market access has widened, some families are questioning whether delegation always justifies its cost.

Some families are naturally suited to direct ownership

One of the strongest arguments for direct investing is that some wealthy families possess capabilities that make direct ownership entirely rational.

Founder-led entrepreneurial families are the clearest example. Families that built wealth through operating businesses often understand management quality, capital discipline, sector economics and long-term ownership in ways that many conventional portfolio allocators do not. For these families, direct ownership may feel less like a strategic leap and more like a continuation of how wealth was originally created. That operating familiarity can be a genuine advantage.

Unlike conventional private equity funds operating within fixed timelines, family capital can often remain patient. It can support businesses through cycles, avoid forced exits and align ownership with longer-term strategic objectives. For families with deep domain expertise, that flexibility can create a meaningful competitive edge.

The sector allocation in the S&P data reflects this logic. Technology and telecommunications activity reflects continued conviction in digital infrastructure and long-term technology adoption. Materials activity, led by the Verallia transaction, reflects continued interest in industrial and manufacturing businesses with stable demand characteristics and long-duration cash flows. These are sectors where long-term ownership conviction can be commercially rational.

Michael Kosnitzky, Private Client and Family Office partner at Pillsbury Winthrop Shaw Pittman LLP, noted in S&P Global Market Intelligence’s analysis that family offices are increasingly attracted by greater control and lower fee drag compared with conventional fund structures. That instinct is understandable. But control is only valuable when the institution exercising it is genuinely competent.

Family offices are not all built for direct ownership

The term family office often creates a misleading sense of uniformity. The reality is far more varied. A multi-billion-dollar institutional family investment office with internal investment professionals, operating specialists, governance committees and defined investment processes is fundamentally different from a lightly staffed wealth-preservation structure focused primarily on administration, tax coordination and adviser oversight.

Some family offices are effectively investment institutions. Others are not. That distinction matters because direct ownership changes the operating model completely.

A family office allocating to external managers remains primarily an oversight institution. A family office pursuing direct ownership becomes an active investment organisation. Success in that model depends on the ability to source opportunities credibly, challenge valuations rigorously, structure investments appropriately, govern assets effectively and manage liquidity with discipline. These are core institutional capabilities.

A disappointing private equity allocation can be attributed to manager underperformance. A failed direct investment is much harder to externalise if the family office sourced the opportunity, approved the transaction and assumed governance responsibility. The issue is not whether direct investing is inherently better. It is whether the family office is structurally equipped to do it well.

Lower visible fees can conceal higher hidden costs

The economics of direct ownership are often framed too simply. Traditional private market structures can be expensive. Management fees and carried interest materially reduce long-term net returns. Families deploying substantial pools of capital inevitably question whether those economics remain justified.

Direct ownership appears to offer a cleaner answer: greater control, more transparency, reduced fee leakage and potentially better alignment. These benefits are real. But so are the hidden costs.

Building internal investment capability is expensive. Experienced professionals require compensation. Specialist legal and tax structuring create recurring complexity. Monitoring private holdings demands time, systems and governance discipline. Failed investments can destroy far more capital than conventional fee structures ever consume.

The relevant comparison is not between expensive intermediaries and free internal ownership. It is between two fundamentally different operating models with different cost structures, governance burdens and execution risks.

A family office with genuine investment edge can create meaningful value through internalisation. A family office without that edge may simply create a more expensive illusion of sophistication.

Collaborative family capital creates both opportunity and behavioural risk

Another important implication of the S&P analysis is the rise of collaborative family capital. Manju Jessa, vice president and head of family office and strategic clients at Royal Bank of Canada, observed that family offices increasingly partnering directly with one another to pursue larger transactions. This reflects a structural evolution in private markets.

Family offices are no longer simply passive limited partners in manager-led structures. Increasingly, they are becoming direct capital providers, co-investors and syndicate participants. This creates clear advantages through access to larger opportunities, pooled expertise, longer ownership horizons and reduced dependence on traditional intermediaries. But collaborative capital introduces behavioural risk.

Social familiarity can weaken scepticism. Prestige can distort challenge. Trusted relationships can substitute for disciplined underwriting. A transaction endorsed by multiple prominent families may feel safer than it actually is. Informal trust is not the same as institutional discipline.

Liquidity risk adds another layer of complexity. Family capital is often described as patient capital, but patience must be strategic rather than accidental. Succession obligations, tax liabilities, philanthropy, operating business support and unexpected family demands all compete for liquidity. A direct investment that appears attractive in isolation can become problematic when liquidity assumptions prove wrong. The strongest family offices understand the distinction between strategic patience and accidental illiquidity.

Private banks need a more defensible role

The rise in direct investing creates strategic pressure for private banks, but not because it reduces their relevance. As sophisticated families internalise more investment capability, the traditional value of product access and manager selection becomes less differentiated. Private banks remain important, but their value proposition is shifting toward capabilities that families cannot easily replicate internally.

These capabilities sit where scale, regulatory infrastructure and balance sheet strength matter. Structured lending against complex asset pools remains specialised. Cross-border financing, liquidity management, custody infrastructure and sophisticated structuring expertise continue to matter even for large family offices. These functions are difficult and often uneconomic to replicate internally at scale.

The strongest private banks will increasingly position themselves less as distributors and more as institutional capability partners — institutions that improve financing decisions, capital structuring and governance outcomes rather than simply intermediating investment access. Those that continue relying primarily on access economics are likely to face greater structural pressure as competition shifts towards capabilities that cannot be easily internalised.

Direct investing is ultimately a governance decision

The rise in family office direct investing should not be interpreted ideologically. More direct ownership does not automatically mean sophistication. Continued use of external managers does not imply weakness. The decisive question is capability.

A mature family office understands where it possesses genuine edge: operational experience, sector knowledge, governance discipline, liquidity resilience, decision-making clarity and institutional infrastructure.

Where those capabilities exist, direct ownership can create meaningful long-term value. Where they do not, conventional intermediation remains entirely rational.

The most dangerous category lies between the two: families ambitious enough to pursue direct ownership, but insufficiently disciplined to govern it properly. That is where expensive mistakes emerge.

The S&P Global Market Intelligence data reveal an important structural trend. But the real story is not that family offices are doing more direct deals. It is that direct ownership forces wealthy families to confront a harder question. Are they genuinely building investment institutions, or simply replacing visible external fees with hidden internal risk? The families most likely to succeed will not be those most eager to own directly, but those most disciplined about when not to.