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Trends in Private Equity: Family Matters

John Polizzi is a certified fraud examiner and a Partner at Gryphon Strategies. John works with institutional investors and private funds during their analysis of new opportunities. He also leads Gryphon’s asset investigation projects and has assisted Gryphon’s clientele in the identification of millions of dollars’ worth of collectible assets in the U.S. and abroad.

In recent years, private equity firms have become increasingly attracted to family-owned businesses. So much so that some firms have created investment funds strictly targeting family or entrepreneur-backed businesses. The reasoning behind this investment strategy is easy to understand. Family businesses are founded with a long-term vision and a focus on establishing strong customer relationships. In addition to these inherent strengths, family businesses continue to prove themselves as economic engines for growth. A recent study summarized that family businesses generate over 60% of the U.S. Gross Domestic Product (GDP) and create nearly 80% of all new jobs within the U.S. workforce.

Complimenting these advantages is a growing willingness on the part of family business owners to entertain private equity offers. A 2023 survey of 200 family owned businesses by PwC asked whether the owners would be open to a private equity investment. A resounding 90% of the respondents said yes. While this may be due to a changing perception of private equity partnerships or a greater flexibility in financing terms, other reasons for accepting a private equity investment may be more problematic.

Family Capital, a publication focused on the global family enterprise sector, reported that only 27% of family businesses have established plans for continued success following the exit of company founders. Additionally, the aforementioned studies note that only 30% of family businesses survive their first ownership transition and that nearly 50% of family business owners planning to retire within the next 5 years are without a proper succession plan.

With this in mind, diligent investors are routinely seeking more intelligence around family dynamics and potential succession plans of a business before closing on an investment. Although professional and reputational concerns over an investment in a family business can be situational, there are several categories and questions that a potential investor should take into consideration. Below, we break down some of the most common questions that Gryphon aims to answer when assisting clients with pre-investment due diligence into family-owned businesses:

As a trusted advisor to private equity firms and alternative investors across the globe, Gryphon combines comprehensive public record due diligence with human source interviews to gather answers to these delicate, but crucial, questions. For more information on Gryphon’s services and expertise, please visit us at


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