SMF construction has been controlled by your family for almost three generations. The family just sold the business to a private equity firm. After the sale, your family received proceeds of USD 800 million, and you are thinking of starting a Single-Family Office (SFO). Which type of SFO model would fit your family’s circumstances?

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BlackTom AI · Accepted Answer

Question restatement: The family business SMF construction has been controlled by your family for almost three generations. After selling to a private equity firm, the family receives USD 800 million and you’re considering starting a Single-Family Office (SFO). Which SFO model best fits your circumstances?

Option 1: A Preserver SFO. This model emphasizes capital preservation, risk minimization, and protection of wealth for future generations. It tends to be conservative, focusing on steady, low-risk investments and liquidity. In this scenario, although liquidity is substantial (800 million), the family’s recent move—from long-term control of an operating business to ownership of a large liquidity event—suggests a potential interest in growth, active involvement, and new ventures rather than strict preservation. Therefore, this option is less aligned with the family’s entrepreneurial background and post-sale opportunity set.

Option 2: A Founder SFO. A Founder SFO is often characteristic of families who see themselves as ongoing business founders, maintaining central decision-making control over the family office and pursuing a strong, sometimes centralized, mandate for wealth creation. While the family has a founder-like history, the context after selling to a private equity firm indicates a shift away from continuing to operate a business under the family name. The emphasis on maintaining founder-style control may be less appropriate when a major liquidity event has occurred and the focus shifts to diversification and new avenues beyond the original business identity.

Option 3: An Entrepreneurial SFO. This model centers on actively deploying capital, pursuing new business opportunities, and leveraging the family’s entrepreneurial experience. Given the family’s three-generational history in business and their recent exit via sale to private equity, an Entrepreneurial SFO aligns with continuing to build and invest—whether in new ventures, co-investments, early-stage opportunities, or strategic partnerships—rather than simply preserving wealth or keeping a narrow founder-centric governance. This approach suits a family with appetite for active involvement, ongoing wealth creation, and a desire to leverage entrepreneurial instincts in a post-exit landscape.

Why the incorrect options don’t fit as well: The Preserver SFO focuses on safety and preservation, which may not capitalize on the liquidity event and growth potential after the sale; the Founder SFO emphasizes founder-level control over ongoing ventures and may not reflect the shift in ownership structure and strategic flexibility that often follows a PE exit. In contrast, the Entrepreneurial SFO explicitly supports active deployment of capital and pursuit of new ventures consistent with a family that has just transformed from operator to investor and may want to maintain momentum through ongoing entrepreneurship.

In summary, the scenario—a family exiting a long-standing business to a private equity firm and receiving a substantial liquidity event—best maps to an Entrepreneurial SFO, which is designed to leverage entrepreneurial experience and actively pursue new opportunities, while the other models center more on preservation or founder-centric governance that may not capitalize on the post-exit opportunities.

BU.232.730.81.SU25 Quiz #2

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