Private equity, venture capital and US Family Offices

Key takeaways

• Private equity and venture capital remain the asset classes that North American family offices believe will deliver the best risk-adjusted returns, despite a challenging exit environment.
• Family offices globally are making fewer but larger deals, reflecting their rising ambitions as major players in the global deals landscape.
• AI and machine learning have become the dominant themes in venture capital, with deal values in these sectors growing rapidly.
• Private credit has emerged as one of the most popular strategies, as family offices step into the space traditionally occupied by banks.

Private markets remain the preferred destination

Despite a challenging period for exits and distributions, private equity and venture capital continue to sit at the top of family offices' preferred asset classes for risk-adjusted returns. Direct private equity remains the most popular asset class for new investment among North American family offices, reflecting the long-term outperformance these asset classes have delivered relative to public markets.

That said, the near-term environment has been difficult. The payback period for private equity funds has extended because exits have become more challenging, creating liquidity pressures for family offices that invest consistently across vintage years. For legal advisers, this presents a range of issues: the negotiation of extension provisions in fund documentation, the structuring of secondary transactions to provide early liquidity, and the review of distribution waterfalls and claw back mechanisms all become more critical in a constrained exit environment.

Bigger deals, sharper focus

The global family office deals landscape has been transformed. Over the past decade, family offices have progressively moved towards larger transactions, with the share of smaller investments declining and the proportion of medium and large deals rising steadily. This signals family offices' rising ambitions as major players in the global deals landscape, targeting a broader scope of investments in search of bigger returns. North American family offices have also shown a marked increase in domestic transactions, underscoring their preference for opportunities close to home.

For lawyers, larger deal sizes bring greater complexity in terms of due diligence, warranty and indemnity packages, competition clearances and post-completion integration. Family offices increasingly require bespoke legal support that can match the sophistication of institutional private equity sponsors, whilst retaining the flexibility and speed that characterize family office investing.

Venture capital follows the AI wave

Family offices have maintained a substantial commitment to venture capital, and the most striking shift is in the sectors receiving investment. AI and machine learning have become the dominant theme, with deal values in these sectors growing rapidly, alongside significant growth in SaaS investment. On a medium-term view, AI is the most popular investment theme among North American family offices, followed by clean energy.

The legal considerations around AI venture capital are evolving quickly, encompassing intellectual property ownership and licensing, data privacy compliance, regulatory uncertainty and the structuring of investments in an area where valuations can be volatile and the competitive landscape shifts rapidly.

Private credit steps into the spotlight

Private credit has emerged as one of the most dynamic areas for family office investment. Allocations have grown significantly as family offices seek the attractive yields available from sub-investment-grade borrowers who are turning to non-bank lenders. Family offices' involvement is mainly through funds, in order to mitigate the underwriting risk, though some larger offices are building direct lending capabilities.

As private clients adopt an increasingly selective and sophisticated approach to US exposure, the migration into alternatives such as private equity and co-investments is accelerating. Family offices are treating the US less as a passive allocation and more as an active, opportunity-driven market. The legal structuring of these investments, from fund terms to co-investment side letters to bespoke lending arrangements, is where families can gain or lose significant value.

This insight is part 3 of our ‘6 trends shaping Family Offices in 2026’ series, exploring the legal, tax and strategic issues set to influence private clients and family offices in the year ahead. 

Look out for my next post on technology, AI and US Family Offices.