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| The Family Office |
Surviving the Sale
Harvey D. Shapiro
12/01/2003
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According to Stanley Pantowich, CEO of TAG Associates in New York, "The typical family office is a hub, and the spokes are different investment brokers and investment managers. They can play one off against another and have total independence and objectivity." He believes that if TAG had sold to a big bank or broker, "We would have lost that."
Instead, in January 2002, TAG sold a 50 percent interest to a small group of investment bankers. "I have four new partners to help me run the business," Pantowich says. "I gained some skills that we didn’t have before. We got real estate expertise. We got private equity expertise, and there’s more talent in the firm as a whole." There is also more young talent that will ensure the continued vitality of the firm, he says. The deal allows the 62-year old Pantowich to follow the advice he would give his clients—get some cash out of the business and prepare for generational transition.
Some insist independence can be maintained, despite an acquisition by a big bank or asset manager; it just has to be negotiated in advance. "We are not steered at all to any Credit Suisse products," Peter Frye insists. "We are allowed to choose best of breed."
Since Eagle joined forces with AMA and SunTrust, Meyer, now executive vice president of AMA, says, "The same team is here, but there are much deeper resources." The additional scale provided by the merger also reduces the cost per family. Similarly, at Frye Louis, Frye says, "As a result of our partnership with Credit Suisse, we have expanded growth channels, and we’ve got a global network of resources."
Financial management is a very scalable business, and the bigger the pool of assets, the less cost there is per client. The concern is that the family-office style of personal services may be the opposite of scalable—the bigger the shop, the more distant the services. In any case, clients have to ask themselves what price they are willing and able to pay for keeping it all in the family.From Your Side of the Table
Five essential questions to ask when your family office is sold.
• Does the buyer mainly want to increase its assets under management, or does it want your office’s expertise and franchise?
• How many of the original clients of the family offices it has purchased remained with the firm?
• Will you still have access to your favorite advisers?
• What additional products or services will become available?
• Are you willing to find a new
family office if need be? Additional Information
 A Decade of Deals
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