What it is
Private equity is the practice of acquiring ownership interests in companies that are not traded on public exchanges. Because these holdings are private, the investor typically takes on a longer time horizon, limited liquidity and a greater need for diligence than with public securities.
Growth equity usually refers to capital provided to established, often profitable businesses that want to expand, enter new markets or professionalize operations, frequently without a change of control. Buyouts and control investments involve acquiring a majority position, which generally brings greater influence over strategy, governance and capital allocation. Minority recapitalizations allow an owner to take some value off the table while retaining meaningful ownership and continuing to run the company.
Valuation in this field is usually discussed conceptually. A buyer may look at revenue or at earnings before interest, taxes, depreciation and amortization (EBITDA), and the choice of measure depends on the business model. Recurring software revenue, for example, is often viewed differently from project-based or cyclical revenue because of its predictability and margin profile. None of this implies that any particular company will earn any particular valuation.
How it’s traditionally been approached
Historically, families and institutions have accessed private companies through funds managed by specialist firms, through direct investments alongside other investors, or through co-investment arrangements. Each route involves different levels of control, transparency, cost and time commitment.
Founder-owned businesses have often been approached through direct relationships, intermediaries or advisors who know the owner. Transactions have been structured in many ways, including full sales, partial sales, growth capital rounds and recapitalizations, depending on the owner's goals for liquidity, legacy and continued involvement.
Evaluation has traditionally centered on diligence into the management team, the quality of earnings, competitive position, governance terms and the exit path. Investors typically rely on their own licensed legal, tax and accounting professionals to review documents and structure.
How the right family office may help
The right multi-family office may help a family clarify what it is trying to accomplish before looking at any opportunity. That can include how private company ownership might fit alongside liquidity needs, existing holdings, family governance and tolerance for illiquidity. A thoughtful MFO may also help organize information so decisions are made deliberately rather than under time pressure.
A first conversation is generally exploratory. Expect questions about the family's objectives, time horizon, experience with private investments and decision-making process. It is reasonable to ask how the office is compensated, how it manages conflicts of interest, whether it is independent of product providers, and how it approaches diligence and ongoing reporting.
Useful questions include: How does the office source and screen opportunities? What role does it play versus the family's own attorneys, tax professionals and accountants? How does it communicate when an investment is slow to develop or difficult to value? Families may also ask how the office supports founders who are considering a partner, including alignment on governance and exit timing. Listed offices are independent and responsible for their own decisions and regulatory compliance.
The bigger picture
Committing capital to private companies is rarely only a financial matter. It can affect how secure a family feels, how freely it can respond to unexpected needs, and how members relate to one another when outcomes take years to unfold. For founders, a partial sale or recapitalization can carry emotional weight tied to identity, employees and legacy.
Approaching these decisions with clear priorities, realistic expectations about illiquidity and trusted advisors can support peace of mind. Taking time to discuss goals openly, and pacing decisions accordingly, is a valid approach. Families who also care about the wellbeing of the professionals around them may find resources at Providers.plus helpful.
Keep in mind
- Multifamily Office AI is an independent directory and not a professional advisor; nothing here is investment, legal, tax or accounting advice.
- Nothing on this page is an offer to sell or a solicitation to buy securities, and no specific investment opportunity is described as available.
- Private investments can be illiquid and may result in loss; rely on your own licensed advisors before making any decision.
- Family offices listed here are independent and responsible for their own decisions, services and regulatory compliance.
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Frequently asked questions
What is the difference between private equity and growth equity?
Private equity is the broader category of owning stakes in private companies, while growth equity is a subset focused on capital for established, often profitable businesses seeking expansion. Growth equity often involves minority positions, whereas buyouts typically involve control. The labels vary by firm, so it helps to ask how each party defines its approach.
Can a multifamily office help with private equity investing?
A multifamily office may help a family define objectives, organize diligence, coordinate with its own legal and tax professionals, and monitor holdings over time. Services differ widely between offices, so ask what is offered directly and what is coordinated with outside specialists. Nothing is guaranteed, and each family remains responsible for its decisions.
What is a minority recapitalization?
A minority recapitalization is a transaction in which an investor acquires a minority stake in a company, often allowing the owner to realize some liquidity while keeping control and continuing to lead the business. Terms, governance rights and future exit expectations are negotiated and vary considerably. Owners should review any structure with their own licensed advisors.
How are buyouts different from minority investments?
A buyout involves acquiring a controlling interest, which generally gives the investor significant influence over strategy, management and capital allocation. A minority investment leaves control with existing owners and relies more on negotiated rights and alignment. The right fit depends on the owner's goals and the investor's expertise.
How do investors think about valuing a private company?
Investors commonly compare a company's value to its revenue or to EBITDA, depending on the business model and how predictable its earnings are. Recurring revenue is often viewed differently from one-time or cyclical revenue because of its durability. These are conceptual frameworks only and do not predict what any specific business will be worth.
What should I ask a multi-family office before exploring private equity?
Ask how it is compensated, how it manages conflicts, how it sources and diligences opportunities, and how it reports on illiquid holdings. Also ask how it works alongside your attorneys, accountants and tax advisors. Clear answers on independence and process can help you judge fit.
Educational resource. Multifamily Office AI shares general information and connects people with independent family offices. It is not professional advice. Talk with a qualified professional about your own situation.