Are family offices becoming more selective about private equity?

The family offices we work with have always been selective. They have access to some of the best managers in the world and have been able to choose accordingly.

What is changing is the broader availability of private market investments. Evergreen funds are attracting significant capital across private equity, infrastructure, and private credit.

It remains to be seen how that affects traditional closed-end funds. My expectation is that it will not fundamentally change that market.

For family offices with established access to leading managers, careful selection has always been important and will remain so.

How much of a problem is the lack of exits? Can family offices simply wait because they have a longer investment horizon?

There is a great deal of discussion about distributions to investors. At the same time, continuation vehicles are creating opportunities by bringing existing assets to new investors.

That can be attractive to family offices that were not investors in the original fund, did not previously have access to a particular asset, or have a strategic interest in the company.

It is now a sufficiently significant market for us to have a dedicated business focused on continuation vehicles within our asset management.

We are also seeing a clear divide in fundraising. Leading managers with strong track records continue to raise substantial funds. Lower-performing managers are finding it harder or taking longer to raise capital.

There will always be demand for managers who perform well and return capital to investors with attractive returns.

Are you concerned that family offices have become too heavily exposed to AI?

The family offices we engage with have highly sophisticated investment teams and investment committees. That gives me confidence in how they approach these opportunities.

"There is certainly a rigorous process. Access alone is not a reason to invest."

Markets and valuations can certainly be volatile. But established institutional family offices are not simply investing because an opportunity is available. They conduct due diligence and assess whether it fits their investment themes.

So there is a stricter investment process?

There is certainly a rigorous process. Access alone is not a reason to invest.

Another interesting development is how family offices are using AI in the investment process itself.

At a client dinner about six months ago, we asked a group of eight to ten family offices  who was using AI in their investment processes. Everyone raised a hand.

Applications ranged from summarizing incoming presentations to generating investment suggestions informed by previous decisions of the investment team and investment committee.

I would not be surprised if family offices increasingly use AI to develop questions for us about investments.  Equally, integrating AI into our workflows is a strategic priority for us. 

Information processing, financial modeling, and presentation development will become faster on both sides. That will help us become more efficient, better prepared and more productive. 

Do you have concerns about the use of AI?

Professionally, I am excited about it. I use AI several times a day, and it helps our team enormously. Tasks that previously required considerable time can now take minutes.

More informed and sophisticated clients are also positive for us.

But as a father of two young adults, I understand that the many unknowns around how AI will reshape our lives are challenging. We must certainly cultivate a prudent approach to managing this technology. 

Beyond the U.S., how important are Asia and the Middle East to family offices?

The Middle East has been more volatile recently. But the region has exceptionally professional institutional investors, including within family offices.

They invest both within the Gulf Cooperation Council countries and globally, and some are among the best investors in the world.

I expect compelling investment stories to emerge from the region, as well as further investment into it. We have committed significant resources to building our business there.

"I am very bullish on Switzerland."

In Asia, we also see strong demand for European and U.S. assets, particularly in technology, branded consumer businesses, and luxury.

How do you view Switzerland as a family office hub?

I am a big fan of Switzerland. I have spent a lot of time in Zurich during my career.

I am very bullish on Switzerland. The more volatile the world becomes, the more attractive Switzerland becomes as a place to live, work, and invest—for wealthy families, family office professionals, and principals.

Could family offices play a larger role in financing Swiss innovation?

That is already happening. We regularly speak with our Swiss investment bankers about capital raising and other opportunities.

The Swiss IPO market has also been relatively resilient compared with some similarly sized markets.

Bioengineering, traditional engineering, and medical devices are areas where Switzerland excels. That makes it relatively straightforward for us to discuss Swiss innovation and precision engineering with family offices in Europe, the broader EMEA region, and the U.S.

What do family offices expect from a bank such as Goldman Sachs?

Above all, access: to leading managers, flexible financing, and direct equity opportunities.

Those opportunities may come through our investment bankers or existing clients looking to raise capital for a portfolio company.

Sometimes family offices need advice on a specific transaction. Often, they are looking for a continuing flow of distinctive investment opportunities.

From my perspective, our strength is the ability to bring together investment banking, capital markets, public and private asset management, and wealth management advice and execution under one roof.

Our role is to deliver those capabilities when clients need them.

That is your key differentiator?

Exactly. It is about bringing those capabilities together for clients and making them available at the right time.

Looking ahead to 2027, what will be the most important change in how family offices invest?

Putting market expectations aside, I think AI will fuel another wave of sophistication. It will become faster and less expensive for family offices to develop institutional investment capabilities across asset classes.

That applies to something as straightforward as researching the most appropriate ETF for a particular asset allocation, all the way through to analyzing a complex, illiquid company investment.

Once the relevant information is available in a virtual data room, AI can make the analysis faster and more sophisticated.

The time and cost involved will shrink. That will help family offices develop further as significant financial investors and strategic partners. This is a multiyear development.

The same applies to us, from assessing opportunities and developing materials to reaching out to investors. 

Darren Allaway is a managing director at Goldman Sachs Apex, the dedicated family office coverage team within  Wealth Management, and leads its business in Europe, the Middle East, and Africa. He advises international family offices and multi-family offices on portfolio construction, investment selection, and complex financing transactions. He also serves as co-head of the firm’s EMEA Black Network.

Allaway first worked at Goldman Sachs as an analyst in the Investment Management Division from 1998 to 2001. From 2009 to 2019, he was a founding member of the UBS Global Family Office Group. He rejoined Goldman Sachs as a managing director in 2019. He also played professional basketball in Spain.