Multifamily Offices for Business Sellers: A Practical Guide
Selling a company can turn years of operating work into a large, concentrated pool of wealth. A multifamily office can help coordinate the financial, legal, tax, investment, and family decisions that follow. This guide explains what these firms do, how to compare them, and what a business seller should prepare before signing an engagement.
Why business sellers use a multifamily office
A business sale often creates several decisions at the same time. The seller may hold cash, public securities, rollover equity, real estate, insurance, and ownership interests in new ventures. Family members may have different goals. Existing advisers may each handle one part of the picture.
A multifamily office, also called an MFO, serves several unrelated wealthy families. Its role is usually coordination. Depending on the firm, services can include investment management, financial planning, manager selection, tax coordination, estate planning coordination, philanthropy support, reporting, and family education.
The office does not replace every specialist. Your lawyer still drafts transaction documents. Your certified public accountant still prepares returns. Your investment manager still makes portfolio decisions under the agreed mandate. The MFO organizes information, clarifies responsibilities, and helps the family keep decisions aligned.
For a seller, the work often starts before closing. The team can help model liquidity needs, review the proposed rollover, map concentrated risks, and prepare a post closing cash plan. After closing, it can maintain a consolidated view of assets, liabilities, entities, trusts, and commitments.
What changes after a business sale
Operating a company usually gives one owner a clear source of cash flow and control. A sale can replace that operating asset with a portfolio of financial and private market exposures. The family must decide how much cash to hold, how quickly to invest, how much risk to accept, and which responsibilities to keep in house.
The transaction may also create a tax timeline. Estimated payments, withholding, charitable gifts, deferred consideration, earnouts, and rollover interests can fall in different tax years. The Internal Revenue Service explains that estimated tax is used when income is not subject to sufficient withholding, including income from self employment, interest, dividends, rents, and gains from asset sales. Sellers should ask their tax adviser to set a payment calendar based on their actual transaction documents. Internal Revenue Service, Estimated Taxes
Estate planning may need to be updated as well. A new level of liquidity can change trust funding, beneficiary designations, insurance needs, charitable plans, and the way ownership is divided among family members. An MFO can help the family collect the relevant documents and keep the estate attorney, tax adviser, and investment team working from the same information.
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Services to look for
Start with the actual work your family needs. Common MFO services include:
Investment policy and portfolio management. The office may build a written policy covering goals, liquidity, risk, time horizon, and permitted investments. It may manage accounts directly or supervise outside managers.
Financial planning. Planning can connect spending, taxes, charitable giving, insurance, education funding, and capital calls to a single household balance sheet.
Manager selection. Some offices evaluate private equity, private credit, real estate, hedge funds, and public market managers. Ask how conflicts are disclosed and whether the office receives compensation from managers.
Reporting and administration. Consolidated reporting can show bank accounts, custodians, private funds, partnership interests, real estate, and liabilities. Ask how often data is updated and how private assets are valued.
Family governance and education. A family may need meeting agendas, decision rules, next generation education, or a process for approving gifts and investments. These services are often separate from investment management.
Transaction support. Before closing, the office may coordinate with legal and tax advisers on liquidity, concentration, escrow, rollover equity, and post sale cash management. Confirm exactly what is included in the engagement and what is billed separately.
What the directory data shows
The MultifamilyOffices.com directory recorded 1,760 firms. Of those, 292 had published SEC Form ADV data captured in the directory. The SEC describes Form ADV as the primary disclosure document for investment advisers registered with the agency or required to file it. SEC, Form ADV
Among those 292 firms, reported assets under management ranged from a 25th percentile of about $358 million to a median of about $921 million and a 75th percentile of about $3.08 billion. The largest reported figure was about $117.5 billion. These figures come from the firms' SEC ADV filings as captured in the directory. They are useful for comparing scale, but they do not measure service quality, client fit, or the value of assets outside the reported advisory business. MultifamilyOffices.com directory benchmark
The most common reported fee type was a percentage of assets under management, listed by 289 firms. Fixed fees were listed by 209 firms, performance based fees by 110, and hourly fees by 95. A firm can report more than one fee type, so these counts are not market shares. Ask for a written fee schedule that covers advisory fees, fund expenses, custody costs, trading costs, administration, performance fees, and any referral or placement compensation. MultifamilyOffices.com directory benchmark
The most common reported service was portfolio management for individuals and small businesses, listed by 279 firms. Selecting other advisers appeared for 213 firms, financial planning for 207, institutional portfolio management for 141, and pooled vehicle management for 126. These categories show what firms report, not what every client receives under a particular contract. MultifamilyOffices.com directory benchmark
Client types also vary. The directory listed 263 firms serving high net worth individuals, 178 serving individuals who are not classified as high net worth, 121 serving pooled vehicles, 107 serving charities, and 62 serving pension plans. A seller should ask for references from families with similar liquidity, complexity, and decision needs. MultifamilyOffices.com directory benchmark
Because every time you go to negotiate a deal, there is always a way to structure it better, to be more tax efficient, to preserve equity, maybe the investor is capped at 3x because they're passive and you're doing all the hard work.
How to evaluate an MFO
Begin with ownership and incentives. Ask who owns the firm, whether employees receive equity, and whether the firm is affiliated with a bank, broker dealer, asset manager, private fund sponsor, or insurance company. Affiliations are not automatically a problem. They should be disclosed and understood.
Review regulatory status and disclosures. The SEC's Investment Adviser Public Disclosure system provides access to Form ADV filings for registered advisers and exempt reporting advisers. Read the firm's brochure, disciplinary disclosures, conflicts section, fee schedule, and description of business practices. SEC, Investment Adviser Public Disclosure
Ask how advice is delivered. Will one lead adviser coordinate the relationship? Who attends investment committee meetings? Who handles cash movement requests? What happens when a key employee leaves? Request a service calendar for the first year.
Test the firm's planning process with your own facts. Provide a simplified balance sheet, expected liquidity, spending needs, family structure, charitable goals, and risk concerns. The best comparison comes from seeing how each firm frames the same problem. Ask each firm what could go wrong in its proposed plan and how it would respond.
Check custody and reporting arrangements. The SEC's custody rule addresses how advisers hold client funds and securities and requires specific safeguards and disclosures in many circumstances. Ask where assets will be custodied, who can authorize transfers, and how dual approval works. SEC, Investment Advisers Act Rule 206(4)-2
Finally, speak with current clients who resemble your family. Ask whether reports arrive on time, whether calls are returned, how conflicts were handled, and whether the office helped during a difficult decision.
Fee structures and contract points
Most MFO engagements combine a recurring advisory fee with charges from underlying investments or outside providers. A percentage of assets can align the fee with the size of the relationship, but the dollar cost rises as assets grow. A fixed retainer can make budgeting easier, but the contract should define the work included. Hourly or project fees may fit transaction planning, estate coordination, or a one time review.
Request a total cost estimate in dollars for your expected asset level. Include management fees, fund expense ratios, performance allocations, custody, trading, tax preparation, legal work, reporting, travel, and termination charges. Ask whether the firm receives revenue from recommended managers or products.
Read termination provisions. Confirm notice periods, final billing, data export rights, transfer assistance, and treatment of prepaid fees. Make sure the agreement identifies the legal entity providing each service.
A preparation checklist for sellers
Before interviewing firms, assemble the latest purchase agreement or term sheet, capitalization table, debt schedule, recent tax returns, investment statements, insurance policies, estate documents, charitable commitments, and a list of recurring family expenses.
Write down the decisions that must be made in the next 12 months. Examples include estimated taxes, debt repayment, a new home, gifts, education funding, charitable contributions, reinvestment in the buyer, or a new operating venture.
Set boundaries. Decide which information can be shared with the MFO, which family members attend meetings, and who can approve transfers. Establish a short list of success measures, such as timely reporting, a documented investment policy, a tax payment calendar, and clear follow up ownership.
Interview at least several firms with the same questions. Compare the people assigned to your account, the services included, conflicts, total costs, reporting examples, and references. A smaller office may offer direct access. A larger office may have more specialized staff. Fit depends on the work your family needs and the way you prefer to make decisions.
A practical first year plan
During the first 30 days, the MFO should gather documents, confirm custodians, map entities, identify near term cash needs, and establish meeting routines. During the next 60 days, the team can complete a risk review, draft an investment policy, coordinate tax estimates, and identify gaps in insurance or estate documents. By the end of the first year, you should have consolidated reporting, a documented capital allocation process, an annual tax and liquidity calendar, and a clear review schedule.
Keep the relationship measurable. Review whether the office completed agreed deliverables, explained recommendations clearly, disclosed conflicts promptly, and coordinated effectively with your existing advisers. If the service model does not fit, raise the issue early and document the agreed fix.
Key takeaways
- An MFO coordinates the financial, tax, legal, investment, and family work that follows a business sale.
- Review Form ADV filings, ownership, conflicts, custody, fees, and termination terms before hiring.
- Use the directory benchmark to understand reported firm scale and service categories, while treating the data as descriptive rather than a quality ranking.
- Ask for total costs in dollars and compare firms using the same facts and questions.
- Define first year deliverables, decision rights, reporting standards, and communication routines in writing.
FAQs
When should a business seller contact a multifamily office?
Start before signing the sale if possible. Early planning gives the team time to review liquidity, rollover equity, estimated taxes, charitable plans, and post closing cash needs with your legal and tax advisers.
How much money is required to work with an MFO?
There is no universal minimum. Firms use different models, including percentage fees, fixed retainers, hourly billing, and project fees. Ask each firm for its minimum relationship size and whether it accepts transaction planning or limited scope engagements.
Does an MFO replace my lawyer or accountant?
Usually no. The MFO coordinates with those professionals and may help organize decisions and information. Your engagement letters should state which party is responsible for legal work, tax advice, investment management, reporting, and administration.