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InvestmentBank.com | An Interview with The Miami #FamilyOffice
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Family-Office (1)

20 Jan An Interview with The Miami #FamilyOffice

The following is an interview with The Miami Family Office. The views expressed in this interview represent those of the interviewee only. 

Can you please provide a brief history of your firm? Its founders?

The Miami Family Office is a single family office with a direct investment mandate covering real estate and operating businesses.  The family originally built its wealth by managing a single operating business and its underlying property.  After successfully operating that single location, the family executed an expansion strategy by first acquiring two locations, then five additional locations, until it managed twenty-five different locations.  The family then partnered with a publicly-traded company to acquire 300 locations, ultimately leading to the recent sale of that portfolio of assets for more than $500 million.

Integral in the story of this family’s success is the willingness to take calculated risks to build a strong business and to work with exceptional partners when needed.  That is the strategy by which we continue to invest and grow the family’s wealth.

Tell us about your typical deal? Size? Industry? Geographic locale? Can you please provide an example?

Check sizes for transactions range from $10 million up to as high as $1 billion at the high-end.  While we have historically expanded from a single business to form a platform of businesses, our family office will consider acquiring an existing portfolio of related businesses.

We are open to investing our patient capital into a broad variety of direct investment opportunities but we would prefer the following:

  1. $500,000+ EBITDA-producing businesses during the last full year of operations
  2. Only U.S.-based operating businesses (nothing international, for now)
  3. Preference given to businesses based in California, the West Coast, and Florida, but we consider opportunities across the nation.
  4. Operating businesses with a real estate component are of particular interest
  5. Will consider distressed assets

How are your deals typically structured? Are you most often a majority investor or a minority investor? Do you prefer to keep existing management in place or do you simply take over the existing business with your own management?

As a family office without a strict mandate, we are flexible in how we can structure our deals.  Whether you look at a hedge fund or a private equity vehicle, they often have a set mandate in terms of minority vs. majority control, geographic or sector focus, and investment timeline.  We are most often a majority investor but willing to deploy growth capital to businesses that meet our EBITDA threshold.  We evaluate management on a company-by-company basis and are by no means blindly committed to removing existing managers.  We find that often management simply needs additional capital to scale or other means of support and we are open to finding ways to continue with at least part of the existing management team, with proper incentives to align interests with ours.  In distressed situations or other specific cases, it may be necessary to buyout majority control and replace management team with an executive staff better equipped for the challenges and opportunities facing the company.

What makes you different than other private equity firms? How does your differentiation make you a better buyer in a crowded market?

In certain ways we resemble a traditional private equity firm; in that we seek to acquire majority control of businesses, are open to the use of leverage for these transactions, and compete for middle market companies.  In a fundamental way though, we are not a private equity firm; rather we are a single family office.  We serve the interest of the patriarch and his family only and thus do not have to follow a set investment horizon to return capital to investors and we can hold assets long-term.  We also do not need to take outsized risks in order to justify fees charged to our limited partners, since the firm’s only investor is the family.  Many companies respond positively to our business model, especially management, because they know that unlike some private equity firms, a family office may be more patient and long-term-minded.  Family-owned businesses respond especially well to our patriarch’s story of being a first-generation successful business owner.

What do you look for when you are courting target companies? What separates a good company from a great company? What are mistakes you have seen from targets that, if remedied, could make the process smoother for all involved?

We look for businesses that can scale and where there is an opportunity for us to add value.  We seek a management team and employees that are motivated to improve the company on a daily basis and appreciative of our longer term goals for the company.  Having grown several businesses, we know that there are often challenges that undermine a company’s ability to succeed and we prize managers that are able to navigate those trials with clearly-defined processes, strong attention to detail, and a willingness to seize opportunities for exponential growth.  Great companies, in our team’s experience, are those operating in a space with reasonably high barriers to entry, who have an excellent product or service, serve their clients well and understand their needs, and make decisions based on hard data and thorough market research.

What added value do you bring to the process? How can you further assist sellers in preparing them to be ready for exit?

At the Miami Family Office, we follow the founder’s original investment strategy to protect our family’s capital for future generations and grow that wealth through co-investments and direct investments.   Our goal is to identify other family office co-investors and acquisition targets that will provide a return on capital for the family.  Our primary investing focus is on acquiring portfolios of real estate assets or operating businesses, but we also consider one-off assets, such as a large operating business or a significant real estate property.

What is your typical investment horizon? How does your mission and goals for the fund impact your investment decisions and how you treat sellers’ businesses both short and long term?

As we’ve noted, our typical investment horizon is not fixed and we will likely stay in a company as long as it makes sense to do so.  Our reasons for exiting might be simply receiving an outstanding offer from a high-quality buyer that makes sense for us and our business partners; or it may simply be time to liquidate our holding after exceeding our target return and put that capital to use in a company that needs growth capital and where we can add tremendous value.  We would love to stay in a company for many years and we are committed to helping great businesses succeed long-term.

Tell us about your buy-side process including the time it typically takes from initial engagement, through indication of interest, due diligence and through final close.

We consider ourselves fairly nimble but we are always seeking to expedite our diligence process (without sacrificing any steps in the process).  We have an initial screening process that puts investments through our head of deal origination.  Once e-mails and conference calls have been exchanged, the investment committee will review the investment case, along with other potential allocations.  If we find a company or asset that meets our investment criteria, our patriarch has a private jet and our team will travel with relatively short notice to conduct an on-site visit.  We pride ourselves in quickly providing feedback, whether it is a yes or a no, within a week of our initial conversation and then the full diligence process will take a few more weeks depending on the level of scrutiny required and our familiarity with the asset class or investment.

Tell us something interesting about your fund, its founders or managers that is typically not widespread knowledge.

Our firm is a single family office that was formed to manage the wealth of a first-generation business executive with an impressive story.  We invite you to learn more in-person anytime.