For the wealthy, an investment that gets around funds’ high fees and may earn good returns. And for the companies, a needed infusion of cash when other options have disappeared.
By Paul Sullivan
Charles Widger, 76, sold his investment firm, Brinker Capital, shortly after the pandemic took hold. After decades of building the firm, Mr. Widger, whose name adorns Villanova University’s law school, ended up with several hundred million dollars.
But as he watched the economy come to a near stop and then haltingly reopen, he noticed previously healthy family businesses struggling to continue. He worried that many of these companies would not make it through the pandemic.
So, Mr. Widger said, he decided to invest in a new fund, Family Legacy Capital, which makes loans to struggling family-run businesses. “I can relate to what these people are going through,” he said. “I understand the challenges. I wasn’t a big conglomerate.”
The way he sees it, family businesses get needed help, and “there’s an opportunity for discerning investors to help these family businesses and get a good return.”
Wealthy families were interested in deals with other families before the pandemic set in. Many wealthy families had a lot of money to invest but weren’t interested in traditional investments or funds that charged high fees. They also understood firsthand how family businesses work and how family dynamics can influence them, for good or bad.
They had a range of investments to choose from: buying a stake in a family business; buying another family’s business outright; or banding together with other wealthy families to invest in a business, with a knowledgeable family taking the lead and all families bypassing funds’ management fees.
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