A recent Bloomberg article examining the growing appetite for direct investing among family offices captured both the opportunity and the challenge of the current moment. Family offices are allocating more capital directly, motivated by greater control, potentially stronger economics, and growing skepticism that the fees and constraints associated with traditional private equity funds always justify the value they provide. At the same time, Bloomberg noted a structural reality familiar to many family offices: even well-capitalized families generally operate with smaller teams and fewer internal resources to source and thoroughly vet investments than large institutional investors.
That distinction matters because direct investing does not simply replace an investment manager. It replaces an institution.
Private equity firms bring far more than capital to a transaction. Behind every investment is an infrastructure developed over decades: disciplined investment committees, operating partners, specialized diligence providers, industry experts, legal advisors, and investigative resources that work together to evaluate not only the business, but also the people behind it. Family offices increasingly have the capital, experience, and relationships to lead transactions themselves, but many remain intentionally lean organizations. As they assume greater control over investments, they also assume responsibility for capabilities that institutional investors have long viewed as essential.
The answer is not necessarily to build all of those capabilities internally. Indeed, doing so could undermine some of the very qualities that make family offices effective direct investors. Bloomberg's discussion highlighted the importance of relationships as a particular family office advantage. Deep networks, accumulated knowledge, patient capital, and the ability to make decisions without navigating a large institution can create an information and execution advantage that is difficult for traditional investment firms to replicate.
The challenge is preserving those advantages while selectively introducing institutional disciplines where they can strengthen the investment process.
One of the most important is investigative due diligence.
Financial, legal, and tax diligence answer critical questions about the business. Investigative diligence answers a different set of questions: Who are the people behind the opportunity? What litigation, regulatory history, business relationships, reputational concerns, or undisclosed conflicts might not appear in financial statements or data rooms? Those questions become especially important in private transactions, where information is inherently less standardized and transparency often depends on the parties involved rather than public reporting requirements.
In the aftermath of transactions that ultimately unravel, it is often revealed that the intelligence capable of changing an investment decision was not entirely absent. Rather, it existed beyond the boundaries of conventional diligence. Public records, litigation histories, regulatory actions, business relationships, reputational indicators, or other contextual information frequently prove significant only in hindsight. Sometimes the information was never sought. Sometimes it was identified but its significance was not fully appreciated. And sometimes those conducting the diligence simply did not know where to look. The lesson is not that every investment conceals hidden risk, but that reducing uncertainty often depends as much on asking the right questions as it does on analyzing the information already in hand.
At Jetty Partners, our experience conducting investigative due diligence for family offices and other sophisticated investors has reinforced how important that distinction can be. The issues that ultimately matter are not always the most obvious at the outset of an engagement, and meaningful intelligence may emerge from litigation and regulatory records, prior business relationships, reputational history, discreet source inquiries, or connections among people and entities that are not apparent from transaction materials alone. The value of experienced investigative diligence lies not simply in accessing more information, but in knowing where to look, recognizing what matters, and placing what is found in the context of the investment decision.
For family offices, this work is most effective when conducted by professionals who understand not only investigative diligence, but also how family offices evaluate opportunities, make decisions, and navigate private transactions. That combination allows the work to be appropriately scoped, discreetly conducted, and focused on intelligence that is relevant and actionable. Family offices need not replicate the organizational structure of a private equity firm to benefit from institutional-quality diligence; specialized capabilities can be brought into the investment process where they add value.
Ultimately, strengthening family office direct investing is not about becoming more like private equity. It is about preserving the qualities that make family offices uniquely effective investors while selectively adopting the disciplines that can make better direct investment decisions possible.
About the Authors
Jordan Arnold is CEO and Founding Principal of Jetty Partners, where he advises family offices, investment executives, and other clients on investigative due diligence, risk, and high-stakes decision-making. A former Manhattan prosecutor, Jordan has spent more than a decade as a consultant and trusted advisor to single family offices.
Matthew M. Girgenti is a Managing Consultant at Jetty Partners whose work focuses on complex investigations, due diligence, and broader risk matters. A lawyer, he previously served as Counsel in WilmerHale's Investigations and Criminal Litigation Group, representing financial institutions, multinational corporations, and other clients in complex regulatory and investigative matters.