Family Offices in Private Equity

Family offices are also investors in private markets. The UBS Global Family Office Report 2026, based on an online survey of 307 family offices conducted from January 22 to March 30, 2026, reports that private equity made up 17% of the average family office portfolio in 2025.

Mechanism

Section 202(a)(11)(G) of the Investment Advisers Act of 1940 excludes family offices, as the Commission defines them, from the definition of an investment adviser. The Commission adopted that definition as Rule 202(a)(11)(G)-1 (17 CFR 275.202(a)(11)(G)-1) in Release IA-3220, dated June 22, 2011, after the Dodd-Frank Act repealed the private adviser exemption effective July 21, 2011.

Under paragraph (b) of the rule, a family office is a company that satisfies three conditions.

1. It has no clients other than family clients, with a one-year allowance for a person who becomes a client through the death or involuntary transfer of a family member or key employee.
2. It is wholly owned by family clients and is exclusively controlled, directly or indirectly, by one or more family members or family entities.
3. It does not hold itself out to the public as an investment adviser.

The rule defines each term. A family member is a lineal descendant of a common ancestor, together with the spouse or spousal equivalent of any such descendant, provided that the common ancestor is no more than 10 generations removed from the youngest generation of family members (paragraph (d)(6)). A family client includes family members, former family members, key employees, and defined trusts, estates, charities, and companies that family clients fund or own (paragraph (d)(4)). A key employee is an executive officer, director, or trustee of the office, or an employee who participates in its investment activities and has done similar work for at least 12 months (paragraph (d)(8)).

A single family office serves one family. In Release IA-3220 the Commission stated that the exclusion “does not extend to family offices serving multiple families,” and, citing section 208(d) of the Advisers Act, treated separate offices for unrelated families that share substantially the same employees as a de facto multifamily office that may not claim it.

The rule was adopted in 2011 and has been amended once, at 81 FR 60457 (September 1, 2016).

Worked Example

The UBS Global Family Office Report 2026 (307 family offices, average assets managed of USD 1.3 billion) shows a 2025 global allocation of 8% to direct private equity investments and 9% to private equity funds or funds of funds, within a combined 42% allocation to alternative asset classes. The 2026 plan holds both figures unchanged.

Applied to a hypothetical family office holding the UBS average of $1.3 billion:

• Direct private equity: 8% × $1,300 million = $104 million.
• Private equity funds and funds of funds: 9% × $1,300 million = $117 million.
• Total private equity: 17% × $1,300 million = $221 million.

Regional averages differ from the global figure. In the same UBS table, US family offices (12% of respondents) reported 10% in direct private equity and 10% in funds, or 20% in total for 2025.

What It Means for a Limited Partner

When a family office commits capital to a private fund, it does so as a limited partner, and its legal status determines which exemptions a fund manager may rely on. Three classifications apply.

First, an office that meets Rule 202(a)(11)(G)-1 is not an investment adviser. Second, under Regulation D Rule 501(a)(12) (17 CFR 230.501), a family office is an accredited investor if it has assets under management above $5,000,000, was not formed to acquire the securities offered, and has its investment directed by a person able to evaluate the merits and risks.

Third, a company that holds not less than $5,000,000 in investments and is owned by two or more natural persons related as siblings, spouses or direct lineal descendants, or by their spouses, estates, or family foundations, charities and trusts, is a qualified purchaser under 15 U.S.C. 80a-2(a)(51)(A)(ii), and section 3(c)(7) of the Investment Company Act excepts an issuer whose securities are owned exclusively by qualified purchasers and that makes no public offering.

The UBS report observes that family offices “appear to be refining how much exposure they take and how it is structured,” while paying closer attention to liquidity, valuation, and concentration risk.

In Life Sciences and Healthcare

Family office interest in health care appears in the UBS report as a theme rather than a separate private equity allocation. Among the family offices surveyed, 33% reported a current allocation to AI in healthcare and 11% planned to add one within 12 months; for longevity the figures were 25% and 13%. The report describes AI-enabled healthcare as one of the “more targeted applications” that also stand out.

Those percentages measure thematic exposure across all instruments, so they do not isolate private equity. The report lists real estate (17%), consumer goods (11%), and banks and financial services (10%) as the most common sectors of the families’ operating businesses; health care is not among them.

Governing Authority and Sources

• Investment Advisers Act of 1940, section 202(a)(11)(G), as implemented by Rule 202(a)(11)(G)-1, 17 CFR 275.202(a)(11)(G)-1.
• Securities and Exchange Commission, Family Offices, Release No. IA-3220 (June 22, 2011); the rule text was published at 76 FR 37994 (June 29, 2011).
• Regulation D, Rule 501(a)(5), (a)(12) and (a)(13), 17 CFR 230.501.
• Investment Company Act of 1940, section 2(a)(51)(A), 15 U.S.C. 80a-2, and section 3(c)(7), 15 U.S.C. 80a-3.
• UBS, Global Family Office Report 2026 (seventh edition; survey fielded January 22 to March 30, 2026), including its asset allocation tables, “Themes,” and “About this report.”

Frequently Asked Questions

What is the difference between a single family office and a multi-family office?

A single family office serves one family, while a multi-family office serves several. Rule 202(a)(11)(G)-1 excludes an office from the Advisers Act only if it has no clients other than family clients and is wholly owned and exclusively controlled by family members or family entities. In Release IA-3220 the SEC stated that the exclusion does not extend to offices serving multiple families.

How do family offices invest in private equity?

Family offices invest in private equity directly and through funds. In the UBS Global Family Office Report 2026, the average office held 8% of its portfolio in direct private equity investments and 9% in private equity funds or funds of funds in 2025. A family office that meets Regulation D Rule 501(a)(12) is an accredited investor when it commits to a fund as a limited partner.

How much do family offices allocate to private equity?

The UBS Global Family Office Report 2026 reports an average private equity allocation of 17% in 2025 (8% direct, 9% funds), with the 2026 plan unchanged at 17%. The 307 offices surveyed averaged USD 1.3 billion in assets. Among US respondents, 12% of the sample, the 2025 figure was 20%.

Related Reference

This entry belongs to the pillar Healthcare Growth Equity. Related entries: Emerging Manager, Co-Investment, and The Illiquidity Premium.