As a sophisticated multi-family office with a 40-year history, Oxford is uniquely positioned to make direct private equity investments. Doing so allows us to create an incredibly strong alignment of interests between our investors and the management teams and employees at the underlying businesses in which we invest. By controlling the timing, duration and structure of the investment, as well as the composition of a company’s board of directors and the compensation and incentives of a company’s management team, we can ensure that our clients’ value-creation goals flow through every decision and aspect of a company’s operations. From capital allocation decisions right down to the day-to-day activities of hourly employees, all efforts are aligned towards maximizing value-creation.
Over the course of the past decade, family offices have increasingly been pursuing direct private equity investments – not just passively investing in traditional private equity funds or co-investing alongside a fund manager in select deals, but instead leading deals and making control investments in order to become majority owners of businesses. This form of investing can add meaningful alpha to an alternative asset portfolio; but the barriers to entry are high. Participating in this market requires building a deep team with a strong track record and having substantial capital available in order to be a credible buyer of businesses. Oxford, with its decades-long successful history of making direct private equity investments via its Mayfair program, is a well-established brand that has a robust pipeline of actionable opportunities. In the past year, the firm has meaningfully increased the resources dedicated to this component of our Aspirational Investing strategy in order to expand and enhance our ability to source, research, negotiate, structure and manage these investments and continue to offer our growing client base the opportunities to participate in this unique asset class.
The traditional 10-year private equity partnership lifespan, which drives the prevailing industry-standard five-year investment “hold” period, does not always align well with the timeline for true value creation at a small business, or with the motivations of a company’s management team. The basic economics of fund management can also push some investors to adopt a hurried, imprudent approach to investment pacing. Oxford’s flexibility with respect to timing, duration and structure allows our Mayfair team to deploy its best thinking, without artificial time constraints, in order to create better alignment with our management team partners. It also allows us to maximize our ability to drive value creation based on fundamentals, as opposed to market cycle timing or simply deploying leverage. Importantly, this approach lends itself to partnering with great management teams, which has historically been the most reliable and sustainable strategy for generating alpha. Furthermore, Oxford’s longstanding participation in this form of investing and the development of its deep, specialized team of Mayfair investment professionals enables us to evaluate hundreds of thesis-driven, direct private equity investments per year, a time-consuming and labor-intensive effort that we can afford, but which many family offices simply cannot support.
Oxford was in a unique position of strength decades ago when the firm began making direct private equity investments on behalf of its clients. As the firm has grown and continued to invest in this effort, so too has the opportunity set grown. Direct private equity investing has the potential for meaningful long-term value creation and being able to offer these unique, alpha-generating investment opportunities is an important component of providing our clients with what we believe are best-in-class Aspirational solutions.