The growing presence of family offices in Belgium's investment ecosystem

Despite declining for the first time in 11 years, family office investment was still going strong in 2022. The PwC global report’s conclusions depict a sector that weighs strongly on businesses’ capacity to innovate: One third of the total capital invested in start-ups comes from family offices, team-ups are increasingly common, family investment funds are on the rise and family offices tend to move away from mega-deals to focus on mid-sized investments.

While these global trends also apply to Belgium’s own family offices, the country has its specificities. “Family-owned businesses have always been important in our country, and many of them are at their third or even fifth generation. As the families got bigger, they started creating single family offices to keep their estates together and invest strategically – sometimes back in the family business but more and more in the growth of the Belgian economy.” explains Nancy De Beule, M&A Partner at PwC Belgium.

If family offices invest massively in Belgian businesses, it’s also because they’re often welcomed with open arms. Belgian families running a business are generally keener to sell it to someone who understands the Belgian economy rather than, for instance, a private equity fund in the UK. “Both sides share the same DNA, values and culture, which explains at least partially the growing success of family offices in Belgium. When we are mandated by shareholders to sell a business and prepare a list of potential buyers, we see more and more family offices popping up. A few years ago, we counted three or four out of a list of 40, now it’s more like 15,” says Dirk Verheyen, Partner Corporate Finance at PwC Belgium.

What are Belgian family offices investing in? 

While family offices around the world primarily invest in start-ups, things are a bit different in Belgium where they tend to favor real estate and the business sectors they’re most familiar with. “There is definitely a link between where the family originally made their money and the type of assets they will invest in,” Dirk Verheyen explains. “Some do look at start-ups or scale-ups, but it’s a minority. This will probably change in the next few years but we’re below the European average level in this regard.”

What did change recently, however, is the emergence of co-investing, which sees several family offices join forces to push the growth of businesses aligned with their own investment goals. Two recent examples include Studio 100, which received support from 3D investors (family Donck) and Vic Swerts in 2020, and more recently Cargo Floor which intends to accelerate its growth ambitions thanks to investment from Smile Invest (Family Vandeurzen) and Essers family offices. As Dirk Verheyen points out, “we see more and more of these cross- family team-ups as opposed to traditional private equity investments, and again these joint ventures tend to focus on businesses both families know very well.”

This “stronger together” approach culminates with family clusters forming to invest in international funds of funds.

From recent crises to future challenges

The past few years have been a rather bumpy ride for all M&A acquisitions, with investments plummeting in 2022 due to the likes of inflation, growing interest rates, etc. Rather than new ventures, family offices tend to focus their attention on the optimization of prior investments.

For Nancy De Beule, future trends will notably depend on how the Belgian tax environment will evolve: “The Belgian tax system is not always business friendly and causes family offices to suffer from a competitive disadvantage. If they want to really compete with private equity funds, they need a clear vision and a unique strategy that makes them more compelling. For those family offices which have not reached maturity yet, this can prove very difficult. The same goes with ESG, which can both create or destroy value if not properly factored in family office strategies.”

So, what does the future hold? “We expect more professionalization, with more families co-creating multi-family office structures within the next few months and years,” Dirk Verheyen concludes.