This paper examines the distinct impact of family office (FO) investments on the competitive strategies of portfolio companies, as compared to other types of investors such as private equity (PE) and venture capital (VC) funds. We argue and demonstrate empirically that FOs influence portfolio companies in unique ways, fostering organizational structures and strategic choices that emphasize profitability over growth. Specifically, we find that FOs encourage strategies characterized by lower reliance on leverage, reduced risk, and a focus on stable, sustainable returns rather than aggressive expansion or high-risk ventures. Using a matched sample of investments by FOs, PE, and VC funds, we identify a relative reduction of 21% in company size, a concurrent increase in operational efficiency corresponding to 12%, and a 6% lower debt-to-assets ratio over the full post-investment period. These results are further particularly apparent in FOs’ solo and PE-related investments. Collectively, our findings suggest that FO investments lead to a distinct strategic trajectory for portfolio companies, contributing to a better understanding of the interplay between investor types and firm strategy.
