• Economy
  • Editor’s Pick
Money Rise Today – Investing and Stock News
  • Investing
  • Stock
Stock

Family offices are giving top staff equity, profit shares in battle for talent

by July 30, 2024
written by July 30, 2024

A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high net worth investor and consumer. Sign up to receive future editions, straight to your inbox.

Family offices are increasingly offering lucrative shares of equity and deal profits to staff amid a growing battle for talent, according to a top family office attorney. 

As family offices surge in size and number, and compete more directly with private equity firms and venture funds for top staff, they’re sweetening their compensation plans. Along with salaries and bonuses, many are now offering equity stakes and various forms of profit-sharing to give employees more upside and incentives.

Patrick McCurry, partner at McDermott Will & Emery LLP based in Chicago, who works with single-family offices, said family offices have to adapt to a more competitive hiring landscape.

“There is a war for talent,” McCurry said. “Family offices are competing for talent against each other, and against traditional private equity, hedge funds and venture capital.”

Family offices, the private investment arms of single families, are also shifting to profit shares as a way to better align the incentives of the staff with the family.

“It helps get everyone rowing in the same direction,” McCurry said.

In an article in the latest UBS Family Office Quarterly, McCurry said there are three common ways single-family offices are paying staff with deal and equity plans.

A profits interest gives an employee a share of upside in a deal or basket of deals. So if the family office buys a private company for $10 million and sells it for $15 million, the employee may get a share (say 5% or 6%) of the $5 million profit, or profit above a target or “hurdle.” If there is no profit, the employee gets no share. “Basically they don’t participate unless there is growth,” McCurry said.

They also save on taxes. Since the profit is a capital gain, the employee typically pays the long-term capital gains rate — which tops out at 20% — rather than the ordinary income rate, which can reach 37%.

A co-investment allows an employee or group to put their own money in an investment, effectively investing in a deal alongside the family. Often the family will lend a portion of the money to the employee for the investment, known as a leveraged co-investment. So an employee may put $100,000 into an investment, borrow another $200,000 from the family, and get a $300,000 stake.

If the deals make no profit, the employee loses their investment and potentially has to repay part of the loan. Family office owners like co-investments since it encourages employees to make less risky deals. They often pair co-investments with profit shares to create both upside and potential downside to staff.

“With co-invests you get a downside so you could get fewer ‘moonshot’ deals that would be high risk,” McCurry said.

If a family office is too complicated, with dozens of trusts, partnerships and funds that make it hard to issue profit shares or co-investments, they can sometimes offer phantom equity — notional shares of a basket of assets or fund or company that track performance without actual ownership. 

Phantom equity can be like a 401(k) plan that’s deferred tax free. But eventually it’s usually taxed at ordinary income rates, so it can be less attractive to the employee.

“It’s not as common, but it’s mainly used for simplicity,” McCurry said.

Because they serve a single family, family offices have more flexibility than many companies when it comes to designing pay plans. Yet McCurry said family offices that want to compete for talent need to start offering more forms of equity.

“There is a crowd effect,” he said. “The more family offices start offering it, the more employees expect it. You don’t want to be the outlier when everyone across the street is offering it.”

This post appeared first on NBC NEWS
0 comment
0
FacebookTwitterPinterestEmail

previous post
White House website praises lifetime Supreme Court appointments as Biden pushes term limits
next post
Venezuela’s Maduro faces political meltdown: Rivals claim election ‘fraud’ proof, police crackdown on protests

related articles

LimeWire acquires Fyre Festival, asking ‘What Could Possibly...

September 17, 2025

Convenience stores are eating fast-food chains’ breakfast

September 15, 2025

Trump administration ramps up pressure on Labor Department...

September 11, 2025

Kenvue stock drops 10% on report RFK Jr....

September 8, 2025

Mortgage rates see biggest one-day drop in over...

September 5, 2025

Paramount mandates 5-day-a-week return to office ahead of...

September 5, 2025

Apple has survived Trump’s tariffs so far. It...

September 4, 2025

Trump family’s American Bitcoin makes stock market debut

September 4, 2025

Disney to pay $10 million to settle FTC...

September 4, 2025

Crash victims’ families prepare to make what could...

September 3, 2025
Enter Your Information Below To Receive Free Trading Ideas, Latest News, And Articles.


Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

Latest News

  • Biden top adviser Anita Dunn leaves White House for Super PAC supporting Harris

    July 30, 2024
  • Progressive Dems rage at Biden for giving Trump the spotlight during final weeks in office

    December 9, 2024
  • New Schiff leak claim from whistleblower echoes years of similar accusations

    August 20, 2025
  • Iran seeks China, Russia help to stall UN sanctions ahead of nuclear talks with Europeans

    July 21, 2025
  • Biden strangely calls Mike Johnson ‘dead on arrival’ in response to criticism of proposed SCOTUS reforms

    July 30, 2024

Popular Posts

  • 1

    Secret Service admits leaning on ‘state and local partners’ after claim it ignored Trump team’s past requests

    July 21, 2024
  • 2

    Five more House Democrats call on Biden to drop out, third US senator

    July 19, 2024
  • 3

    Elon and Vivek should tackle US funding for this boondoogle organization and score a multimillion dollar win

    December 4, 2024
  • 4

    Forex Profit Calculator: Maximize Your Trading Potential

    July 10, 2024
  • 5

    Biden calls to ‘lower the temperature’ then bashes Trump in NAACP speech

    July 17, 2024

Categories

  • Economy (829)
  • Editor's Pick (6,047)
  • Investing (634)
  • Stock (926)

Latest Posts

  • Dem senator plows ahead with war powers resolution despite ceasefire

    June 24, 2025
  • Shutdown fears move House Republicans to protect military paychecks

    September 19, 2024
  • Democrat godfathers make Biden offer they hope he can’t refuse

    July 19, 2024

Recent Posts

  • Leverage in Trading: Understanding Its Impact and Risks

    August 16, 2024
  • White House Cabinet officials rally around Biden despite backlash over his wife taking control of meeting

    September 24, 2024
  • With 4 days until voting starts, ‘election season’ kicks off sooner than you think

    September 2, 2024

Editor’s Pick

  • Michelle Obama wore nearly $3K pantsuit to DNC while touting her parents were ‘suspicious’ of the wealthy

    August 21, 2024
  • Sam Altman’s OpenAI backing initiative headed by several anti-Trump staff pushing liberal causes

    January 18, 2025
  • New poll reveals what Americans think of Trump’s transition decisions

    December 12, 2024
  • About us
  • Contacts
  • Privacy Policy
  • Terms & Conditions

Disclaimer: moneyrisetoday.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2025 moneyrisetoday.com | All Rights Reserved

Money Rise Today – Investing and Stock News
  • Economy
  • Editor’s Pick
Money Rise Today – Investing and Stock News
  • Investing
  • Stock