How Family Offices Can Improve Acquisition Governance

Several forces push these decisions outside the office's normal machinery. They are personal, and process can feel intrusive applied to a principal's own choices. They are urgent, or presented as urgent, because a particular asset is available now. They are unfamiliar — few offices transact aircraft or vessels often enough to build institutional expertise. And they arrive through relationships rather than through a pipeline, which makes them feel already vetted.

There is also a structural issue. The office's investment team is not resourced or qualified to evaluate an aircraft's maintenance status or a construction programme's cost plan, and so responsibility drifts toward whichever external party is closest to the asset — often one whose remuneration depends on the transaction completing.

The consequence is not usually a bad outcome. It is an unexamined one: a decision taken on partial information, with the sequence set by external parties, and with little record afterwards of what was decided or why.

The single most effective governance intervention is also the simplest: write down the requirement before looking at the market. What is the purpose of the asset, what must it do, over what horizon, at what total cost, and what is the alternative to acquiring it?

Requirements written before candidates are seen are meaningfully different from requirements reverse-engineered from a preferred option. They make comparison possible, they make disagreement visible early, and they give the office a basis on which to decline an attractive proposition that does not fit.

The requirement should also include the alternatives seriously. Chartering rather than owning, leasing rather than buying, renovating rather than relocating, or continuing with the present arrangement are options with real economics, and an acquisition that cannot survive comparison with them should not proceed.

In private asset markets, advice and economic interest are frequently combined in the same party. Brokers are remunerated on completion and often on price. Yards, dealers and managers have interests in specification and in ongoing service relationships. Contractors have an interest in scope. None of this is improper, and these parties are often the most knowledgeable available.

What governance requires is that the office knows, for each participant, how they are paid, by whom, and on what outcome — and that at least the central judgments are informed by a party with no interest in whether the transaction completes. Technical assessment, cost planning and structuring advice belong in that independent category.

The practical test is straightforward: for each significant judgment in the process, can the office identify who reached it and whether that party benefits from a particular answer? Where the answer is uncomfortable, a second, disinterested view is inexpensive relative to the exposure.

Criteria convert preference into analysis. For any significant purchase they can be written on a single page: the requirements that must be met, the attributes that are desirable and their relative weight, the maximum total commitment including first-year operating cost, the conditions under which the office will withdraw, and the information that must be available before commitment.

Weighting matters because trade-offs are inevitable. An asset that is available immediately but imperfectly configured, or well configured but with an incomplete record, forces a judgment. Criteria set in advance make that judgment explicit rather than rationalised.

Criteria should also define what disqualifies. Unresolved title questions, incomplete records, damage history beyond a stated tolerance, or a structure that cannot be accommodated for tax reasons are matters better identified as disqualifying at the outset than debated under deal pressure.

Each asset class draws on a different table, and the office's role is to convene it rather than to populate it with whoever is already known. An aircraft requires aviation counsel, tax advice, technical inspection, insurance and management expertise. A vessel requires maritime counsel, survey, flag and registration expertise, and management. A construction programme requires design, engineering, cost consultancy, planning and construction counsel. A collection requires provenance, authentication, condition and title expertise.

Selection should be tested rather than assumed. Relevant recent experience in the specific asset class, jurisdiction and scale; the individuals who will actually do the work rather than the firm's reputation; availability against the intended timeline; and the basis of remuneration are the questions worth asking before appointment.

Briefing is where offices most often lose value. Advisers briefed separately by different people, from different documents, at different times, produce advice that cannot be reconciled. One consistent brief, distributed to all parties, costs nothing and prevents a great deal.

Options in private asset markets are rarely comparable as presented. Prices reflect different conditions, different inclusions, different maintenance or completion states and different residual obligations. Comparing them directly produces confident but unfounded conclusions.

Comparability is constructed by normalising each option to a common standard — what would it cost to bring this to the required condition, and what will it cost to hold and operate over the intended horizon — and then evaluating the adjusted figures. This is the same analysis the office would apply to an investment, expressed in the vocabulary of the asset.

The horizon matters. A five-year view and a twenty-year view rank options differently, particularly where maintenance cycles, technology obsolescence or resale liquidity differ materially between candidates.

The documentation required is modest: for each significant judgment, what was decided, on what information, by whom, and subject to what conditions. A page per decision is sufficient, and the discipline of writing it frequently exposes reasoning that had not been fully examined.

Its value appears later. When a maintenance liability emerges, a variation is disputed, or a subsequent principal asks why the asset was structured as it was, the record answers the question. Without it, the office reconstructs from correspondence and recollection, usually incompletely and usually at a moment of pressure.

This is also the mechanism by which advice is held to account. An adviser's view recorded at the time, with the assumptions on which it rested, is a materially different thing from a general recollection that they were comfortable.

Long processes need defined gates. Approval to proceed to market, approval to make an offer, approval to commit to inspection expenditure, approval to waive a condition, and approval to close are natural points at which the office should confirm that the decision remains within the framework agreed.

Escalation thresholds should be set alongside them: the variation value, the delay, the cost overrun or the diligence finding that requires the principal's attention rather than the team's. Without thresholds, either everything escalates or nothing does, and both failure modes are common.

Gates should be light. Their purpose is to create moments at which withdrawal remains possible, because the practical difficulty with significant purchases is that commitment accumulates informally long before it is documented.

Family offices experience turnover, and significant assets outlast the people who acquired them. The knowledge of why an aircraft was registered where it was, what the survey found, which items were accepted subject to holdback, and what the warranty position is tends to reside with individuals rather than with the office.

A single maintained file per significant asset — decisions, advisers, contracts, technical records, conditions and outstanding items — is the remedy, and it costs almost nothing to keep if it is kept contemporaneously. Reconstructing it later is expensive and usually incomplete.

This is also what allows the office to improve. Reviewing how a completed acquisition actually performed against the requirement and budget that justified it is the ordinary practice of any investment function and is rarely applied to purchases of this kind.

Closing is a milestone, not a conclusion. Operating cost, management performance, maintenance and compliance, insurance adequacy, warranty administration and eventual disposition all continue, and each is a place where value is preserved or quietly lost.

Governance after acquisition means periodic review against the assumptions made at purchase: is the asset being used as anticipated, is cost tracking the model, is the management arrangement performing, and does continued ownership still serve the purpose that justified it. These are unremarkable questions that are seldom asked because no one owns them.

None of this suggests replacing the office's advisers. Counsel, tax advisers, technical specialists, brokers and managers each do work that cannot be done elsewhere. What is usually missing is a layer above them: acquisition governance that establishes who advises, who decides, who has an economic interest, what information supports the decision, what conditions must be satisfied, and what record remains afterwards. That layer is inexpensive relative to the sums it governs, and it is the difference between a purchase that was made and a decision that was taken.