The company you buy will outlive the person who bought it.

It is a Sunday night at the end of October, at a kitchen table in Hinsdale. Call them the Larkspurs. Walt Larkspur is seventy-one. Four years ago he sold the packaging company his father started in a garage in Cicero, and the money now lives in a family office with three employees and a very good coffee machine. His eldest, Ellen, runs it. His son Daniel is a surgeon in Denver and is on the speakerphone, half listening. The youngest, Tess, is thirty-four and has opinions about everything. On the table is a banker's book about a corrugated-box plant in Rockford. Forty million dollars. The family would own all of it.

Walt is happy in a way the children have not seen since the sale. This is a business he understands. He knows the customers and the plant managers, and he can smell a bad quarter before the numbers arrive. He is right about all of that. What nobody at the table says out loud is that the person who owns this company in fifteen years will not be Walt.

We have sat at a good many of these tables. The deal is almost never the hard part.

Families are doing this as a matter of routine now. UBS surveyed 307 family offices in more than 30 markets between January and March of this year, families with an average net worth of $2.7 billion, and found direct private equity at 8% of the average portfolio for 2025. The year before it was 11%. Campden Wealth and RBC, whose North America report draws on 141 family offices surveyed between April and August of last year, found that about a third of their private equity exposure is through direct participation in companies and some 80% hold direct investments alongside their funds. The share moves with the cycle, but the habit has settled in.

When the Larkspurs put money into a buyout fund, the governance arrived in the box. A general partner decided. A partnership agreement said how, an advisory committee existed for conflicts, and the fund had an end date. Nobody at the kitchen table had to agree on anything except the wire. Buy the company yourself and all of that is gone. The governance is whatever the family writes down. Half of them write nothing, and the surveys say so.

In the UBS survey, half of the offices had a documented investment process, 49% had a board or similar body overseeing the office's work, 35% had a succession plan for the office itself, and 27% had an organized process to prepare the next generation. Campden Wealth and RBC found 69% of their respondents with a succession plan, up from 53% the year before, and report that the offices without one are almost exclusively first- and second-generation families. Walt's office is four years old. It is exactly the kind the surveys describe.

The governance is whatever the family writes down. Half of them write nothing.

Start with which pocket buys the company. Walt's shares in the old business sat in trusts his father set up, and the proceeds still do. If a trust is going to own a box plant in Rockford, Illinois law has something to say about it. A trustee must invest as a prudent investor would, judged by the portfolio as a whole and as part of an overall strategy, and has a duty to diversify unless the trustee reasonably believes that staying concentrated is in the beneficiaries' interests and furthers the purposes of the trust. Forty million dollars in one company is the opposite of diversifying. The rule is a default, and the trust's own terms can expand, restrict, or eliminate it, so the first document to read is the instrument, which was probably drafted when the children were small and nobody imagined a box plant.

Illinois also lets a trust name an investment trust advisor, who may direct the trustee on buying, holding, selling, and voting, and whose directions bind the trustee and every beneficiary. The trustee who follows them has no duty to second-guess and no liability short of willful misconduct. Families use this so that Walt can run the money while a bank holds the title. The subsection families skip makes the directing party a fiduciary, subject to the same duties and standards as a trustee. If Walt directs the trust to buy Rockford, he owes Ellen, Daniel, and Tess the duties a trustee owes. He will be judged on the file he kept, and he is not a man who keeps a file.

Who counts as family is nearly the whole of the federal rule that lets a family office skip registering as an investment adviser. A family office may have no clients other than family clients, must be wholly owned by family clients and exclusively controlled by family members or family entities, and may not hold itself out to the public as an investment adviser. Family means the lineal descendants of a common ancestor no more than ten generations back, with their spouses and spousal equivalents. A former spouse stays a family client after a divorce. An executive officer of the office is a key employee, and so is any other employee who has worked on its investments for at least twelve months. Both may invest alongside the family. The friend from the club who would like a piece of Rockford cannot. And when a family member dies and assets pass to someone who is not a family client, the rule treats that person as a family client for one year after legal title passes, and then it stops.

The rule is a list of people, and the Larkspurs know every name on it. A son-in-law is family. An ex-son-in-law still counts. There is no column for the friend from the club, and the friend gets in because somebody at the table was kind.

We know how it goes when nothing is written down, because one family's quarrel ran long enough to reach a court of appeals. In 1966 and 1967 Fred Koch gave all of his common shares in the company he had launched after the war to trusts for his four sons, equal shares for three of them and a lesser amount for the fourth. He died in 1967 and his son Charles succeeded him as chief executive. In 1980 a dispute over the management of the company set William and Frederick, with a group of cousins, against Charles and David, and the board voted to terminate William's employment. In June 1983 the dissident shareholders, who held 47.8% of the stock, sold it back to the company for $200 a share, about $1.1 billion in all. Two years later they sued, claiming the company had misrepresented and omitted facts that would have raised their valuation. Thirteen years after that the case went to trial, for eleven weeks. The jury found for the company and its officers, and the Tenth Circuit affirmed the judgment, with two exceptions, in February 2000. Thirty-three years from a father's last gift to the appeals court's opinion, which still sent two claims back to the trial court. We are not told, and will not guess, what passed between the brothers. We can read what their father wrote down, which was the gift. Nothing in the opinion describes a page about how four sons would decide anything together.

And yet.

Direct deals are a fine thing for a family that knows a trade. The Larkspurs know packaging and plants, and they know how a shop floor in Rockford earns its money. It may be the finest company they ever own. Our quarrel is with the missing page, and it is a short page.

We would give November to four short pages.

1. Decide which pocket buys before anyone signs a letter of intent. If it is a trust, read the instrument for its investment language and for any investment trust advisor. If Walt wants the wheel and the instrument does not give it to him, amend first. A new directing party has 90 days to notify every qualified beneficiary of the appointment. The children will find out either way.
2. Write the family's investment policy on one page. Who may propose a deal, who approves it, what a family member who runs the company is paid and who sets the number, how a sibling sells out and at what price, and who decides when Walt cannot. Every adult signs it, including Daniel.
3. List every person who will touch the deal and sort them into family clients and everyone else, with the rule open on the desk. Anyone in the second column either joins the office on the rule's terms or stays out of the deal.
4. Call Daniel in Denver on a weekday and ask him what he wants. Write down what he says and put it in the file.

In fifteen years the table will still be there, and so will the company. What the people sitting at it will have in front of them to read is the part Walt can still write.

Columns are the views of their authors. They are not legal advice and not the position of the firm.