Articles · Raising capital for the holding company

Family office, private equity or your own network: who should fund your holding company?

For most first-time holding companies, the first money should come from your own network, because those investors accept minority positions, smaller checks and a long horizon. Family offices fit once you have a record and want patient capital in larger checks. Private equity fits when you are willing to give up control and sell on its timeline. As of October 2026, self-funded search investors commonly ask for a 2x step-up, an 8–12% preferred return and a 1.0x liquidation preference, so even network money has a price.

How do the three sources compare?

The useful comparison is on three questions: what terms they ask for, who controls the company, and how long they will wait for their money.

  • Your network. Friends, former colleagues, customers, local business owners and angel investors. Terms are usually close to self-funded search terms. You keep control. The time horizon is whatever you agree in writing, and it can be long.
  • Family offices. Investment arms of wealthy families. Terms are negotiated case by case and vary widely. Some want a board seat or consent rights. Many can hold for a long time because they are not running a fund with an end date.
  • Private equity. Funds that buy companies with committed capital from their own investors. They usually want control and a defined exit, because their fund has a fixed life. Their returns come from selling.

A holding company that plans to keep its businesses needs capital that can wait. That is the main reason the source matters more than the price.

If you are raising for the first time

Start with people who already know your work. It is the source most likely to back a person before a deal, and the one most willing to stay a minority. Search deals are often syndicated widely. The Stanford 2024 search fund study counted about 16 investors per deal.

Expect terms modeled on self-funded search. As of October 2026, these commonly include:

  • A 2x step-up on investor capital, down from about 3x in earlier years.
  • An 8–12% preferred return.
  • A 1.0x liquidation preference.
  • Investors targeting 30–40% IRR.
  • The buyer keeping roughly 60–80% of the equity, with 75–90% of the price funded by SBA debt.

The trade-off is effort. Many small checks mean many conversations, a longer cap table and more investor reporting. Each investor also adds to the count of people who need to be treated fairly if the company later lists.

When does a family office make sense?

A family office makes sense when you need larger checks and you have something to show. That might be a business you already own, a closed acquisition, or a clear acquisition program with a pipeline.

The advantage is the time horizon. A family office can own a minority stake in a holding company for many years without forcing a sale. That fits a buy-and-hold model.

The cost is concentration. One family office can become your largest investor. Its consent rights, board seat or change of strategy can shape every later decision. Read the governance terms as closely as the economics.

When does private equity make sense?

Private equity makes sense if you want to run a platform and are content to sell it. It rarely fits a holding company that intends to keep what it buys.

PE is already active in many of the fragmented industries holding companies target. In HVAC, of 25 deals tracked in the first half of 2026 by PKF O'Connor Davies, 14 were PE add-ons and 3 were new PE platforms. Carta's data shows PE home-services add-ons running about 4x as common as platform deals in HVAC. If you take PE money in these industries, you are often building the fund's platform.

A middle path is the independent sponsor. You find and run the deal, and institutional capital funds it deal by deal. A 2025 Citrin Cooperman survey of more than 170 independent sponsors found:

  • A closing fee most commonly of 2% of transaction value (56% of respondents).
  • A management fee most commonly of 5% of EBITDA (69% of those charging a percentage of EBITDA).
  • Minimum carried interest of 10–25%, with 64% reaching a maximum carry of 25% or more.
  • A hurdle of 8–9.9% (63%), and a full catch-up for 74%.

Those economics can be good. The capital partner usually controls the exit, so the business is sold when the fund needs it sold.

Worked example: what each source costs on one deal

Take the site's illustrative business: $1M of annual earnings bought at 4x, a $4M price.

  1. Independent sponsor with institutional capital: closing fee at 2% x $4M = $80,000. Management fee at 5% x $1M EBITDA = $50,000 a year. If the investors' equity gains $2M above the hurdle, carry at 20% is $400,000 to you; at 25%, $500,000. The capital partner usually decides when that gain is realized.
  2. Network investors on self-funded terms: you keep roughly 60–80% of the equity, and investors receive an 8–12% preferred return before you share in profits. No fee income, but you own the majority and choose when, or whether, to sell.
  3. Family office: terms vary. If it buys the same minority stake on similar terms, the economics resemble the network case, with fewer investors and more influence for one of them.

Fees and carry are not the full comparison. On the site's illustrative math, that $1M of profit inside a platform valued at 10x supports $10M of value. Owning most of that, and deciding when to realize it, is the reason to build a holding company. Real multiples vary, and the platform value only exists if you integrate well and do not overpay.

Whichever source you choose, the raise is still a securities offering. The structure and exemption should be set with securities counsel before terms are discussed.

Where these numbers come from: Self-funded search terms are from Smash VC and Searchfunder. Investors per deal is from the Stanford 2024 study as summarized by Searchfunder. Independent sponsor fees and carry are from the Citrin Cooperman 2025 survey. HVAC deal counts are from PKF O'Connor Davies and Carta. The $4M and $10M figures are the site's illustrative math.

Related questions

Can I mix network money and a family office?

Yes. A common sequence is network money for the first deal and a family office once there is a record. Set the first round's terms so a later, larger investor does not need to rewrite them.

Will private equity invest in a holding company that never sells?

Rarely on its standard terms, because a fund with a fixed life needs exits. Some longer-hold vehicles exist, but expect to negotiate liquidity rights in place of a sale.

How much control do I give up with a minority investor?

It depends on the documents, not the percentage. Board seats, consent rights over acquisitions and debt, and information rights can give a minority investor real control. Review them with counsel before signing.

What comes next

Once you know whose money fits, decide the vehicle it goes into: a fund, the holding company itself, or deal-by-deal SPVs.

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Meraki Dealmakers is a service of Meraki Partners, LLC, an advisory firm. It is not a broker-dealer, investment adviser, business broker, law firm or accounting firm. This article is general information, not legal, tax or investment advice.

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