Entrepreneurs understand private companies better than most investors. The discipline after a sale is to decide how much of the family's capital can afford to be locked up, and for how long.

The wrong question and the right one

A founder who has just sold a business is often asked whether private equity, venture capital or private credit belongs in the new portfolio. It is a reasonable question, and the answer is usually yes. But it is not the first question. The first question is whether the family's liquidity plan can support the commitment – through capital calls that arrive on the fund's timetable rather than the family's, through distributions that may come later than modelled, and through periods when the value of the holding is uncertain and cannot be realised.

Private markets reward patience. They punish the investor who needs money back at the wrong moment.

Why liquidity matters more now

Family offices remain substantial private-market investors, but their behaviour has shifted. UBS reports that private-market allocations among surveyed family offices averaged 21% in 2024, while those planning changes for 2025 intended to bring the average down to 18%. The reasons given are instructive: subdued deal activity has slowed exits, acquisition activity has been muted, and financing costs are higher. Capital that was expected to return and be recycled is staying in the ground longer.

The wider financial picture adds caution. The IMF's Global Financial Stability Report for October 2025 points to stretched valuations, pressure on sovereign-bond markets and the growing role of non-bank financial institutions, and notes strained liquidity among vulnerable borrowers in leveraged-loan and private-credit markets. None of this argues against private markets. It argues for knowing exactly how much illiquidity a family can carry before adding more.

Six things to assess before increasing exposure

  • Capital calls. Commitments are drawn over several years. Model the full schedule of unfunded commitments across every fund and co-investment, and hold the capital to meet them in assets that will be available when called – not in other illiquid positions.
  • Distribution timing. Build the plan on conservative assumptions about when money returns. A fund that was expected to distribute in year six may distribute in year nine. The family's obligations, spending, tax, philanthropic, or otherwise should not depend on the optimistic case.
  • Concentration. A founder who has sold one company often keeps a stake in it, or in the acquirer, or in businesses in the same sector. Add private-fund exposure to the same industries and the family may be more concentrated after the sale than before it. Measure the total, including what is held outside the investment portfolio.
  • Valuation uncertainty. Private holdings are valued periodically and by judgement. Treat reported values as estimates, and avoid borrowing against them or counting on them for near-term decisions.
  • Debt obligations. Any borrowing – against the portfolio, against property – creates a fixed call on liquidity that sits alongside the capital calls. The two should be planned together.
  • Near-term family requirements. Houses to be bought, children to be educated, a new venture to be funded, a tax liability from the sale itself. List what the family will need in the next three to five years, in cash, and ring-fence it before a single private commitment is made.

A liquidity plan first

The output of this exercise is a simple table: what the family needs, when, and from where it will come. Against that, the private-market programme can be sized. In our experience the answer is rarely a single percentage. It is a ceiling on unfunded commitments and a floor on liquid assets, with a pacing plan that spreads commitments across vintage years so that no single year's calls or disappointments can disturb the family's life.

How we approach it

At Otoma Group we build investment strategies around our clients' objectives and the wider structure of family capital. In private markets we select opportunities with rigour, and where it makes sense we invest our own capital beside our clients. We stay involved from due diligence through to the final distribution. That involvement begins, always, with the liquidity plan.

If you are weighing a private-market programme after a sale, we would welcome the chance to work through the numbers with you.