Know Your Strengths: How to Develop a Family Wealth Strategy
Many FOX members have asked about what considerations should go into developing a family wealth strategy after an operating company is sold. To them, I’ll often tell the story of Thorndale Farm CEO Oakleigh Thorne and his 20 year plan.
After Oakleigh completed his MBA in 1986, he went to work at Commerce Clearing House, Inc.—a company his family started in 1892. Oakleigh helped refocus the company’s energies, transforming it from a publishing company into a modern information technology company. He was promoted to CEO in 1993, and in 1996 led the sale of CCH for $1.9 billion to Wolters Kluwer, a Dutch publishing company.
When contemplating the liquidity event, Oakleigh recognized the need for a newly focused long term wealth strategy—both for himself, and for his family. He decided to focus on developing, and executing, a 20 year plan. While thinking through asset allocation, the first thing Oakleigh and his family all agreed upon was a desire to hold operating businesses. Entrepreneurship was in their family DNA, and so they decided to dedicate 20% of their liquidity to direct investments.
Having just successfully turned around a company’s prospects and sold it for a profit in less than a decade, Oakleigh and his family were interested in focusing on what they knew: running information technology companies. So he set out on a path to do more direct investing, hiring advisors to assist in managing the family’s other assets while spending his own time running the newly-formed Thorndale Farm LLC.
Today, Oakleigh’s son, daughter, and nephews are all still interested in the family business. They are active entrepreneurs who want to manage and build companies for the future, not just let others manage their assets. By following their passion for entrepreneurship and embracing a family mission of direct investment, Oakleigh Thorne and the rest of his family were able to see outsized returns compared to the public markets.
The lesson? Know who you are, and know your strengths. The direct investment strategy helped Oakleigh not only improve his returns vs. the public markets, but also encouraged family engagement by succeeding generations, having all grown up in an entrepreneurial environment where the family was involved with several operating businesses. Direct investing might not be right for everyone, but it was right for Oakleigh, and he had the sense to recognize and embrace that. I would encourage other families to embody the same spirit.