Governing Private Investments
Most family offices have more private investments than any other asset type. They're also the most challenging to govern. Not because anyone decided to skip the governance — but because the document flow is relentless and the lifecycle is long.
A single private investment generates a surprising amount of operational activity. The subscription agreement alone contains the commitment amount, ownership structure, fee terms, investment period, fund term, preferred return, carried interest, hurdle rate, and GP commitment — details that inform every subsequent decision about that position. Then come the capital call notices, distribution notices, quarterly financial statements, capital account reconciliations, K-1s, and periodic investment updates. Over a ten-year fund life, a single position can generate hundreds of documents.
But the governance story doesn't start at the subscription agreement. It starts at deal flow. The 95% of opportunities your team reviews and passes on don't disappear from a compliance perspective — they're part of the investment decision record. When a principal or Investment Committee asks, "What did we look at this year? Why did we pass on that fund?" — the answer should be documented, not reconstructed from memory.
The best offices treat the entire private investment pipeline as a governed process — from initial review through a structured due diligence workflow that ends in either an investment decision or a documented pass. When the decision is to invest, the governance continues through document execution, funding coordination, and the setup of ongoing compliance. When the decision is to pass, the opportunity is marked inactive with its due diligence record intact.
Critically, the best offices govern private investments as part of the family's broader governance architecture — because the investment is owned by a trust or entity that's also governed, and the documents, compliance obligations, and workflows that flow from the investment connect directly to that ownership structure. When those connections are visible, the governance compounds. When they're not, every workflow is assembled from scratch.
And the lifecycle doesn't end when a fund sends its final distribution. K-1 obligations can extend a year or two beyond dissolution. Offices that close out a position prematurely miss residual tax documents — and by the time they realize it, the tax deadline has created the urgency their system should have prevented.
If your principal or Investment Committee asked tomorrow for a complete picture — every deal reviewed this year, every pass with the rationale, every active position's commitment status, every K-1 received and every one still outstanding — how long would it take to assemble that? And how much of the answer depends on one person's memory?
Best-in-class private investment governance runs on a small number of structured workflows that repeat predictably across the life of every position. These exist as pre-built templates. Your Professional Services team can customize them to match your office's processes.
The structure is standard. The details are yours.
AARK™ in Action
| Pass → Inactive | Invest → Active Management |