Media & Publications

Read our Publications

Blockchain &
Cryptocurrencies

This is a piece on a (relatively) new piece of technology that is dominating our discussions and the media at the moment.  The reason that there is so much discussion is that blockchain is believed to be able to revolutionise the way we transact and trade.

There is also the whole issue around the rise in cryptocurrencies (see comments below) which has given the topic an added spice and has led to some interesting comments from the likes of Jamie Dimon (CEO of JP Morgan) to call it a “fraud” amongst others.

There are so many people discussing blockchain today that the terminology has become incredibly confusing. It has, in other words, become a madness of markets with everyone talking about it and few understanding it.

The only agreement is that this is a shared system, which means that more than one player has to be in the game for a blockchain development to work.

I will therefore endeavour to give a high-level overview to the current situation and hopefully prompt an enthusiasm for more information.  In other words, I can only scratch at the surface for this article.

 

What is Blockchain?

Currently, most people use a trusted middleman such as a bank to make a transaction, but blockchain allows consumers and suppliers to connect directly, removing the need for a third party, in a digital format.

Using cryptography to keep exchanges secure, blockchain provides a decentralized database, or “digital ledger”, of transactions that everyone on the network can see. This network is essentially a chain of computers that must all approve an exchange before it can be verified and recorded.

By design, blockchains are inherently resistant to modification of the data.  Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks, which requires collusion of the network majority.

The technology can work for almost every type of transaction involving value, including money, goods and property. Its potential uses are almost limitless: from collecting taxes to enabling migrants to send money back to family in countries where banking is difficult.

Blockchain could also help to reduce fraud because every transaction would be recorded and distributed on a public ledger for anyone to see.  In fact, the use of blockchain is almost unlimited in instances where two parties need to transact securely and swiftly.

The key issue here is that it does away with a middleman (think a bank, a lawyer, a Government and so on) so a lot of businesses and their respective business models could be disrupted by this technology.

 

Who is developing Blockchain ideas?

According to the World Economic Forum investment in Blockchain will increase significantly in the next decade, as banks, insurers and tech firms see the technology as a way to speed up settlements and cut costs as well as other applications.

For example, in banking, there is no blockchain. There are just a range of areas where this technology is being applied to banking processes and could save billions of dollars. For example, Santander produced a white paper that estimated more than $20bn a year could be saved in clearing and settlement alone. For this reason, dozens of start-up companies are developing settlement coins that could process post-trade clearing in minutes or even seconds at almost no cost.

Other companies are racing to adapt blockchain include UBS, Microsoft, IBM and PwC. The Bank of Canada is also experimenting with the technology.  Currently the London Stock Exchange is developing a Blockchain settlement system with the Italian Stock Exchange.  Finally, the Royal Mint (aged 1,100 years and going strong) has just launched its own Blockchain and digital currency to purchase gold.

 

When was this technology “invented?”

The first distributed blockchain was conceptualised in 2008 by an anonymous person (or group – there is a lot of speculation on this) known as Satoshi Nakamoto and implemented in 2009 as a core component of Bitcoin (note the capital “B”) where it serves as the public ledger for all transactions.

The invention of the blockchain for bitcoin (note the small “b”) made it also the first digital currency to solve the double spending problem without the need of a trusted authority or central server (this is a key component as preventing someone from spending their money twice is very complex). The bitcoin design has been the inspiration for other applications and cryptocurrencies, especially as it needs to be “mined” (this is a whole article in itself).

 

What is a Cryptocurrency?

A cryptocurrency is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions, to control the creation of additional units, and to verify the transfer of assets.

The best-known example is bitcoin, but there are now hundreds of them in circulation.  The top 5 are listed below and the total Market Cap of all Cryptocurrencies is now $309 billion, according to Coinmarket (https://coinmarketcap.com/).

Putting this into perspective the crypto market is now a similar size as Exxon Mobil, which has a market capitalization of $340 billion (at the time of going to press – the price is quite volatile at present).

  • Bitcoin – 62%
  • Ethereum – 14%
  • Bitcoin Cash – 5%
  • Ripple – 3.5%
  • Litecoin – 1.5%

 

Why is Blockchain the enemy of the State?

Gold was originally the currency of choice for Governments.  However, they could only print as much money as they had gold supply.  This was the era of the Gold Standard.

In 1914, shortly before WW2 the British, French and German Governments all took their countries off the Gold Standard (the US followed suit in 1971 with President Nixon) so they could print more money to pay for the ensuing war.  This was the beginning of Fiat Money, meaning money by command.  You must accept this money as payment for goods and services.  Crucially you also need to pay taxes in it too!

By manipulating the money system and coming off the gold standard, they enabled themselves to both print money and run up deficits (and indeed pay for very costly wars).  Crucially as the money is not backed up by Gold (or indeed anything else) there is (almost) no limit on how much can be created.

At present, we live in a world where the State looks after our birth, our education, our health, often our employment, our old age and even our burial.  It was not always like this.

In the UK, the move to a large state model began in the late 19th Century with compulsory education as one of the first pieces of legislation.  The US began their own path in 1913 when income tax and the formation of the Federal Reserve Bank (the Fed) was introduced.

Whichever side of the political debate you are on the large state model is only possible when Government controls money.  If money becomes independent, then Government struggles to fund itself and therefore loses control.  This would also apply to Banks and big business where they have been de facto the only source (or a very limited source) of information or money.

This explains why big business and Governments (China for example) have been big detractors of the technology and particularly the crypto currencies.

 

How will Blockchain change the world?

Bitcoin has been dubbed “money without Government” and “money without borders.” When you are using a cryptocurrency via the Blockchain suddenly capital controls do not apply as they once did.  This frees up the possibilities for money laundering and other illicit activity, of course, but it also frees up people.

The implications of this possibility to instantly transfer wealth or ownership across borders without interferences are I think considerable.  In this new paradigm, it would mean borders would lose much of their significance.

The monopoly on money and payments that Banks have held so long is under threat from cheaper, more efficient systems.   The implications for banking as we know it are considerable, as suddenly is it easy to move money and goods around without anyone (read Government) knowing about it.  There is going to be a lot of friction between know-your-customer, anti-money laundering regulations and other regulations, particularly between the developing and the developed worlds.

The internet had a big impact on the world as it made communication super easy, but it did show that the money system doesn’t work very well.  If blockchain becomes mainstream it will grow bigger and better over time and will increase commerce.  As a result, it could unleash a huge global economic boom (especially to areas in the world where there is a mass of “unbanked”).

The current technology has laid the foundations for a dramatic increase in exchange, and of course exchange is the crucial process by which mankind prospers and progresses.

 

Should you buy a cryptocurrency?

In the process of writing this article (from September 2017 onwards) I started to trade crypto’s and bought bitcoin, Ethereum and Litecoin.  I have now subsequently sold all of my Litecoin and put it all into bitcoin whilst retaining the Ether.  My portfolio at the time of writing is up c40% (I would also add I am investing only modest sums at this stage).

Some would argue that we are in the throes of a mania not seen since Tulips, Railroads and the dot com bubble while others would argue that we are experiencing an epoch changing event.  Personally, I found that by investing a small sum and taking part I was better able to articulate my thoughts in meetings and over coffees and as a result have kept a close interest on the topic.  Time will tell which currency will prevail (think of the battle between VHS and Betamax video in 1980’s).

Our clients are also beginning to ask about this area and one in particular is considering the implications of an ICO (think IPO but in tokens / coins).  Undoubtedly these conversations have stemmed from my interest and activity on the topic.

 

Conclusion

Trust is a risk judgement between different parties, and in the digital world, determining trust often boils down to proving identity (authentication) and proving permissions (authorisation). This is in essence what the blockchain allows you to do.

All in all, blockchain may be confusing and appear close to madness at the highest level but, look under the hood, and the next generation of financial systems are being developed by the world’s leading infrastructures, based upon this technological change.

Therefore, it is not just important, but fundamental.

 

 

Mark Estcourt
Founder & CEO
Cavendish Family Office
mark@cavofo.com / 07973 634 185

 

 

Cavendish Family Office is an independent, creative and solutions based Multi Family Office in London, Monaco and Dubai.

Cavendish Family Office serves clients from all over the globe including the USA, Europe, Middle East and Asia. We also help clients from unusual and high risk geographic jurisdictions or with political connections, such as PEPs.

We are used to dealing with complexity and clients who have found it difficult to receive a service from the traditional banks, investment managers, and other institutions with overly sensitive and vanilla compliance and on-boarding procedures.

Cavendish Family Office assists in all aspects of wealth including Tax & Structuring, Accounting, Investment Management, Real Estate, Commodities, Alternative Assets (Art, Cars, Jewellery and so on) as well as Concierge. We achieve this by utilising our wide range of strategic partners which are selected to meet our client’s needs and requirements. We are independent in thought, word and deed.

We also have expertise in nurturing the “Next Gen” helping shape the family’s future legacy and ensuring that the wealth is maintained for generations to come.

How to mitigate
digital footprint risks?

We are delighted to co-author this White Paper with our friend and strategic partner Meglena Petkova of Digitalis Reputation.

 

Managing vulnerabilities in your digital footprint

As the world moves increasingly online, most of our daily lives are recorded on some sort of electronic record, but what’s worse is that what happens online is beyond our control, in the hands of social media, search engines and other much less visible web platforms.

Whilst it’s fair to say that every individual could be the victim of his or her own digital footprint, it is those more publicly visible people who are most at risk – from High Net Worth Individuals (HNWIs), their families and businesses through to well-defined, high-risk groups such as those connected to politics. For such groups, even seemingly harmless information can be misinterpreted, spun and used by hostile third parties to expose private activity, attack reputations, and even do serious harm.

Maintaining a low profile is often important to influential figures, especially when it comes to ensuring the protection of their families. However, counterintuitively, it is the digital space which remains overlooked and lacks risk assessment by those who desire confidentiality and privacy.

 

The “Second Layer” and the Deep Web as a source of harmful information

Known elements of a digital profile exist in the open for any unauthorised party to view indiscriminately. News stories, profile pieces and social media accounts offer a wealth of data that may reveal an individual’s interests, whereabouts and extended social circle.

Far more data may be gleaned, though, about an individual by mining the footprints of the “Second Layer”. The social media accounts of those close to a HNWI often unwittingly divulge sensitive information, even where the target individuals themselves refrain from social media activity. Family members are often the prime information targets of hostile third parties. It can take as little as four hours to assemble a family tree via freely available public records online and then to track down and monitor the digital activities of this “inner circle”.

 

Investigative Journalists

Investigative journalists are also increasingly turning to new tech-powered tools to source stories in a time-efficient manner. The news site Vocativ and The Press Association’s RADAR project (Reporters and Data and Robots) use Artificial Intelligence to trawl the deep web for the information not returned readily by search engines. Documents like spreadsheets, comment chains in forums and chat rooms and even information from company databases often exist online without being visible in a search engine like Google. In addition, new material is published online every second and old, paper archives are being digitised every day.

The younger generation of those families subject to greater public attention are increasingly coming under fire for the material posted online. Sites like the Daily Mail publish regular roundups shaming the “Rich Kids of Instagram”. In some cases, affluent people also are public figures whose children can be easily tracked on Twitter, Instagram, Snapchat, Facebook and other online platforms. Even if the children are highly responsible, they may find themselves with others who are not.

As well as drawing negative press attention, some posts expose information which can pose physical risks too and can be used to track down the individuals themselves; such as license plate numbers and hotel locations.

It is therefore unsurprising that around 40% of online information related to a person or a firm is unknown to the subject themselves.

It is notoriously difficult to remove anything permanently from the internet, and even a trace of an unfavourable story on the deep web can potentially be discovered by journalists, hostile business rivals, and hackers. It is critical to be aware of what is being circulated about an individual, their business and family to mitigate against wider reputational threats.

 

Cyber means Human

The phrase “sophisticated cyber-attack” has become commonplace to describe many high-profile hacks but he reality is that most attacks — 95 percent according to CyberSmart — are not “sophisticated” at all. These attacks succeed simply because humans are not as vigilant as they could be.

Information online can be abused in a huge variety of ways. It can be used to guess passwords, to identify and access sensitive information which might be encrypted for the purposes of ransom, or to create convincing fake emails, a practice known as phishing which can be used to access a victim’s machine. Therefore, the gateway to cyber-attacks often starts with social engineering and prey on human vulnerability; bespoke, highly-researched phishing emails might link to the family’s holiday photos from St Lucia on Instagram or refer to the amount raised from the charity triathlon performance on a nephew’s JustGiving website.

Social media sites such as Facebook, Twitter and Instagram have made it easy for cyber criminals to track and target high net worth individuals and their family members. Cyber extortionists can for example demand money to remove morphed photos from social media. Similarly, several high-profile yacht-related cyber-crimes in recent months come to show that hacking is not necessary to extort money from wealthy yacht owners if the yacht crew post photos on social media. Drones and long-lens photographers can be deployed to try and take compromising photos of the owners and their often well-known guests.

This deliberately shared, and often undiscovered online material is readily available to hostile third-parties. Being mindful of it, and even better, controlling it, can mitigate reputational, security and physical threats in future.

 

Reputational consequences of a vulnerable digital footprint

“Boulevard” media outlets are experts in spotting the headline-grabbing issue for a HNWI or individual connected to politics by looking at his/her digital footprint. “Juicy” material from leaked papers reporting on a decades-old business transaction connected to records of legal disputes, or even innocent references to spending on family birthdays, can easily make for a sensationalist page one newspaper story.

In this digital age, such articles are not just headlines, they can become prominent features of an individual’s first page results in search engines – a person’s digital business card. Such content can have an especially enduring effect, appearing on the digital profiles of spouses, siblings and children due to a shared family name.

An online reputation crisis of this nature can be disproportionately influential. According to a 2017 Reuters Institute and YouGov report, social media and search remain the most important gateways to online content. Furthermore, negative content is naturally more visible online. There is an increased recognition that search algorithms are rarely neutral, and are not equipped to deal with the nuances and complexities of our modern world.

At the same time, many HNWIs naturally place a high value on privacy, which can result in a practically non-existent digital footprint. However, the lack of owned, controlled content on the digital profile of any family member can actually exacerbate the effect of damaging news, as there is no material to counter the impression made by a negative story should one arise.

The lack of an online presence is starting to be viewed with suspicion by some. As the world increasingly turns online for information, digital silence can be obstructive in conducting effective due diligence or establishing a reputation. The days of being digitally invisible are over.

How to mitigate digital risks

There are several steps that can be taken in managing an appropriate digital profile that addresses the needs of HNWIs and similar high-risk groups.

  • It is crucial to identify, assess and mitigate the potential impact of content that already exists online. Often, information found on even non-credible platforms can have a significantly detrimental impact on the view of those conducting financial due diligence or in-depth searches ahead of engaging in a transaction. A full digital audit can reveal not only obvious reputational threats, but also less openly apparent issues.
  • Create appropriate online assets such as official family websites and professional social media accounts (if appropriate and carefully-managed) to create a strong digital footprint while retaining (or controlling) privacy.
  • Social media is similarly important to review in order to address whether private information is openly accessible on an individual’s accounts or the accounts of those they have connected to. This includes accounts that are no longer in use but may still be authorised to share information.
  • It is also highly advisable to train the younger generation of wealthy families on how to use social media safely and effectively in order to prevent leaks that jeopardise the family’s reputation or their own safety.

These are just some of the ways in which you can protect yourself, but for a more in-depth or bespoke arrangement we would be delighted to work in conjunction with Digitalis Reputation, who can advise on steps to detect existing threats, and instruct on future digital strategy to construct a cohesive and appropriate narrative.

 

 

Mark Estcourt
Founder & CEO
Cavendish Family Office
mark@cavofo.com / 07973 634 185

 

 

Cavendish Family Office is an independent, creative, and solutions based Multi Family Office in Mayfair, London.

Digitalis is an online reputation and digital intelligence firm with bespoke, proprietary technology which provides rapid, exhaustive coverage of content online about a person or firm.  Their unique, automated analysis allows the monitoring and management of online reputation as well as the mitigation of a variety of reputational, privacy and security threats which tend to originate online.

Top Tips for New
Philanthropists

In association with one of our Strategic Partners, Juliet Cockram Agnew who is Head of Philanthropy at I.G Advisors, we present our latest White Paper.

We have produced this Paper as increasingly we are being asked by our Families on how to be philanthropic, especially from the Millennial (18-35 year olds) members.

 

Why give?

There are many reasons, ranging from wealth and tax planning, to brand building, to much more personal motivations, that people may decide to get involved in philanthropy.

Philanthropy is now in vogue, widely celebrated, and adopted as a worthy lifestyle choice amongst the wealthy. We know that philanthropy is on the rise, too. According to the Coutts Million Dollar Donors Report $56bn donations of more than $1m were made in 2015 – a significant rise from the previous year.

Giving can be a hugely rewarding experience. Getting to know the dynamic individuals and organisations working on the frontline of social change is enriching and humbling. And such engagement can cut across different aspects of your life – from involving the family and even the children in planning and choosing donations, to engaging companies and their employees.

One of the best reasons to give is that the world needs it. Philanthropy has often played a hugely important role in the development of just, democratic societies. Now more than ever – with such global and complex challenges as global under-nutrition, gender inequality, climate change and the refugee crisis – philanthropy has a very important role to play.

 

What are some of the challenges donors face?

Whilst the journey of a philanthropist is a privileged and rewarding one, it’s not easy to be effective. Here are some of the key pitfalls:

  • Feeling overwhelmed by need – The sheer scale of today’s social challenges can be overwhelming. It is said, for example, that the global economy will lose $12tn if greenhouse gases are not tackled, and that US$3.5 trillion is lost every year due to global under-nutrition. These are staggering figures, but we mustn’t be disheartened. Private wealth has resources to contribute to this challenge, but they need to be allocated wisely. The great news is that with strategic thinking, even a £20,000 donation could have a catalytic effect in a chosen field.
  • Defining purpose and value-add – We live in an age of information overload and there will be competing demands for a donor’s attention. The challenge for any donor is how to focus their involvement – this takes a good filtering system and often some solid support. Defining your own purpose and value-add within your chosen field is the true challenge and opportunity of every philanthropist.
  • Finding great opportunities – The causes that shout the loudest are not necessarily the most effective. Unlike the corporate world, assessing organisations and causes is not straightforward as there is no single bottom line to be compared.  There is no stock market for charitable causes.  It often takes expertise and/or time and immersion into particular cause areas to find fantastic causes that resonate with your purpose and goals.
  • Regulatory and risk issues – Donors do not often realise the myriad risk, legal and tax considerations in giving. Setting up your own charitable foundation is an appealing option, but comes with its own regulation and governance requirements. The level of transparency that is needed often surprises and frustrates donors, particularly if giving overseas. It is worth taking advice on the right structure for your giving early on.
  • Power dynamics – Funders need to be aware that they can influence entire sectors of work (not always positively) by how and what they choose to fund. It’s easy for new donors to wade into subjects with hubris, particularly if they’ve been successful businessmen or women. Unequal power dynamics between funder and recipient do not help to create an honest relationship. Trying to solve a social problem (which is really what this is all about) can take many years, often decades – think of the abolition of slavery, for example, which was pushed forward by a strong civil society movement backed by philanthropic support.  It takes patience, focus, and – critically – collaboration across sectors.

 

Top tips for new philanthropists:

Understand the change you want to see – try to think strategically.  Understand what change you want to see in the world and work backwards from there. Philanthropy can be catalytic when targeted carefully but should be informed by a good mix of passion and evidence in order to be really effective.

Avoid duplication – there are already 160,000 charities in the UK, so be brutally honest about whether you have something new to offer by setting up a new initiative or charitable foundation. A good example is Warren Buffet, who has pledged to give 99% of his substantial wealth to philanthropic causes, the majority of which will go to the Bill & Melinda Gates Foundation. Buffet recognises the critical importance of both leverage and avoiding duplication. Sometimes it is worth funding someone else’s initiative rather than reinventing the wheel.

Acknowledge what you don’t know – get informed. Meet people and organisations. Understand the issues in which you are interested. And don’t expect to go it alone. We know that donors give more when they seek and receive good advice – be it from other, experienced philanthropists, or professionals. Support can help you to filter information, find and assess great causes, and ensure you are meeting all legal requirements. It will enable you to focus on the fun and rewarding parts of philanthropy whilst ensuring you see the fruits of your contribution much more quickly.

Just Make a Start! – have a go in one area of interest. Make smaller and simpler contributions initially until you are more comfortable with the process. If there’s one thing I’ve witnessed in my years of working in this space, it’s that donors learn best by doing – so just make a start, and have fun with it!

If you are interested in exploring a philanthropic cause or are just interested in obtaining knowledge of the sector, then we would be delighted to help, just get in touch.

 

 

Mark Estcourt
Founder & CEO
Cavendish Family Office
mark@cavofo.com / 07973 634 185

 

Juliet Cockram Agnew is Head of Philanthropy at I.G Advisors, a strategy consultancy that works with companies, philanthropists, charities and foundations on all aspects of social impact. With a career spanning more than a decade, ranging from running charities to managing international foundations, advising high net worth individuals on philanthropy and billion-dollar global fundraising campaigns, she has seen it all – the good, the bad and the ugly of philanthropy.

Private Equity allocation within a Family Office

Over the last decade Private Equity as an asset class has grown in importance for families.  We wanted to examine some of the most important factors behind this trend, whether this is likely to continue and the alternative strategies open to families in accessing this asset class.

We will also share our thoughts on what we are aiming to provide our families.

 

So why are families increasing their exposure to Private Equity? 

Whilst every family is different, we see the following as the most common themes driving this trend:

  • Higher returns: in an environment of low interest rates, Private Equity has achieved an average annualised return of 12% to 15% net per annum, or circa 500bps above public equity markets (*)
  • Long time horizons. Private investments (PE, VC, distressed securities) were the three best performing asset classes over the past 10 years outperforming all public equity and bond indices (*)
  • Shared entrepreneurial spirit: families often identify with the ambition and aspirations of business owners, understanding their needs, concerns and long term goals
  • Long term partner: unlike most Private Equity Funds, families invest for the long term and can be more pragmatic regarding exit timetables and growth strategies generally. This makes families an attractive investor class for many business owners and has led to families competing aggressively and successfully for direct private equity investments.

Although much is changing from a global political and economic perspective, we expect the growth in Private Equity investments by Family Offices to continue.

Governments and politicians across the globe are encouraging entrepreneurs, fiscal and tax incentives are pushing capital towards private businesses, advancements in technology are accelerating and people are generally more willing to take greater control of their destiny by starting and creating their own businesses.

These trends strongly suggest the momentum behind Private Equity will continue for the foreseeable future and in such an environment, family money is increasingly attractive.

We therefore anticipate allocations to Private Equity from Family Offices to increase both due to its propensity to provide a higher economic return and because families understand the market and its participants.

 

How do families expose themselves to Private Equity?

Exposure to Private Equity can be achieved through two main routes.

Historically, the most popular route has been through funds and limited partnerships. The challenge with funds is identifying the best managers, gaining access to those funds that is often difficult without a substantial investment, and gaining attractive co-investment rights. Although a relatively passive approach in nature, it’s perfectly valid and is pursued successfully by many families globally.

Increasingly, however, families are looking to take greater control of their investments by investing directly or in partnership with specialist Private Equity firms. Families are now recruiting some of the best talent in the industry and competing directly with the established Private Equity investors and funds. While this latter approach requires greater effort and commitment, it will appeal to certain families and the rewards may be substantial.

At Cavendish Family Office we appreciate the importance of Private Equity as a distinct investment class and have established strong industry relationships to ensure our clients are given access to both new and established funds as well as proprietary direct investments. We work with respected partners in all areas and pride ourselves on providing a tailored service for each family and every engagement.

 

How does Cavendish Family Office allocate to Private Equity?

We have developed a process for investing in Private Equity that achieves the following key objectives:

  • Provide access to proprietary investments originated or identified by Cavendish
  • Assist clients in reviewing and investing in deals that they originate or receive directly
  • Assist on allocations to Private Equity funds and limited partnerships
  • Ensure the process for investing in deals is robust and the reputational risk to our clients is minimized

 

Strategy for providing clients with access to Private Equity and Due Diligence

Given Private Equity deals are characterized by high returns but also high risk, we have established a stringent process for looking at Private Equity investments.

On the funds side, we work with our partners to identify funds that provide above average returns and gain access for clients within these fund structures. We aim to identify new, smaller funds where the returns can be higher, carrying out a thorough review of their approach, performance and process.

These individual funds will be used to enhance and compliment our core approach.

On the direct investment side, we will source Private Equity deals from our network and having carried out our own internal due diligence, work with our regulated partners who will arrange funding for the deals from our clients and other investors as required.

On occasions clients will introduce deals to Cavendish both to review and also to help fund.

 

Strategy for implementing the proposed approach

Cavendish Family Office has appointed Tony Fabrizi as Board Advisor to be responsible for Private Equity activities within the firm. His initial goals are to identify a pool of funds with which the firm’s clients can invest and to implement processes for analysing and reviewing potential Private Equity deals.

Tony will use external specialists to help identify funds and these will then be discussed and reviewed by the Board before finalising the approved list. It is also possible that as this activity matures within the business, the opportunity to launch funds on behalf of clients will emerge.

In terms of individual Private Equity deals, Tony will make an initial assessment of all potential deals to determine whether the deal should be formally considered. At that stage the regulated entity with whom Cavendish will work, will undertake its own due diligence before a final decision is taken whether to move forward.

Once fully committed, Cavendish will work with its families and partners to ensure the funding is raised in the most appropriate manner.

Cavendish will then provide ongoing monitoring of the investment and reporting.

 

Tony Fabrizi – Private Equity Board Advisor

Tony qualified as a Chartered Accountant with KPMG before joining HSBC Investment Bank. He worked in Corporate Finance and spent 8 years undertaking UK transactions, becoming a Director in 1993.

Tony joined RP&C, a niche US Investment Bank, as a partner in 1998 to help develop its UK business.

In 2002 Tony established his own Regulated corporate finance advisory business, Ghaliston Limited. Over the next 4 years Ghaliston acted as Financial Advisor to 10 companies listing on AIM and raised capital for numerous other private companies.

In May 2006, Ghaliston Limited acquired Merchant Securities Limited, a private client stockbroking business and the enlarged company listed on AIM in November 2006. Tony retired as CEO of that company in June 2008.

Having taken a short break, Tony was appointed as the CEO to Blue Star Capital PLC, an AIM listed investment company with a focus on technology. Over the last three years Tony has advised on a number of private companies to help raise capital.

Tony joined the Advisory Board of Cavendish Family Office in March 2017.

 

Mark Estcourt
CEO
mark@cavofo.com / 07973 634 185

Family Values and how the All Blacks are an excellent example to follow

Family values, are traditional or cultural (that is, values passed on from generation to generation within families) that pertain to the family‘s structure, function, roles, beliefs, attitudes, and ideals.

There are also the moral and ethical principles traditionally upheld and transmitted within a family, as honesty, loyalty, industry, and faith and are traditionally learned or reinforced within a family, such as those of high moral standards and discipline.

This is not just a Christian view either as interpretations of Islamic and Arab culture states that as an indisputable fact in the academic literature the family is regarded as the main foundation of Muslim society and culture; the family structure and nature of the relationship between family members are influenced by the Islamic religion.

 

Who serves the best example of these values?

We can take many values from successful sporting teams as they tend to transcend normality and fill a unique space in our lives.  In researching this article I was both surprised and heartened to learn that the most successful sporting team in history is the New Zealand “All Blacks” rugby team.

New Zealand’s win-rate over the last 100 years is over 75%. It’s a phenomenal record, and an achievement matched by no other elite team, in any code.

However back in 2004, something was wrong. The 2003 World Cup had gone badly, and by the start of the following year senior All Blacks were threatening to leave. Discipline was drunk and disorderly, and to make things worse, the All Blacks were losing.

In response, a new management team under Graham Henry began to rebuild the world’s most successful sporting team from the inside out. They wanted a fresh culture that placed emphasis on individual character and personal leadership.

 

Their mantra?

“Better People Make Better All Blacks”

The result? An incredible win-rate of just over 86%, and a Rugby World Cup.

In early 2010, James Kerr had the privilege of going deep inside the All Blacks camp for five weeks alongside photojournalist Nick Danziger. It was a unique opportunity to study the way the best in the world stay on top of their game.

Here are five lessons in leadership that I learnt from reading his book – “Legacy”

Sweep the sheds

Before leaving the dressing room at the end of the game, some of the most famous names in world rugby – including Richie McCaw, Dan Carter and Mils Muliana – stop and tidy up after themselves. They literally and figuratively ‘sweep the sheds’.Former All Black Andrew Mehrtens describes it as an example of personal humility, a cardinal All Blacks value.Though it might seem strange for a team of imperious dominance, humility is core to their culture. The All Blacks believe that it’s impossible to achieve stratospheric success without having your feet planted firmly on the ground.

 

Follow the spearhead

In Maori, whanau means ‘extended family’. It’s symbolised by the spearhead.

Though a spearhead has three tips, to be effective all of its force must move in one direction.  The All Blacks select on character as well as talent, which means some of New Zealand’s most promising players never pull on the black jersey.

Champions do extra

Former All Black Brad Thorn’s mantra, ‘Champions Do Extra’, helped him become one of the single most successful players in rugby history.The philosophy simply means finding incremental ways to do more – in the gym, on the field, or for the team. It is much like the philosophy of marginal gains used by Team Sky in Cycling.A focus on continual improvement, the creation of a continual learning environment, and a willingness to spill blood for the jersey was at the core of Graham Henry’s All Black culture.

 

Keep a blue head

Following their arguably premature exit at the 2003 World Cup, the All Blacks worked with forensic psychiatrist Ceri Evans to understand how the brain works under pressure. They wanted to overcome their habit of choking.

 

“Red Head” is an unresourceful state in which you are off task, panicked and ineffective.

 

“Blue Head”, on the other hand, is an optimal state in which you are on task and performing to your best ability.

 

The All Blacks use triggers to switch from Red to Blue. Richie McCaw stamps his feet, literally grounding himself, while Kieran Read stares at the farthest point of the stadium, searching for the bigger picture.

Using these triggers, the players aim to achieve clarity and accuracy, so they can perform under pressure.

Leave the jersey in a better place

The All Blacks have long had a saying: ‘leave the jersey in a better place’. Their task is to represent all those who have come before them – from George Nepia to Colin Meads, Michael Jones to Jonah Lomu, and all those who follow suit. An All Black is, by definition, a role model to schoolchildren across New Zealand.

 

Understanding this responsibility creates a compelling sense of higher purpose. It’s a good lesson for us all: if we play a bigger game, we play a more effective game.

Better people make better All Blacks – but they also make better doctors and lawyers, bankers and businessmen, fathers, brothers, and friends.

 

Conclusions

Every family is strengthened by having a shared goal for the family’s wealth and agreeing upon a set of values, which all generations wish to exhibit and live by.

Many families who successfully transition wealth through multiple generations have a unique set of values, which express their world-view and the principles which family members choose to embody. When a family has the courage to examine the qualities it wishes to uphold, the process is unifying and deeply fulfilling for all members of the family across all generations.

A 21st century approach to Estate Planning begins by creating a compact across generations, whereby the whole family organises themselves around a shared long-term goal. In families, unlike in business, “long term” equates to at least three to four generations or 100 years.

The family will agree on how they wish to reach decisions together as the family grows in size. They will consider whether wealth transitions per stirpes or per capita. Most importantly, however, once the family have agreed on their shared long-term goal across the generations, they will agree on a common set of values which they all subscribe to and which binds them together.

This process enables a family to resolve underlying issues and tensions, which might cause conflict at a later date. More importantly, our approach is specifically designed to create real affinity between family members across generations.

When family values are defined in this context, they establish a framework of common understanding and co-operation which can last for generations.

A family can therefore have the same dreams and aspirations as a sports team and uphold these core beliefs over many decades and lifetimes.

“Vision without action is a dream. Action without vision is a nightmare.” (Joel A Barker)

If you would like to discuss the strategic direction of your family and how to resolve their values and mission then we would be delighted to hear from you.

 

Cavendish Family Office

Cavendish Family Office is an independent and modern Multi Family Office (MFO) working with entrepreneurial clients and their families.

Cavendish Family Office help clients from all over the globe including USA, UK, Europe, Middle East and Asia.  They also help clients from the more “unusual” geographic jurisdictions or with political connections, such as PEPs.

Cavendish Family Office manages all aspects of wealth including Tax & Structuring, Accounting, Investment Management, Real Estate, Commodities, Alternative Assets (Art, Cars, Jewellery and so on) as well Concierge.  They also have expertise in dealing with the Next Generation helping shape the family’s legacy and ensuring that the wealth is maintained for future generations.

 

Mark Estcourt
CEO
mark@cavofo.com / 07973 634 185

Working with the Next Generation (Next Gen) within a Family Office

In our previous White Paper on “When does it make sense to set up a Family Office” we explored the huge and unprecedented era of transfer of wealth from one generation to the next as the world’s most affluent individuals approach retirement and contemplate their succession and wealth planning issues. The needs of these families are extensive, complicated, and require expert advice, so many are considering a Family Office to help them manage this transition and provide a crucially provide a framework for the Next Generation (Next Gen). Read more

When does it make sense to set up a Family Office?

We are witnessing an era of unprecedented transfer of wealth from one generation to the next as the world’s most affluent individuals approach retirement and contemplate their succession and wealth planning issues. The needs of these families are extensive, complicated, and require expert advice, so many are considering a Family Office to help them manage this transition and provide a crucially provide a framework for the Next Generation (Next Gen). Read more