Sometimes the creation of a family office is more of a natural evolution than a one-time decision. Vinu Natarajan, founder and CEO of Consolidate Health, traces the slow creation of Natarajan Family Holdings, the family office that developed after the sale of his father’s business, Omega Healthcare Management Services, in 2019. He also discusses the family’s future plans for the office:
How did your family office get started?
It was not a deliberate decision to start a family office. It evolved into that over time. My dad is a first-generation entrepreneur, and I’m a second-generation entrepreneur.
If you’re going to be responsible about how you grow and how you’re managing your risk and evaluating your opportunities, the process matures along with it. So that evolved into what’s called a family office over time.
The genesis of the family office was the sale of my father’s company and an inflow of capital. We started doing financial planning: What does one do with this money? You get a financial advisor or a wealth manager who asks questions: What are your goals? How would you like to see this money grow over time? How much would you like to pass on to the next generation? What areas of philanthropy are you interested in? You have these high-level conversations so you can come up with an investment strategy that aligns with your family’s needs and goals.
We started off with a very simple, almost passive portfolio. Then we started getting a bit more nuanced: Investments began coming to us through our network and several other channels. When you have this deal flow coming in, you have to have some kind of process for evaluating these deals. Initially, it would be me looking at them, or my dad, or my wife, who also works in finance.
Over time, it matured, and now we have a team of people who look at these things. We naturally and organically started to do these things, and then I realized that there was a term for it. That’s how we ended up as a family office.
How did you become involved?
Right around when my dad sold his company, I got my MBA. While there, I joined the family business club where I met other students who had family offices, and also took some courses on wealth management. This was the first time I was exposed to the concept of a family office. I was in a unique position where I could apply a lot of the things I was learning in school to what was happening at home. So, my dad said, ‘You can be the expert, you can handle this.’
How does your family office serve the family?
We’re a small family office that has only four members, so we’re pretty self-sufficient when it comes to the services we need. That being said, the private banks we work with do offer many services catered to the unique needs of family office clientele.
For us, the family office is primarily an investment entity at this time. We believe that good opportunities can come from anywhere, so we take a flexible approach that’s resulted in a portfolio that spans across many sectors, stages, and sizes — everything from early stage venture to late stage private equity.
How is your family office structured?
I’m an only child, so the family is my mom, my dad, myself and my wife. Instead of going out and hiring our own team and having dedicated employees for our family office, we use a hybrid-multifamily office. They manage our reporting, connecting all the bits and pieces that reside in various areas and putting them all into a consolidated reporting platform for us. They help with due diligence and analysis and bring in other experts where necessary. We also have other vendors of various types on our team: lawyers, tax specialists, accountants, and other teams of financial advisors.
We have more than one set of financial advisors that we use as a system of checks and balances — different people have different areas where they’re good.
How has working with a multifamily office helped?
The family office has been around almost five years. This year, things have really begun to mature more, after having the hybrid family office firm Interchange Capital Partners come in and be the glue between all the existing components.
They do all the administrative work so that it’s not sitting on us. They have access to our financial information across a variety of platforms: banks, investment advisors, and funds. They have a digital family office platform that retrieves all that and puts it in a single view for us. It’s a lot to manage and organize on our own: legal documents, paper trails, ensuring that capital calls are filled, receiving any kind of revenue from the portfolio and all the tax work behind that. They manage that, because everyone in the family has their own full-time jobs doing other things. They also do diligence work for us on investments.
Before we started working with them, we went through a pretty hefty cost-benefit analysis, because it’s not cheap to work with somebody like that.
Why did you go this route rather than setting up a single family office?
Both the cost and the administrative burden are obstacles to having a single family office. I have my own startup — my own team of people that I’m dealing with and managing. Having a single family office would mean another set of people that I need to do that for, and it would be too much on top of my existing company. The same goes for my dad and his other companies. It would just be too much work for us.
What are your plans for the future of your family office?
We don’t have a clever name for our family office — Natarajan Family Holdings is what it’s called at the moment. One of the things I would like to do is formalize a name for the entity that can also provide anonymity. I don’t necessarily want to be writing my actual name on all these things.
In addition, our intent is to continue to grow the pie. My dad is a serial entrepreneur, and I’m heading in the same direction, though I’m obviously earlier in my career than he is. We like to try to pursue opportunities where we can.
I have been fortunate enough to be on both sides of this ecosystem — the building side and the financing side. I have my own startup, but I also invest. I quite enjoy the whole process of investing and diligence and evaluating deals. I’d like to continue to do that.
My folks are getting older, so I’m also thinking about how I can continue their legacy. They are big on philanthropy — they are first-generation immigrants from India, so a lot of their philanthropic work tends to be around educating people in India, as well as healthcare work and generally helping people escape poverty. So, finding ways to continue that is also on my mind.
Regarding the next generation, whenever my wife and I start our own family, there’s a whole other side of this: How do I get my own children ready for what they’re about to enter?