The Rise of the Family Office: How BDT & MSD Partners is Rewriting the Rules of Wealth and Investing
A new era of private wealth management is underway, driven by the evolving needs of multigenerational families and a shift towards long-term, patient capital. BDT & MSD Partners is at the forefront of this revolution, advising some of the world’s most prominent families on navigating complex financial landscapes and ensuring their legacies endure.
From Enterprise Rent-A-Car to a $70 Billion Empire
The story of BDT & MSD Partners begins with a lesson in leverage and long-term vision. In 1989, Byron Trott, then at Goldman Sachs, visited Jack Taylor, founder of Enterprise Rent-A-Car. Taylor candidly revealed his company was operating with a 10-to-1 debt ratio. As Trott recalls, the Taylors demonstrated a remarkable ability to not only overcome this initial challenge but to build Enterprise into a global model of success, accumulating significant cash reserves and establishing a foundation for future generations. This experience underscored a core principle that would define Trott’s career: the power of compounding wealth over time.
Trott, described by Warren Buffett as “the rare investment banker who puts himself in his client’s shoes,” has spent decades advising families like the Waltons, Kochs, Pritzkers, and Mars on growing their fortunes. He’s become known as a “wealth whisperer,” building a network of trust and expertise that spans generations.
A Revolution in Private Wealth
The fortunes of business owners have soared in recent decades, leading to the growth of sophisticated family offices. These offices are no longer simply managing wealth; they are actively buying, selling, and building companies, wielding significant economic power. According to EY, the 500 largest family businesses globally generate a combined $8.8 trillion in revenue and employ 25.1 million people.
BDT & MSD Partners was formed in 2023 through the merger of Trott’s merchant bank and Michael Dell’s family office spin-off, MSD Partners. This union has created a uniquely positioned firm capable of facilitating investments between family-led companies, raising capital, and diversifying portfolios. The firm currently has approximately $70 billion under management, with 95% of its investors being active business owners, family offices, or foundations.
High-Profile Deals and a Tech Focus
BDT & MSD Partners has quickly become a key player in major transactions. The firm advised Patagonia founder Yvon Chouinard on transferring ownership of the company to a special trust and nonprofit, ensuring its environmental mission would be protected. It also represented Shari Redstone in the $8 billion merger of Paramount Global with Skydance Media, and facilitated the record-shattering sale of the Boston Celtics for $6.1 billion, alongside David Rubenstein’s purchase of the Baltimore Orioles.
With Dell serving as chairman of the firm’s advisory council and its largest investor, BDT & MSD has also established a strong foothold in the technology sector. The firm recently launched a tech fund that raised over $800 million in just three months, attracting partners like Daniel Ek of Spotify, the Collison brothers of Stripe, Ryan Smith of Qualtrics, and Joe Gebbia of Airbnb. “There is a real magic to having these two worlds come together,” explains co-CEO Gregg Lemkau, noting the mutual curiosity between established families and next-generation tech founders.
The Rise of Direct Investing and Family Office Best Practices
Wealthy families are increasingly opting for direct investing – buying stakes in companies directly, rather than through private equity funds. However, this approach requires significant due diligence and expertise. BDT & MSD advises families to gain experience with established funds before venturing into direct deals. “Direct investing is not easy,” Trott emphasizes, “you have to have great people, with high integrity, and experience that matters.”
The firm also provides guidance on establishing and running effective family offices. According to Trott and Lemkau, the most successful family offices share a clear objective and align incentives accordingly.
Values, Impact, and the Next Generation
A significant trend among the next generation of wealth holders is a focus on values-based and social-impact investing. Unlike previous generations who were often expected to take over the family business, today’s inheritors are increasingly driven by a desire to make a positive impact on the world. “The great thing about this generation, the rising generation, is that they care dearly about impact. They want to impact the world,” Trott observes.
BDT & MSD facilitates conversations between generations, addressing complex issues like inheritance, philanthropy, and the balance between wealth and values. The firm’s leaders emphasize that true wealth isn’t measured by material possessions, but by the integrity and principles instilled in future generations. “It’s not the house they live in or the jets or the planes or the cars they drive,” Trott concludes. “It’s the people in the house and in those cars that are teaching them how to have high integrity, a North Star.”
