Family offices are positioning themselves to buy distressed credit at a discount. Before committing more capital, they need to understand how much credit risk they already carry across their investments, businesses and borrowing entities.
Private credit is entering a period of greater scrutiny, and some family offices see an opportunity. BlackRock's 2026 Americas Family Office Survey found that distressed debt had the strongest net demand among offices planning to change their allocations. Meanwhile, some investors are selling private credit positions at discounts to access liquidity.
For buyers with patient capital, those discounts can create opportunities. But there is a question worth answering before making another investment: how much credit exposure does the family already have, and where is that risk concentrated?
The answer may be spread across private funds, direct loans, real estate, operating companies and borrowing arrangements held by different legal entities. Without a consolidated view, a family office can take on more exposure than it intends.
Private credit expanded rapidly as investors sought higher yields and alternatives to traditional fixed income. But the characteristics that made the asset class attractive, including infrequent valuations and limited redemption windows, have become more consequential as investors seek liquidity.
Crain Currency's reporting on family offices and private credit describes a market where some investors are looking to exit positions while others see an opportunity to buy at a discount. Publicly traded business development companies (BDCs) have also traded below their reported net asset values, reflecting market concerns about underlying portfolios and liquidity.
The challenge is that a reported valuation is not necessarily the price an investor can realize today. Private assets are generally valued periodically, while secondary-market buyers must account for the price at which a position can actually be sold.
Liquidity restrictions add another consideration. Some private credit funds have long investment horizons and limited redemption opportunities. An investor who needs cash before the end of that period may have to accept a discount to exit.
For buyers, this creates an opportunity to acquire assets below reported valuations. It also makes understanding existing liquidity needs and credit exposure essential before committing additional capital.
Some family offices are using their long investment horizons and available capital to explore opportunities in stressed and distressed credit.
Crain Currency has reported on Michael Dell's family office pursuing opportunities in the private credit secondary market, alongside other investors developing strategies to acquire discounted positions. The broader trend is consistent with a more opportunistic approach to private markets, in which investors seek to deploy capital when other holders need liquidity.
BlackRock's survey provides a wider view of family office intentions. Conducted with Preqin, it covered 206 single-family offices across the Americas, representing approximately $491 billion in investable assets. Among offices planning allocation changes, distressed debt showed the strongest net demand.
That finding needs context. It does not mean every family office is increasing its private credit allocation. Overall, private credit intentions were more mixed, with roughly half of offices planning to hold steady.
Deutsche Bank's 2025 Family Office Financing Report identified a related strategy: building reserves that allow families to take advantage of distressed assets when prices fall, while also preserving the capacity to support their operating businesses if credit conditions tighten.
The opportunity, then, depends on more than finding assets at a discount. Families need the capital, liquidity and balance-sheet visibility to make that decision with confidence.
A family office considering distressed credit needs to understand both the credit it owns and the debt it owes. These exposures often sit in different entities and systems, making them difficult to assess together.
A family's lending exposure may include:
The same family's borrowing may include:
Bank of America's 2026 Family Office Study found that most family offices use credit in some form, with nearly half citing real estate opportunities as a reason to borrow. Yet only a quarter use credit consistently as part of their overall wealth strategy, and another 40% use it opportunistically.
That distinction matters. Borrowing is often tied to a specific investment, property or liquidity need rather than managed as one coordinated portfolio of liabilities.
Consider a family that holds private credit fund interests through a trust, owns BDC shares in a personal brokerage account and carries a mortgage through a property-owning LLC. Its operating company may also have a credit facility backed by a personal guarantee.
Each position may be reported separately. Together, they determine the family's exposure to credit conditions, interest rates, refinancing requirements and potential calls on liquidity.
Individual systems often hold the right information. The problem is that the information needed to understand total exposure is distributed across custodians, fund statements, bank portals, loan agreements and entity-level records.
Several gaps can make the overall picture difficult to assemble.
Private fund reporting arrives periodically. Credit fund statements may provide quarterly valuations and portfolio updates rather than daily information. The latest available mark may not reflect the price at which the position could be sold.
Liabilities sit outside investment reports. A consolidated portfolio report may capture a family's publicly traded BDC holdings while omitting mortgages, credit facilities and debt held by operating companies.
Guarantees are documented differently from investments. A personal guarantee may appear in a loan agreement rather than a financial account. Yet it can create a significant contingent liability if the borrower cannot meet its obligations.
Underlying exposures can overlap. A family may hold several credit funds and direct loans that lend to the same sector or borrower. Without sufficient underlying information, the concentration may not be apparent.
Liquidity commitments compete for the same cash. A family may be evaluating a discounted credit opportunity while also facing upcoming capital calls, debt maturities, property expenses or operating-company funding needs.
These gaps matter most when market conditions change. A family office may have sufficient assets on paper but limited liquidity available at the moment it needs to meet an obligation or take advantage of an opportunity.
Before committing capital to a discounted position, a family office should be able to answer six questions:
The principle is straightforward: investment liquidity and liability timing need to be considered together. A discounted asset may be attractive, but the decision depends on whether the family can hold it for the required period without compromising its other commitments.
MYFO connects the entities, assets and liabilities, stakeholders and documents that make up a family's financial world. Rather than treating each account or investment as a separate record, MYFO links financial information to the entities that own the assets and carry the obligations.
For family offices assessing credit exposure, that foundation helps bring together information that might otherwise remain scattered across different systems.
MYFO provides the connected data foundation needed to understand a family's financial position across entities, investments and liabilities. That visibility supports better-informed decisions about where to deploy capital and how much liquidity to preserve.
Distressed credit can offer opportunities when other investors need to sell. But taking advantage of those opportunities requires more than identifying an attractive price. Family offices need to understand their existing exposures and obligations before deciding how much additional risk to take on.
Book a demo to see how MYFO helps family offices connect their financial data.
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