Candice Beaumont, chair of the family office of the Salsano Group, said that with stocks and real estate facing the end of a nearly 20-year bull market, many family investors were ill-prepared for “hard times ahead.” Beaumont, who manages more than $1.5 billion in assets in Miami, said the surge in interest rates has set the stage for a long-term correction in the stocks, office real estate and private equity industries. “The worst is yet to come,” Beaumont said. “I think it’s the beginning of a new paradigm and the beginning of a multi-year contraction cycle that we’re in.” Like many family offices, Beaumont said she holds “substantial amounts” of cash in preparation for a potential sale at a discount — especially in real estate. Panama-based Salsano Group recently started getting calls from U.S. real estate owners looking to sell office or residential buildings at discounted prices, she said. “A lot of big families with trophy properties, especially in New York City, have been approaching us” for sale, she said. “They want to do it very quickly, but they’re not in the woods yet. But we think over the next few years, this trend will proliferate and there will be more opportunities. We want to have dry powder that can execute.” With many Like large investors, family offices are grappling with the new financial landscape of higher interest rates. Founded by Italian-born entrepreneur Sandro Salsano, Salsano Group has investments in Latin America, the US and Europe. Beaumont, a veteran of Lazard Freres (mergers and acquisitions) and Argonaut Capital (private equity), said many large investors continue to invest heavily in real estate and other assets without careful analysis of risk-adjusted returns in the new interest rate environment. “I see people buying more[family] “Investing in real estate can give you a 4 percent return, and at the same time you can have a cash return of 4 percent or more, without any leverage, with no risk,” she said. “We think the market is moving a little bit slowly.” Cash, Treasuries, hedge funds, public stocks and other investments. But its main focus is private equity, which Beaumont says has achieved an internal rate of return of 35%. The group’s biggest project is a new free trade zone in Panama, which is being developed with co-investment from the sovereign wealth fund. “Panama is a very strategic region that connects the Atlantic and Pacific Oceans and is a logistics center for the dollar economy,” she said. Prices have fallen to levels attractive for a privatization deal. She said she was considering a potential acquisition of a European company that was trading at a much lower price than its U.S. counterpart. “It’s a $100 million European company that would be worth $2 billion if it were in the U.S.,” she said. “Sometimes there’s a huge arbitrage where deals are done in Europe, especially in some of the small European stages.” Beaumont, who has served on several family office committees and advisory boards and is a former top tennis pro in the world, said that in the current environment Diversification is a top priority for family offices, especially for emerging tech millionaires and billionaires. “A lot of young families have tech wealth,” she said. “They know the tech industry very well, so they’re very focused on one industry. But I think asset diversification is very important. There’s a famous allocation chart showing which industries have outperformed each year in the past, and every year it’s a different segment — — one year it was tech, one year it was commodities, one year it was distressed debt. Every year is completely different. That’s a prime example of why family offices need to diversify.”