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Forming a relationship for co-investment opportunities has its drawbacks. Susanna K. and David D. argue that social status and experience are two forms that co-investment opportunities rely on and can provide great limitations for deals to go through. Experience may create bias for investors looking
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Comparing both direct and co-investments, direct investments typically have better returns than co-investments. Co-investments involve multiple people pulling together their funds and allocating a fund manager to hinder the deal. Whereas, direct investing there is no collaboration, and the owner of
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and other investors, co-investments are a means of increasing exposure to attractive transactions and making investments that have a higher return potential because of the lower economics paid to the general partner. As a result, many private equity firms offer co-investments to their largest and
104:
seek co-investors for several reasons. Most important of these is that co-investments allow a manager to make larger investments without either dedicating too much of the fund's capital to a single transaction (i.e., exposure issues) or sharing the deal with competing private equity firms.
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Co-investment shows benefits for those looking to reduce costs. The types of costs reduced are both fixed and variable. These costs typically are split between the parties involved in the co-investments. Compared to a direct investment where the limited partner is inquiring every cost.
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for a partnership on a co-investment opportunity. Social status is a contributing factor for investor partnerships as well. Investors with a high standing in status, generally have more co-investment opportunities and are sought out.
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on an individual investment. Co-investments are typically passive, non-controlling investments, as the private equity firm or firms involved will exercise control and perform monitoring functions. For large private equity
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the fund has control of what area they have their assets allocated to. Some drawbacks of co-investment include: a slow deal process, negative impacts on relationships with limited partners, as well as additional costs.
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managed by the lead financial sponsor in a transaction. Unlike the investment fund however, co-investments are made outside the existing fund and as such co-investors rarely pay management fees or
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Khavul, Susanna; Deeds, David (2016). "The
Evolution of Initial Co-investment Syndications in an Emerging Venture Capital Market".
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Diagram of the structure of an equity co-investment in a portfolio company alongside a financial sponsor
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most important investors as an incentive to invest in future funds.
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investment, made directly into an operating company, alongside a
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Co-investments in funds of funds and separate accounts
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Bourreau, Marc, Steffen
Hoernig, and Winston Maxwell.
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295:. Centre on Regulation in Europe asbl (CERRE), 202
268:"The advantages of co-investments – Institutional"
105:Co-investors bring a friendly source of capital.
293:Implementing co-investment and network sharing
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873:Private equity and venture capital investors
336:CalPERS - Private Equity Industry Dictionary
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845:Taxation of private equity and hedge funds
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63:transaction. In certain circumstances,
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67:firms may also seek co-investors.
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162:"Equity Co-Investment Definition"
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216:Greene, David; Rigdon, Amy.
346:AltAssets: The direct route
196:Corporate Finance Institute
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737:High-net-worth individuals
527:Leveraged recapitalization
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625:Limited liability company
585:Venture capital financing
532:Dividend recapitalization
39:(or co-investment) is a
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830:Liquidation preference
795:Distribution waterfall
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192:"Equity Co-Investment"
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959:Corporate development
903:Venture capital firms
655:Venture capital trust
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883:Private equity firms
611:Private equity firms
560:Post-money valuation
437:Equity co-investment
222:Latham & Watkins
102:Private equity firms
37:equity co-investment
933:Portfolio companies
850:Undercapitalization
702:Insurance companies
620:Limited partnership
565:Pre-money valuation
785:Capital commitment
555:Business incubator
522:Buy–sell agreement
341:AltAssets Glossary
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171:. Retrieved
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717:Foundations
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432:Secondaries
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113:Limitations
948:Categories
805:Envy ratio
712:Endowments
575:Seed money
489:Terms and
148:References
775:Cap table
680:Investors
604:Structure
422:Mezzanine
410:Leveraged
272:BlackRock
247:Schroders
47:or other
825:Leverage
761:Related
491:concepts
126:See also
97:Benefits
71:Overview
41:minority
835:M&A
542:Venture
447:History
417:Venture
800:EBITDA
499:Buyout
427:Growth
405:Buyout
79:in an
615:funds
480:2020s
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470:2000s
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460:1980s
667:SPAC
613:and
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389:and
279:2022
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