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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
93:
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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232:"The value of co-investment and secondaries, and why GPs are growing more selective"
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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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284:. Centre on Regulation in Europe asbl (CERRE), 202
257:"The advantages of co-investments – Institutional"
94:Co-investors bring a friendly source of capital.
282:Implementing co-investment and network sharing
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862:Private equity and venture capital investors
325:CalPERS - Private Equity Industry Dictionary
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834:Taxation of private equity and hedge funds
651:Private investment in public equity (PIPE)
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52:transaction. In certain circumstances,
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296:Journal of International Management
56:firms may also seek co-investors.
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151:"Equity Co-Investment Definition"
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902:List of venture capital firms
207:"Private equity coinvestment"
882:List of private equity firms
639:Business Development Company
308:10.1016/j.intman.2016.03.006
205:Greene, David; Rigdon, Amy.
335:AltAssets: The direct route
185:Corporate Finance Institute
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726:High-net-worth individuals
516:Leveraged recapitalization
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614:Limited liability company
574:Venture capital financing
521:Dividend recapitalization
28:(or co-investment) is a
681:Institutional investors
819:Liquidation preference
784:Distribution waterfall
736:Sovereign wealth funds
181:"Equity Co-Investment"
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948:Corporate development
892:Venture capital firms
644:Venture capital trust
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872:Private equity firms
600:Private equity firms
549:Post-money valuation
426:Equity co-investment
211:Latham & Watkins
91:Private equity firms
26:equity co-investment
922:Portfolio companies
839:Undercapitalization
691:Insurance companies
609:Limited partnership
554:Pre-money valuation
774:Capital commitment
544:Business incubator
511:Buy–sell agreement
330:AltAssets Glossary
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319:External links
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302:(3): 280–293.
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264:. Retrieved
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160:. Retrieved
156:Investopedia
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706:Foundations
629:Pledge fund
421:Secondaries
266:18 February
241:18 February
216:18 February
190:18 February
162:18 February
102:Limitations
937:Categories
794:Envy ratio
701:Endowments
564:Seed money
478:Terms and
137:References
764:Cap table
669:Investors
593:Structure
411:Mezzanine
399:Leveraged
261:BlackRock
236:Schroders
36:or other
814:Leverage
750:Related
480:concepts
115:See also
86:Benefits
60:Overview
30:minority
824:M&A
531:Venture
436:History
406:Venture
789:EBITDA
488:Buyout
416:Growth
394:Buyout
68:in an
604:funds
469:2020s
464:2010s
459:2000s
454:1990s
449:1980s
656:SPAC
602:and
559:SAFE
378:and
268:2022
243:2022
218:2022
192:2022
164:2022
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809:IRR
804:IPO
759:AUM
304:doi
48:or
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Text is available under the Creative Commons Attribution-ShareAlike License. Additional terms may apply.
