Meaning and transaction use
An SEC-filed prospectus defines direct investments made alongside a portfolio fund or manager and states that the adviser conducts its own diligence before investing. [S1]
Another SEC filing describes independent co-investment assessment of entry valuation, capital structure, thesis, value drivers and exit alternatives in addition to sponsor diligence. [S2]
Proposed control method: apply the family office's full underwriting, conflict and concentration tests to every co-investment.
Worked example
Illustrative co-investment only. Assume 4.0 million invested for 800,000 shares in a company with 20.0 million fully diluted post-closing shares.
Scroll the table horizontally to view all columns.
| Measure | Calculation | Result |
|---|---|---|
| Price per share | 4.0m / 800,000 | 5.00 |
| Post-closing shares | Given | 20.0m |
| Ownership | 800,000 / 20.0m | 4.0% |
| Value at 7.50 per share | 800,000 x 7.50 | 6.0m |
The illustrative co-investment owns 4.0% and would be valued at 6.0 million at 7.50 per share.
Proposed transaction review process
Screen access
Confirm sponsor, allocation, mandate fit and conflicts.
Underwrite independently
Test business, valuation, structure, downside and exit.
Negotiate rights
Review information, governance, transfer and follow-on provisions.
Monitor
Track thesis, sponsor actions, valuation, concentration and liquidity.
Evidence checklist
Opportunity
Sponsor materials, company data and allocation terms.
Underwriting
Independent market, financial, legal and tax review.
Rights
Security, governance, information, transfer and exit terms.
Portfolio
Concentration, liquidity, follow-ons and risk budget.
Decision framework
| Situation | Proposed action |
|---|---|
| The sponsor timeline is short | Prioritise critical diligence or decline. |
| Information access is limited | Reduce exposure or require protections. |
| Allocation creates concentration | Resize under the approved portfolio limits. |
| A follow-on is offered | Re-underwrite price, need and ownership value. |
Common errors to check
- Relying solely on sponsor diligence.
- Assuming fee savings imply better value.
- Ignoring conflicts and allocation practices.
- Underestimating follow-on and liquidity needs.
Underwrite the co-investment
Bring sponsor materials, company evidence and portfolio exposures to a co-investment review. Reconcile value, rights and concentration.
Discuss the transactionPrimary references and editorial scope
- SEC filing: Direct and co-investment definition
Example direct investment alongside a fund manager and adviser responsibility for independent diligence. Reference checked 17 September 2026. - SEC filing: Independent co-investment assessment
Example independent review of valuation, structure, thesis, value creation and exit alternatives. Reference checked 17 September 2026.
General transaction education using public United States filings. Figures are hypothetical. Deal documents, mandate, regulation, tax and legal advice govern actual rights and outcomes.
General business information. Obtain advice appropriate to the legal, tax, accounting and financing facts. No offer, lender commitment or transaction outcome is represented. All worked examples use expressly assumed figures. Editorial draft date: 17 September 2026.
