Co-Investment
Last updated 17 July 2026
A co-investment is a direct stake in a specific company or asset acquired alongside a private equity fund, venture fund, or other lead investor. It is separate from the family's commitment to the main fund. The lead manager typically sources and controls the transaction, then invites selected limited partners to provide additional capital.
Co-investments often carry lower management fees and carried interest than the main fund, although terms vary. They give the family visibility into the exact asset and can increase exposure to a high-conviction opportunity. In return, the investor usually faces a short decision window, concentrated risk, limited control, and a need to evaluate the deal rather than relying only on its view of the manager.
Why it matters for family offices
Access to good co-investments can improve the economics of a broader private markets programme and deepen a relationship with a manager. It can also distort the portfolio. A family already exposed to a company through the main fund adds a second, direct exposure when it co-invests. Several attractive invitations from the same sponsor may create an unintended concentration by sector, geography, or deal vintage.
The office therefore considers each opportunity within its total allocation and liquidity plan. Due diligence typically covers the business, valuation, financing, governance rights, conflicts, exit assumptions, and the manager's allocation process. The absence of a full fee layer does not compensate for a weak asset or an unsuitable position size.
How it shows up in practice
Suppose a family has committed $10 million to a buyout fund. The manager invites it to invest another $2 million directly in a healthcare software company, with ten business days to decide. The investment team reviews the data room, asks why the fund is syndicating part of the equity, and models its total exposure through both the fund and the proposed co-investment.
The committee approves $1 million rather than the full amount to remain within its sector limit. The family office tracks the direct vehicle separately, but links it to the underlying company and sponsor so consolidated reports do not treat the positions as unrelated. When the company later makes a distribution, the office records that cash against the co-investment rather than the main fund capital account.
Related terms
Private Equity
Investment in companies that are not publicly traded, typically through funds that acquire, improve, and eventually sell businesses. Private equity offers strong long-term return potential in exchange for illiquidity and long holding periods. For family offices, tracking commitments, capital calls, distributions, and valuations across many funds is a significant administrative undertaking.
Limited Partner (LP)
An investor in a private markets fund who provides capital but plays no role in management and whose liability is limited to the amount committed. Family offices are among the most active LPs globally, valued by managers for their patient, long-term capital. LPs receive periodic capital calls, distributions, and quarterly reports that feed into the family's consolidated reporting.
Direct Investment
An investment made straight into a company or asset rather than through a fund, giving the family full control over selection, terms, and exit. Family offices increasingly favour directs to reduce fees, apply their operating expertise, and align investments with family values. Directs demand strong internal capability in sourcing, due diligence, and monitoring.
Club Deal
A direct investment made jointly by a small group of like-minded investors, often several family offices, who pool capital and share due diligence on a single opportunity. Club deals give families access to larger transactions than they could do alone, while avoiding fund fees and retaining influence over the deal. Trust among participants and clear governance of the vehicle are essential to making them work.
Concentration Risk
The risk that arises when a large share of a family's wealth is tied to a single asset, company, sector, or currency, often the original family business. While concentration frequently created the wealth, it can also destroy it. Measuring true concentration requires looking through all entities and accounts to the underlying exposures.
Further reading
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