Counsel for capital that invests alongside others, covering co-invest vehicles, syndicate and club agreements, and the allocation, conflicts, and governance terms that keep a shared deal defensible from first close to exit.
A co-investment is offered late and closes with the main deal, so the vehicle that takes it is formed under Section 3(c)(1) or 3(c)(7) of the Investment Company Act, and the allocation is made under a policy the sponsor has already written down and, if registered, described in its Form ADV. Who was offered the opportunity, on what economics and why, is the record a limited partner's counsel reads first and an SEC examiner reads second.
The economics, reduced or no management fee and no carried interest, are only as reliable as the documents that record them. The SEC has brought enforcement actions where broken-deal expenses fell entirely on the fund while co-investors paid none, and its 2023 private fund rules were vacated in 2024, which puts preferential treatment back in the partnership agreement, the side letters and the adviser's fiduciary duty.
A club deal has no lead to defer to, so the consortium agreement must say who decides, what is reserved and how a deadlock ends. We act for sponsors offering co-investment and for the limited partners and family offices weighing it, never on the same deal.
Structuring and forming co-invest vehicles that sit alongside a sponsor's main fund, covering entity selection, fee and carry economics, capital-call and funding mechanics, and the organizational documents an LP will diligence before committing.
Drafting and negotiating the agreement that binds a club of equal partners, including governance and decision rights, contribution and dilution mechanics, deadlock resolution, and the exit framework that keeps a no-lead deal from stalling.
The allocation framework and conflicts discipline that co-investment governance rests on, which decide how an opportunity is offered, priced, and split between a sponsor's fund and its co-investors, set so the decisions hold up to LP scrutiny.
Portfolio-company governance for the shared deal, through shareholders' and members' agreements, board and information rights, transfer restrictions, and the drag, tag, and pre-emption terms that order an exit before anyone needs them.
Legal diligence and execution support on the underlying transaction. We coordinate the syndicate's review, marshal the diligence record each partner relies on, and align the co-invest terms with the lead deal's documents.
Structuring co-investments and club deals that span jurisdictions, with securities and antitrust touchpoints managed in coordination with locally admitted and specialist counsel where a filing or local-law advice is required.
Co-investors pay reduced or no management fee and no carried interest. Expenses are the harder question. When a deal dies after co-investors were lined up and the fund absorbs the whole cost, the SEC has treated silence about it as a disclosure failure, so broken-deal expense allocation goes into the policy before the first offer.
Under the Advisers Act the sponsor owes a fiduciary duty to each vehicle it manages, and the main fund and the co-invest vehicle are separate clients whose interests part at predictable points: who gets the allocation, who prices the follow-on, when the exit comes. The policy and the partnership agreement settle those points in advance.
Equal partners can lock on a reserved matter, and an agreement that stops at unanimous consent has no way out. The usual tools are a casting vote on operating matters, an escalation period for the principals and a buy-sell, where one side names a price and the other chooses to buy or sell at it.
A drag-along lets holders above an agreed percentage force the rest into a sale; a tag-along lets the rest join one. The percentage, the floor price and whether a sale to an affiliate counts are negotiated, and a right of first offer rather than first refusal keeps third-party buyers from walking before the process starts.
A club deal can need more than one Hart-Scott-Rodino filing, since the acquisition vehicle and any member taking control of it are tested separately. On a public target, members acting together form a group under Section 13(d), and a group over five percent files a Schedule 13D within five business days.
Co-investment is offered after signing and must fund at closing, so the sponsor forms the vehicle, settles its subscription documents and clears its 3(c)(1) or 3(c)(7) status before a deal arrives. The limited partner's side does the same: investment committee authority, a form side letter and a diligence checklist sized to the window.
The lead sponsor's deal team offers the opportunity, and the allocation policy is applied and papered before pricing is shared. We fix who was offered what, on what economics, and why, because that is the record LP counsel and any later examination will read first.
The co-invest vehicle is formed and the syndicate or consortium agreement negotiated against the lead deal's timetable, with fee and carry breaks, funding obligations, the decision matrix, and deadlock mechanics settled while the underlying purchase agreement is still moving.
Signing and closing run in lockstep with the main transaction. The co-invest equity commitment letters, the shareholders' agreement at the portfolio company, and every partner's diligence reliance and closing conditions are checked against the lead documents to the letter.
Follow-on rounds, dilution, and the moment one partner's return clock runs faster than another's. The drag, tag, and transfer machinery drafted at stage two is exercised, and the exit runs on the agreement.
A club deal is decided in the drafting. The exit only announces the result.
A co-investment is a direct investment into a portfolio company made alongside a sponsor's main fund, typically by one or more of that fund's limited partners. It lets an LP put additional capital to work in a specific deal, often with reduced or no management fee and carry, while the sponsor enlarges the equity check it can write without straining a single fund. The terms sit in a co-invest vehicle and a set of agreements that define economics, control, and exit.
In a co-investment, an LP rides alongside a lead sponsor's fund on a deal that sponsor is leading. In a club deal, two or more sponsors or institutional investors join together to acquire a target as roughly equal partners, sharing diligence, governance, and control. The drafting problem is similar in both, covering allocation, decision rights, conflicts, and exit, but a club deal has no single lead, so the consortium agreement has to settle who decides what, and how a deadlock is broken, before the deal closes.
The core documents are the co-invest or consortium vehicle's organizational papers, a co-investment or syndicate agreement that sets economics and rights, and a shareholders' or members' agreement at the portfolio company that governs control, transfers, and exit. Side letters, allocation policies, and the underlying fund documents all bear on the deal as well. We draft these so the next investor and the eventual buyer read a clean, internally consistent record.
By writing the allocation policy before there is an opportunity to allocate. The policy says which limited partners are offered co-investment and in what order, whether the offer is pro rata or discretionary, and how broken-deal expenses are shared if the deal fails. A registered sponsor describes it in Form ADV and reports against it to the limited partner advisory committee. The 2023 SEC rules that would have required quarterly statements and preferential-treatment disclosure were vacated in 2024, so the partnership agreement and the side letters are again where the obligation lives.
Four recur. Deadlock, when equal partners disagree on a reserved matter and the agreement has no casting vote or buy-sell to break it. Dilution, when one partner cannot or will not fund a follow-on and the agreement is silent on the price of its absence. Information asymmetry, when the lead has run the diligence and the others have relied on it without a reliance letter or a shared report. And the exit, when one partner's fund is in its harvest period and another's is not. Each has a drafting answer: a decision matrix and buy-sell, a pre-agreed dilution formula, and drag and tag rights with a floor price.
Both, never on the same transaction. For sponsors we build the allocation policy, the vehicle and the offer documents. For limited partners and family offices we review the opportunity against the fund terms they already hold, negotiate the side letter and press the points a co-investor can win: most-favored-nation treatment on economics, information rights at the vehicle level and a say in the follow-on. Acting for each side over time shows us which asks are customary and which are reaches, which saves both clients a negotiation round.
Yes. The common pattern is a US sponsor, a Cayman Islands or Luxembourg co-investment vehicle and limited partners in several countries, which brings in the vehicle's local law, the marketing rules where each investor sits and the tax treaty position of the portfolio company. Hart David Carson LLP has structured cross-border private capital since 2014, with offices in London and Dubai through partner firms and a partner network of locally admitted counsel in about 51 jurisdictions, and we bring in local or specialist tax counsel where a filing or an opinion is required.
The lead transactions a co-investment so often rides alongside, sponsor-led buyouts and take-privates, structured and executed from term sheet through closing.
Explore →Minority and growth-stage investing where investor rights, governance, and exit protections stand in for control, which is the drafting closest to a co-invest stake.
Explore →Direct and co-investment counsel for family offices putting principal capital to work alongside sponsors and funds, on terms built for a long horizon.
Explore →Holding-period governance, follow-on funding, and the exit mechanics that determine what a shared investment ultimately returns.
Explore →Reviewed by Jonathan D. Herpy, Sr., Senior Partner · Last updated October 2026 · Educational overview · Not legal advice
One partner is accountable for the whole matter, and you have that partner's direct line. Chicago, London, and Dubai work to the same standard.