How does co-invest typically work? Is is on a deal by deal basis or a fund basis? If given the option would you invest at the fund level or deal level?
When do you get paid out? assuming it’s a 3 yrs Associate program.
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Typically, as a member of the investment team at a PE shop, you can only put $ into the fund itself and not into individual deals. They don't want professionals on the investment team to be able to show "favoritism" over certain assets based on where they allocate their personal money into co-invest. If you work for a fundless sponsor and each deal has its own separate sources of funding, I am pretty sure it is fair game, though. Generally speaking, I think most investors would say it's better to be able to invest at the fund level for the same reasons that investors do (in PE or otherwise) - to diversify $ across more assets and generate risk-adjusted returns. If you work in PE, you should expect that your fund will at least generate 2.0x MOIC (if you work at a MF; higher if you work at smaller/better funds), which, in the span of 5-10 years is a pretty handsome return.
Oh, and you get paid out when capital is returned to investors.
Thanks super helpful.If firm is investing concurrently out of 2 funds, or even 3, which do you get to invest in? Assuming you get to invest paripassu with initial investment of LPs.If fund is in last year of investments and you co-invest, assuming you get distributions much faster.. but is it on par with investors that had capital called at the onset? Does this mean you make a riskless co-invest contribution?
What’s typical timeline for payout to investors? 7-10 years after fundraise?
Most places you can only invest in the fund (on a fee-free basis of course) but have definitely heard of firms where you can either invest deal-by-deal or get extra exposure to your own deals. My current fund also allows MDs/Partners to commit incremental capital to specific deals (but they’re required to have a minimum level of fund investment before that)
^ our firm (MF) also gives options to the deal team (VP+) the option to co-invest into their own deals
Say you’re given the opportunity to invest in individual deals across the firm at a shop with a couple verticals, diversification aside, wouldn’t it make more sense to co-invest in deals that where you know you have a solid investment?
Not an answer to the above but curious as well.
If you co-invest in individual deals, would it make sense to assume that you get paid out individually by deal and that you won’t have to wait for the fund to fully distribute? Similarly, would you be able to exit if your firm puts the investment into a continuation vehicle - as this is technically a liquidity event - or would you have to roll into the new vehicle generally speaking?
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