Co-Investment Due Diligence
Prior posts have touched on the level of modeling required for a co-investment alongside a fund (e.g. modifying GP assumptions and stress testing) but how much due diligence is performed prior to the investment? Do you get access to a data room or are you sent information from the sponsor? Management meetings? Also, how long does it take to diligence? 2-3 weeks? A few days? I assume the diligence process is a little bit more tame than direct investing but I don’t have any direct knowledge.
Based on my own experience, potential co-investors normally don't get access to the data room, but they will receive the investment memo, models, DD reports from the GP etc. However, if the co-investor wants access to the data room, I think it is possible, but don't think it will add a lot of value, because at the end of the day the co-investor is investing on the basis that the GP has a strong track record.
In terms of timing, it depends on how quickly the co-investors receive the information and how quickly the co-investors finish their analysis, the timeline and the size of the deal. 2 - 3 weeks sounds reasonable for a mid to large cap deal, assuming the co-investors were approached after all the DD process is complete.
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