Leaving firm - what usually happens to money you co-invest (not carry)?

Based on the most helpful WSO content, here's what you need to know about co-investments when leaving a firm:

1. Customary Practice for Co-Investments Upon Leaving:

   • If you leave the firm, the treatment of your co-investment depends on whether the firm exercises its call option. If the firm exercises its call, they will typically pay you the value of the assets you invested in, based on the most recent quarterly valuation. In this case, you have no further commitment to the firm or fund.
   • If the firm does not exercise its call, you are required to continue funding capital calls up to your commitment amount. In this scenario, you remain a no-fee Limited Partner (LP) in the fund until it is wound down.

2. Buyout at Par or Initial Contribution:

   • Firms are generally not obligated to buy out your share at par or the initial contribution amount. The valuation is typically based on the most recent quarterly valuation of the assets. Whether they are "happy" to buy you out depends on the firm's policies and the specific circumstances of your departure.

3. Leaving Your Investment In:

   • Leaving your investment in the fund can be seen as a gesture of goodwill and continued support for the firm. However, this decision should also consider your financial situation and the terms of the co-investment. If you leave your investment in, you will still receive proceeds when the underlying assets are sold, and you will need to stay in touch with the firm for capital calls, proceeds, and tax documentation (e.g., K-1s).

Ultimately, the specifics can vary depending on the firm's policies and the terms outlined in your co-investment agreement. If you're leaving on good terms, maintaining your investment could reflect positively, but it’s essential to weigh this against your personal financial goals and obligations.

Sources: Differences between Co-invest and Secondaries?, https://www.wallstreetoasis.com/forum/private-equity/co-invest-and-carry-what-happens-if-you-leave-the-firm?customgpt=1, What returns have you achieved from co-investing in your fund?, Value Buy-out vs Growth Buy-out Discussion from Associate Perspective, What returns have you achieved from co-investing in your fund?