What Happens to Co-Investment if You Leave Your Job?

Based on the most helpful WSO content, here's what you need to know about co-investment when leaving your job:

1. Liquidation or Retention of Co-Investment:

   • If you leave your firm, your co-investment typically remains outstanding until the underlying assets are sold. This means you may not be able to liquidate your position immediately unless explicitly allowed by the operating agreement or at the Manager's discretion.
   • The norm varies, but in many cases, departing employees are required to hold their co-investment until the investment reaches maturity. This aligns with the typical private equity fund lifecycle, where assets are sold over a 3-7 year period.

2. Buyout or Transfer Options:

   • Buyout by the Company/Manager: This is less common unless explicitly stated in the agreement. Managers may offer a buyout, but it’s discretionary.
   • Transfer to Other Co-Investors or External Buyers: Transfers often require Manager approval, as noted in your agreement. Some agreements may restrict transfers to maintain control over who holds interests in the fund.
   • Forced Hold Until Maturity: This is the most typical scenario. Your co-investment remains locked in the deal, and you receive your returns when the assets are monetized.

3. Valuation:

   • Valuation for buyouts or transfers, if allowed, can vary. It might be based on fair market value, but discounts are not uncommon, especially if the Manager or company is facilitating the buyout. The specifics depend on the terms outlined in your agreement and the discretion of the Manager.

4. Commitment Period Obligations:

   • If you leave during the commitment period, you may still be required to fulfill your commitment amount for future capital calls. This amount will be returned to you when the underlying assets are sold.

In summary, the most common outcome is that your co-investment remains locked until the investment matures, and any liquidation or transfer is subject to Manager discretion and approval. If you're navigating this, it’s crucial to have a clear understanding of your operating agreement and to communicate with the Manager for clarity on your specific situation.

Sources: What Happens when a PE Fund Closes?, https://www.wallstreetoasis.com/forum/private-equity/co-invest-and-carry-what-happens-if-you-leave-the-firm?customgpt=1, First timer introduced to Co-invest + Carry: How to navigate?, Exit options for BIG LBOssss, What returns have you achieved from co-investing in your fund?