In private equity parlance, a co-investment is a minority equity investment made directly in a portfolio company by a private equity fund investor alongside, but not through, the private equity fund in which the investor is a limited partner. Many private equity fund investors view co-investments as an attractive addition to their investment strategy. To take advantage of these benefits, the investor and sponsor must structure the co-investment with consideration toward tax efficiency, governance control, transparency, and cost control.

Practical Law has published two Practice Notes that discuss the considerations that go into deciding whether to make, and how to optimally structure, a co-investment.

Practice Note, Private Equity Co-Investments examines:

Practice Note, Structuring Private Equity Co-Investments examines:

These Practice Notes assume that the underlying investment is a buyout of a private company—the most common type of private equity investment and the most common transaction type for co-investments. For a discussion of buyout transactions, see Practice Note, Buyouts: Overview.