Co-Investing with Other Family Offices
The mechanics, benefits, and pitfalls of syndicating deals with peer families.
Why Co-Invest?
Co-investing allows families to punch above their weight, sharing due diligence costs and accessing larger deals than they could fund independently. It aligns capital with patient, like-minded partners rather than aggressive PE funds driven by IRR clocks. This is a core component of modern direct investing.
The Governance Challenge
When multiple families co-invest, who acts as the lead? Who takes the board seat? These terms must be explicitly defined in a rigorous Shareholders' Agreement before capital is deployed.
| Role | Responsibilities | Typical Economics |
|---|---|---|
| Lead Family | Sources deal, performs DD, holds board seat | May charge 10-15% carry to syndicate |
| Syndicate / Follow-on | Provides capital, passive observation | Pays carry, no management fees |
Common Mistakes
Failing to plan for follow-on capital calls. If the company requires emergency bridge capital and a follow-on family refuses to participate, the lead family must have explicit "cram-down" provisions to dilute the non-participating family aggressively.
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