How do family offices use co-investing and club deals?

Co-investments and club deals

The terms "co-investment" and "club deal" are sometimes used interchangeably, but they can describe different arrangements. A co-investment often lets an investor participate alongside a fund or lead investor in a particular company. A club deal brings multiple investors together to pool capital and resources for a large investment.

The distinction can matter in practice. A fund may offer one of its limited partners the right to invest more alongside the fund in a specific deal. A club deal, by comparison, may bring together several investors to acquire or fund an opportunity that would be too large for any one participant.

How a family office might structure a co-investment

A family office can invest directly into a portfolio company, negotiate terms with the company, and manage its investment through to exit. Or it can invest indirectly, for example through a special purpose vehicle (SPV). An SPV holds the investment for the participating investors; the arrangement may also use a limited partnership, an LLC, or a fund that aggregates several co-investments.

The choice depends on the deal and the participants. The structure affects how capital is pooled and managed, and may reflect tax considerations. Before committing, a family office would need to understand its rights, costs, decision-making role, and how an exit would work. These are practical questions to resolve with appropriate legal and tax advisers for the specific transaction.

A club deal example

Imagine a single family office finds a business whose owner wants to sell. If the acquisition is too large for that office to fund by itself, it may invite other investors to contribute the capital needed to complete the purchase. The investors may also contribute expertise or other resources.

This example illustrates the core purpose of a club deal: bringing together participants to pursue a transaction that may be out of reach for one investor alone. The arrangement also means the participants will need to agree on governance, responsibilities, and how they will handle disagreements or a later sale. Those details should be settled before the group commits capital.

Choosing partners

Deal access and size are only part of the decision. Participants will be long-term partners during due diligence, ownership, and exit, so a family office should consider whether the investors' interests, expectations, and working styles fit. A clear agreement about who makes decisions and how information is shared can help set expectations from the start.