peHUB Publishes Lisa Peterson Article on Co-Investment Pitfalls
Akin Gump corporate partner Lisa Peterson has written the article “Co-Investments: protecting your investment,” which was published by peHUB. The article discusses some of the pitfalls that can arise in connection with co-investments, which fund sponsors, Peterson writes, see as a way “to mitigate fundraising challenges, recruit strategic partners and develop strong relationships.”
The article begins with an overview of what co-investments are, noting that there are two basic co-investment structures: direct investments and investments through sponsor-controlled vehicles. It also examines the basic protections that co-investors should seek under each option.
Peterson then gives a brief analysis of the legal fees and timing associated with a co-investment. She follows that with a look at the issue of how much involvement a co-investor should have in an underlying transaction. Peterson concludes with the observation that “it is critical that the interests of the co-investor and the sponsor are aligned” in any deals that are struck. Additionally, care must be taken from the start for the co-investor to get the full benefit of any such deal.