Table of Contents
- Agreement Template Bundle
- 8+ Co-Investment Agreement Templates in PDF
- 1. Co-Investment Fund Agreement Template
- 2. Co-investment Fund Feasibility Assessment Agreement Template
- 3. Co-Investment Agreement Template
- 4. Co-Investment Securities Purchase Agreement Template
- 5. Co-Investment Limited Partnership Agreement Template
- 6. Private Equity Co-investments Agreement Template
- 7. Transfer & Subscription Co-investments Agreement Template
- 8. Co-Investment & Incentive Based Regulation Agreement Template
- 9. Sample Co-Investment Agreement Template
- 6 Steps on How to Draft a Co-investment Agreement
- The Attraction Feature of an Equity Co-investment
- The Co-Investment Nuances
8+ Co-Investment Agreement Templates in PDF
An equity co-investment, or simply co-investment, is a minority investment made directly into an operating company, in partnership with a financial partner or other private equity participant, in a leveraged acquisition, recapitalisation or capital exchange for growth. Venture capital firms may also search for co-investors under some circumstances. The agreement that is made to define this partnership between the operating company and the financial partner, is known as athe co-investment agreement.
Agreement Template Bundle
8+ Co-Investment Agreement Templates in PDF
1. Co-Investment Fund Agreement Template
eif.org2. Co-investment Fund Feasibility Assessment Agreement Template
communityforwardfund.ca3. Co-Investment Agreement Template
bursamalaysia.com4. Co-Investment Securities Purchase Agreement Template
launchtn.org5. Co-Investment Limited Partnership Agreement Template
elsevier.com6. Private Equity Co-investments Agreement Template
lowenstein.com7. Transfer & Subscription Co-investments Agreement Template
legis.state.pa.us8. Co-Investment & Incentive Based Regulation Agreement Template
econstor.eu9. Sample Co-Investment Agreement Template
nyserda.ny.govDetails
6 Steps on How to Draft a Co-investment Agreement
Step 1: Determine the Parties
The first part in drafting any agreement is to identify the parties taking part in that agreement. The general structure follows one party providing some kind of information while the other party receiving that information. If some other third party is also a part of this agreement, it should be mentioned along with the details of the third party or parties. In the case of a co-investment agreement, one party acts as the operating company where the investment will be made, while the other party acting as the finanncila partner provides the investment.
Step 2: Define the Investment
No matter the kind of agreement you are drafting, you need to have the objective clear. In other words, you need to know why you are drafting the said agreement. A co-investment agreement is generally made to help introduce an investment into an operating company by a related or relevant financial partner. Such an agreement can be for any type of investment depending on the company it is being made for. Once the objective has been outlined, the objective of the other party needs to be explained along with the investment that would be made. The party who is drafting the agreement is the one who needs to make sure that the other hand doesn’t find a loophole in it.
Step 3: Scope of Obligation
All agreements and contracts have a scope of some obligation. The essence of the co-investment agreement is a two-part obligation on both parties, one of whom will act as the financial partner to the other party that will be the operating company where the investment will be made. The second party needs to be clear on the type and form of investment to be made, including the amount for the same. This offer needs to be accepted by the first party who has to agree to make that investment. This scope of obligation must always be maintained by both parties.
Step 4: Exclusions
Some exclusions from the obligations or the clauses may be provided in the agreement. In the case of a co-investment agreement, these exclusions are designed to tackle circumstances in which perhaps making the investment would be unfair or too burdensome for any of the parties. Or if there are any other such exclusions that need to be made, then you need to provide the same.
Step 5: Determine the Term
The term refers to the length of the contract and this term should be provided clearly in the agreement. An agreement can last forever or for a duration of a few years, depending on the needs of the party wanting to introduce its product or service. Both parties need to be clear and agree on this term.
Step 6: Sign and Date
Once you have followed all of the above steps, you will have your agreement prepared. The final step is to provide spaces for putting the signature of both parties and the date of issuance of the contract. This step is the only way to prove that both parties acknowledge and comply with the agreement. Such shall also serve to prevent the forgery of the document.
The Attraction Feature of an Equity Co-investment
Upon first glance, it would seem that the general partners lose revenue on fees and give up some ownership of the fund by co-investments. Nevertheless, by providing a co-investment, general partners can escape capital exposure restrictions or demands for diversification. A $500 million investment, for instance, may choose three companies valued at $300 million. The partnership agreement could restrict participation in the fund to $100 million, which would mean the companies would leverage $200 million for each company. If a new opportunity combined at $350 with an enterprise value, the GP would have to pursue financing outside its fund structure, because it can only directly spend $100 million. The general partner could borrow $100 million for capital, and create incentives for co-investment to current or outside parties.
The Co-Investment Nuances
Although co-investment in private equity transactions has its benefits, co-investors can read the fine print before committing to them on these deals. The most important element of such agreements is the lack of transparency about payments. Private equity firms give no information on the fees they charge limited partnerships. In cases such as co-investing, where they supposedly provide no-fee services to invest in large transactions, hidden costs might just arise.
PE firms also have the chance of receiving payments from companies in their portfolio to support the deals. These transactions are also risky for co-investors, as they have no say in choosing or structuring the offer. Essentially, the deals ‘ success (or failure) rests in the acumen of charged private equity practitioners. This may not always be optimal in some situations, because the deal can sink.
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