Led by Audrey Derep (Tax) and Aline Nassoy (Corporate M&A), the session covered practical insights into some of the key considerations and challenges of structuring co-investments vehicles, drawing on our experience and sparked lively discussions with participants sharing their own experience. Here are three key takeaways.
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#1 Tailor the structure to the investment and its investors
There is no default legal form for a co-investment vehicle. The underlying investment, investor profile, investment jurisdiction and financing, repatriation and governance needs are key elements to consider. Tax is not a downstream consideration but an essential part of the structuring process, taking into account the tax implications across all relevant jurisdictions, from the investors to the underlying investments.
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#2 Mind the AIFMD perimeter
Whether a co-investment vehicle falls within the scope of AIFMD depends on the specific facts and circumstances, with potentially significant regulatory implications. Even in a club deal, careful consideration must be given to how investors came together, whether capital was raised and the degree of control investors retain over investment decisions.
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#3 Negotiate rights deliberately
Establish clear governance arrangements at both board and shareholder level, ensuring that decision-making rights reflect the respective roles and interests of the investors.
Calibrate economic and voting rights to the investment structure, taking into account the parties’ respective contributions, risk exposure and commercial objectives.
Ensure contractual alignment on exit mechanisms, including transfer restrictions, tag-along and drag-along rights, and exit timing.
The common thread: every structure should start with the commercial expectations - who decides, how returns are shared, who exits, and when. Shape the structure to fit specific features of each co-investment.
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