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Co-investment has gone from a quiet perk to a defining feature of modern private markets investing and it’s reshaping how fund managers and limited partners work together. We dig into what co-investment actually is: an LP investing directly into a specific deal alongside the fund, on top of their core fund commitment. That single move changes the economics, the diligence process, and the expectations on both sides of the table.

From the LP perspective, the draw is straightforward and powerful: co-investments often come with reduced or even zero fees and carry, plus more control and transparency because you can evaluate a specific asset instead of relying on a blind pool. As deal sizes rise and LPs get more sophisticated, direct deal participation becomes a strategic tool for building targeted exposure and improving net returns in private equity and beyond.

From the manager perspective, co-investment helps get larger transactions done without loading the fund with outsized concentration risk. It also strengthens investor relationships by offering something genuinely valuable: access. But there’s a catch. Co-investment only works when the process is operationally sharp, fast timelines, clear communication, and clean logistics for bringing multiple parties into one deal without confusion or delays.

If you’re thinking about using co-investment to deepen LP relationships rather than strain them, this conversation lays out the incentives and the execution realities. Subscribe for more on private markets strategy, share the episode with a colleague, and leave a review if it helped, what’s your best or worst co-investment experience?