Club deals and co-investments: how they work

A club deal is a transaction in which a small group of investors joins forces to finance a single investment together — the purchase of a company, a property, an equity stake — pooling their capital for one specific operation. It is not a fund that raises money and then decides where to deploy it: here investors know in advance exactly what they are putting their money into, and they decide deal by deal. It is a format increasingly popular among entrepreneurs, family offices and private investors who want access to larger transactions while keeping control over their own choices.

Club deal and fund: the difference

In a fund, investors entrust their capital to a manager who selects the investments according to a mandate. You delegate, you pay a management fee, and you have little say over the individual transactions.
In a club deal, investors assess and approve the single deal. More control, more involvement, often lower costs — but also more work and direct responsibility.

Co-investment is a closely related concept: several parties investing side by side in the same operation, usually alongside a promoter or sponsor who originated and coordinates it.

Why it is done

Access to larger transactions: on their own, many investors could not reach a certain scale; together they can.
Diversification: instead of concentrating everything on a single operation, you take part in several club deals with contained amounts.
Risk sharing: the capital — and therefore the risk — is spread across several parties.
Shared expertise: co-investors often bring sector experience, contacts and analytical skills that an individual would not have.
Control: unlike a fund, each investor chooses whether or not to enter that specific operation.

How it is structured

In practice, investors almost never enter the target’s capital directly and individually: a special-purpose vehicle (or an equivalent structure) is created to collect the club’s capital and hold the stake. This simplifies governance, the distribution of proceeds and any eventual exit.

The elements to define before starting:

Who coordinates (the sponsor): who brought the deal, manages it and maintains the relationships. Often they receive remuneration or an extra share of the profits (carried interest) for the work done.
Distribution of capital and proceeds: how much each party contributes and how profits and capital gains are divided.
Voting rights and decisions: which choices require everyone’s agreement and which are delegated to the sponsor.
Exit rules: when and how you sell, what happens if an investor wants to leave early, pre-emption rights, drag-along and tag-along clauses.

The risks to weigh

Confused governance: without clear rules, a group of investors with differing views can get stuck on important decisions. This is the number-one risk.
Illiquidity: the capital stays committed for years; it is not an investment you can exit whenever you like.
Concentration: a club deal is a single operation. If it goes wrong, you lose on that one; diversification has to be built by taking part in several deals.
Dependence on the sponsor: the quality of the operation depends heavily on who originates and manages it. Experience, alignment of interests and track record must be checked.
Transparency: periodic reporting and clear rules on costs and conflicts of interest are needed.

Governance is everything

The success of a club deal is decided before signing, in the quality of the agreements between investors. A well-drafted shareholders’ agreement (or agreement between the vehicle’s members) establishes who decides what, how proceeds are divided, how you exit and how disagreements are handled. Putting it clearly in writing, with defined majorities and exit clauses, is what distinguishes a club deal that works from one that ends in deadlock or conflict.

In short

A club deal brings together a few investors on a single operation, with direct control over the choice.
Compared with a fund: more say, more involvement, often lower costs, but more responsibility.
A special-purpose vehicle usually holds the stake.
Sponsor, distribution of proceeds, voting rights and exit rules must be defined.
The main risks are confused governance, illiquidity and concentration: they are managed with clear agreements and by diversifying across several deals.

How we help you

We structure club deals and co-investments for entrepreneurs and private investors in Switzerland: special-purpose vehicles, agreements between investors, governance and exit rules, with an eye to transparency and alignment of interests. Let’s talk about your operation.