The family office co-investment note that survives the meeting

A family office evaluating a direct co-investment may already own part of the same business through a fund. Put both exposures on the opening page. Record the dates, valuation basis, funding commitments and source of each figure so the principal knows which numbers can be added and which still need reconciliation.

The question a $3 million check can obscure

Imagine an office with a $100 million reference portfolio that is considering a $3 million direct investment. A manager's look-through statement attributes a further $2 million of current equity value to the same issuer through an existing fund. If both figures are measured at the same date on a comparable equity-value basis and the denominator remains $100 million, the illustrative combined exposure is 5%. Looking only at the new check shows 3%.

That calculation changes if the fund statement is stale, the direct commitment is staged, or the direct securities sit at a different place in the capital structure. Keep unfunded amounts in a separate column. Ask the manager to reconcile the security class and waterfall before treating equal dollar amounts as economically equivalent.

Four questions to send before the decision

• How was this opportunity allocated among the flagship fund, co-investors and affiliates? Ask for the allocation policy and any deal-specific exception.
• Which fees, broken-deal costs and follow-on obligations sit in each vehicle? Request a worked example using the proposed check size.
• What information can the office expect after closing, at what frequency and under which agreement? Distinguish a promised courtesy from a contractual right.
• When new capital is required, who decides whether to participate and what happens if the office declines?

These questions draw on the co-investment section of the ILPA Due Diligence Questionnaire. Use the actual documents and advisers for the transaction-specific interpretation.

Leave a record someone else can read

Close the note with three short entries. Record the approved amount and basis, the most important unresolved question, and the person responsible for checking it. If the committee proceeds despite missing information, preserve its reasoning. At the next opportunity from the same manager, the office can compare what it expected with what it actually received.

For a complementary example of tracking an underwriting assumption after a deal closes, see the first board pack field guide.